Welcome to Boomer411. We hope you will visit again. You can also subscribe to our RSS feed.

By Rita R. Robison, Consumer Specialist, Blogging at The Survive and Thrive Boomer Guide
Guest Blogger

Life’s a struggle these days for boomer consumers as they seek to survive in these bleak economic times.

What can you do to avoid the worst kinds of problems that can happen in consumer transactions as well as downright scams?

The Top 10 Consumer Complaints List for 2007 released recently by the National Association of Attorneys General gives an indication of what to look out for as you go about your daily consumer purchasing and activities.

This national list of consumer complaints is compiled from reports provided by offices of the attorneys general and is tallied by NAAG’s Consumer Protection Project.

The results are as follows:

1. Debt collection
2. Auto sales
3. Home repair/construction
4. Telecommunications/slamming/cramming
5. Automotive (general)
6. Telemarketing/Do Not Call
7. Financial/investments
8. Retail sales
9. Internet goods and services
10. Contests/sweepstakes/prize promotion

I’ve added a link on each type of complaint that offers information on how to avoid the problem.

In addition, the Consumer Federation of America offers these seven ways that consumers can protect themselves from top complaints.

1. Check the track record. Before you buy, check the complaint records of unfamiliar companies. Consult your state or local consumer agency, the Better Business Bureau, and online complaint forums.
2. Hire licensed professionals. When you’re hiring professionals such as home improvement contractors, ask your state or local consumer protection agency if they must be licensed or registered and how you can check to confirm that they are.
3. Pay the safest way. Pay with a credit card when you buy goods or services that will be delivered later so you’ll be able to exercise your right to dispute the charges if you don’t get what you were promised.
4. Don’t pay in full upfront. Pay only a small deposit, if requested, for home improvement or other services, never the full amount upfront.
5. Recognize the danger signs of fraud.  Watch out for any request to wire money; scare tactics or pressure to act immediately; promises that you can borrow, win or make money easily as long as you pay a fee in advance; or any situation in which someone wants to give you a check or money order and asks you to send money somewhere in return.
6. Get all promises in writing. Verbal agreements are hard to prove. Carefully read contracts or finance agreements and make sure you understand them before you sign.
7. Get financial advice from legitimate sources. If you’re having trouble paying your bills, consult your local nonprofit consumer credit counseling service. Your state or local consumer agency may be able to help you find other legitimate sources of assistance.

Remember, it’s important to your financial and psychological health to be an informed, aware boomer consumer.

Last week we discussed about the current financial crisis and the resulting economic situation in the country. Since we last discussed a lot has happened on this front. It appears that the country’s legislative bodies have agreed to a deal in principle and have written the draft legislation. It is widely expected to be passed by the Congress this week.

Also, one of the greatest investing legends of our times, Warren Buffett of Berkshire Hathaway decided to invest $5 Billion in one of the two last standing investment banks, Goldman Sachs last week. In light of this ground breaking investment, CNBC recently interviewed Warren Buffett over a telephone call. The complete transcript of the interview and the audio/video of the interview can be accessed here. This is a very interesting, no holds barred interview. It gives the listener a very good opportunity to peek into the legendary investor’s mind at such a critical juncture in our nation’s economy. Mr.Buffett also shares his outlook, his rationale for this investment and more. So we wanted to spread the news about this interview to our readers. Hope you’ll like it. Please do post your comments and let us know your thoughts.

Note: The audio/video of the interview is in 3 separate parts. Be sure to go to the transcript of each part to access the audio/video of that part.

This proverbial “roller coaster” ride in the financial markets this last week could even make an ardent roller coaster lover sick to their stomach. These are unusual times with history-breaking/history-making events. Hopefully the government’s intervention plan gets the seal of approval from the legislature bodies and bring stability and order to the chaos that reigned in the markets last week.  And hopefully this stability will be for both the short-term as well as the long-term.

In case you missed the events of last week, the following articles give a heart-breaking rendering of the events that transpired and about the people that are at the forefront of reshaping the financial landscape of the country. Read this article titled, Shock Forced Paulson’s Hand (from The Wall Street Journal) as it narrates the major events last week and how Lehman’s bankruptcy disrupted the markets and caused some Money Market Mutual Funds to break the buck. If you are still interested to learn more, read this article titled, The Players Remaking Financial World. This article provides an inside scoop of what happened behind the scenes and the events leading up to the collapse of some of the storied firms in the financial world. Here is a listing of 12 failed U S banks and thrifts this year.

On the positive side, the government now has a grand proposal to rescue the economy at a whopping cost of $700 billion. Also, the last two remaining investment banks have been allowed to change their status as bank holding companies. This will enable them to create or acquire commercial banks and give them the safety of deposits and thus avoid the liquidity crisis that brought the other investment banks down.

Considering all this, things may finally be starting to calm down. But all this turmoil would naturally raise the question in consumers about the safety and availability of their prized savings and retirement funds. Also, it is natural to ask what does all this mean to me and my family?

It is probably a good idea to review the following articles and take steps to ensure the safety of your investments.

This article, Is Your Money Really Safe? Know What You Own talks about the money market fund debacle. It also provides links to the FDIC Deposit Insurance Estimator Calculator, FAQs on Deposit Insurance, a listing of recently failed banks among other things.

And here is an article outlining what FDIC insurance protects and what it does not, FDIC Insurance Protects, Except When… 

10 Ways to Protect Your Finances From The Crisis details a checklist of 10 steps you can take to safeguard the value of your savings. 

This article, Is My Money Really Safe? shares some down-to-earth, frank answers to your tough questions about banks, brokerages and mortgage companies and what you can do.

A scan of the news headlines in newspapers these days could make one sick to their stomach. Though you can find a variety of viewpoints, many are ususally negative especially whent it concerns the economy, the housing market and so on. Though it is not without basis, some times it may be exaggerated. One has to always take the opinion presented in the articles with a grain of salt or assess its value and usefulness for himself or herself.

For example read this recent interview titled ‘U S House Price Decline Could be Worse than Great Depression: Economist Schiller says‘. In this interview the famous economist and MacroMarkets Chief Economist, Robert Schiller presents his analysis of the present situation and states how the house price decline when adjusted for inflation looks much worse. And this report about the ‘U S Oil prices closing at 5-month low on U S gas report‘ states how the reduced consumption of oil and gas by the U S Consumer confirms that the U S economy is in doldrums (Big surprise, huh?).

Read this article from The Economist’s website titled ‘Economics Focus: Home Truths‘ and it talks about how the housing price decline has impacted the credit available to consumers and their spending power. But argues against equating the impact of the so called ‘wealth effect’ from liquid investments such as stocks, bonds, etc with the ‘wealth effect’ from the housing price (not so liquid investment) changes.

The article concludes with the following statement

There is also a more general point that emerges from Mr Buiter’s paper. Very often there is too much emphasis on the losers from falling house prices and too little on the winners. A fall in house prices is not bad for everybody. In an important sense, a house is much like any other durable good: a fall in prices is a boon for those consumers who have yet to buy one.

Speaking of a good opportunity for those who have yet to buy one, read this article titled, ‘Affordable Housing Exists, if you know where to look‘. It lists top-10 Most Affordable Housing Markets. So if you are looking to buy one, this may very well be the golden opportunity you have been waiting for.

Bottomline (in my opinion) is that housing is not an area that people invest in for liquidity. It is a long-term investment and in most cases more than a mere investment, it is the place we call home. So the recent volatility does not really hurt everyone who owns a house. For those that are disciplined and careful and have the liquidity, this may be an opportunity to get in and grow their assets. Having said that, for those that are in need of cash and house is their only remaining source of that cash, the pain is acute and hard, especially since emotions are attached to this investment, more so than other types. It may help them to assess their situation in a non-emotional way (some times it helps to listen to the advise of good friends or a counsellor) and make the right choice that is good for their families and for their wallets in the long-run.

Whatever we do, we should do it while keeping in mind our ultimate goals of a good retirement.

The past year has been brutal on majority of investment accounts. The sub-prime mortgage meltdown, the credit crunch have all strained liquidity out of the market and put enormous stress on businesses. The resulting macro-economic issues have worsened the pain on the average consumer. Amidst all this mess, most retirement accounts have taken a beating in stride with the market or even worse in some cases. It’s only natural to ask “How do I stop the bleeding?”. A recent article attempts to address and answer this very question.

One great call out in that article is about asset allocation or diversification strategy. We have heard it enough times already, but yet we don’t take the time and effort to implement diversification in our own accounts.

I am not an expert in the field of investing (either by professional education or licensing) but I have keen interest in investing for my own personal investing and I read a lot on the subject and talk to other experts in the field. So I couldn’t help but want to share this with our readers. You can take it for what it’s worth.

In my opinion, following is a strategy that would take us a long way

• Decide a Diversification strategy that is suitable for your risk tolerance: One needs to have exposure to stocks (domestic and international), bonds, commodity and real estate to name just a few and the percentage of your portfolio you are willing to invest in each category (To learn more about Asset Allocation from the SEC click here; or to use an interactive asset allocation calculator click here)
• Choose your picks for investing into each of the above categories. It can be individual stocks and bonds OR Mutual Funds OR Index Funds OR Exchange Traded Funds (ETFs) and so on. Each has its pros and cons. Based on my research, I prefer or recommend Index funds and Exchange Traded Funds because of their low overhead costs. There is a wide variety of these funds available. Click on the links above to find out your options and use the tools there to choose your index funds and ETFs
• Invest in the selected funds in the selected percentage amounts and
• Finally, discipline yourself to rebalance your portfolio at a pre-determined frequency you are comfortable with (For more insight on this topic, read this article on Motley Fool)

My rationale for the above approach is:

• Picking right stocks at the right time is called market timing and even the pros find it difficult to do it well consistently
• If someone’s portfolio went down a lot and they are asking how to stop the bleeding, then thinking they’ll be able (either in terms of knowledge, time or knack) to pick the winners this time around is a very big and risky assumption in my opinion 
• Funds with high overhead costs eat away a portion of your returns and reduce the amount available at retirement and can be substantial over an extended period of time
• Over long periods of time that one’s career lasts, market indices and funds based on those indices (or index funds) have returned more value to a patient investor and
• this approach limits the amount of time and energy one needs to spend doing their investing rather than enjoying other activities

This is my 2 cents on the topic. Please post your comments, thoughts and ideas on this subject.