Powershares: 2 More ETFs

In our last wednesday's posting, we discussed about PKB, a new exchange traded fund (ETF) based on the construction-industry. Last Wednesday, another PowerShares ETF began trading, which would track the Spade Defense Index (DXS), a basket of companies involved with defense, homeland-security and space exploration. For the year to date, the index is up more than 3%, and top holdings include Boeing Co. (BA) and United Technologies Corp. (UTX). The fund could be used as a short-term vehicle to play geopolitical developments such as terrorist attacks.

Another new PowerShare tracking an index of nanotechnology stocks is coming up soon and is expected to be a success with investors given the sector's potential growth. Nanotech companies develop materials and devices at the atomic and molecular level for a wide range of uses. Also, Archipelago Holdings Inc. (AX) earlier this year hinted at plans to list a separate nanotech ETF, its first, on its electronic exchange. The Chicago-based exchange, which is set to merge with the New York Stock Exchange, said it plans to launch an index calculation and dissemination service in the third quarter and has already received strong client interest.

Weekend Commentary

Gold: Gold futures climbed Thursday, closing above $475 an ounce for the first time since Oct. 17. This is 11.24% gain from the level of$426.9 on May 11 when we advised our readers to accumulate Gold.

Crude Oil & ...: Yesterday evening, the crude for December delivery closed up 43 cents at $61.09 a barrel in New York. November heating oil fell 0.22 cent to finish at $1.8539 a gallon, while November unleaded gasoline added 0.81 cent to end at $1.5926 a gallon. November natural gas closed at $13.832 per million British thermal units on the New York Mercantile Exchange, down 20.8 cents, or 1.5% on news from the Energy Department that Natural-gas in storage rose by 77 billion cubic feet for the week ended Oct. 21.

Housing: According to a report from the Commerce Department, sales of new homes in the United States increased 2.1% in September -- a seasonally adjusted annual rate of 1.222 million after an 11.6% slump in August.

Refinancing: The weekly data from the Mortgage Bankers Association (MBA) says that applications for mortgages to buy homes fell 7.4% and refinancing applications decreased 8.5%. Refinancing accounted for 42.5% of last week's applications, down from a 42.8% share a week earlier.

Mortgage Rates:
The 30-year fixed rate has increased for seven weeks without pause. The average rate paid on a 30-year, fixed loan increased for a seventh straight week, to 6.15% through Oct. 27, up from 6.1% a week earlier. Last year at this time, the 30-year rate averaged 5.64%. The Mortgage Bankers Association (MBA) said this week that it looks for moderately faster economic growth and more Fed tightening to push average long-term mortgage rates up to 6.7% by the middle of next year, before flattening through much of 2007

The average for the 15-year fixed loan this week was 5.69%, up from last week's 5.65% and last year's 5.01%.

The one-year Adjustable-Rate Mortgage (ARM) averaged 4.91%, up from last week when it averaged 4.89%. Last year at this time, it was at 3.96%. Five-year Treasury-indexed hybrid ARMs averaged 5.63%, up from last week's 5.59%.

[Mortgage-rate information source: Freddie Mac weekly data]

Baidu : A Lesson

In our Aug 8th posting "Another Craze: Baidu", we cautioned our readers
not to jump into that stock and invite anxiety to your home, unless you
had lot of money.

Baidu went public on Aug. 7. On that day, shares of this Chinese Web
search-engine operator vaulted 354% in the IPO market's biggest splash
in at least 5 years. Baidu.com (BIDU) opened at $66, more than double its
$27 price, climbed, stabilized and then rallied anew before plateauing a
second time and ending its historic opening day at $122.54. It traded as
high as $153.98 on its 2nd day on the market. But that's it -- after that it
was up and down all the way for finding new lower peaks.

In its first earnings report since going public in August, yesterday the
company listed third-quarter profits and income that nearly tripled from
the previous year. Baidu reported a profit of $1.1 million or 3 cents a
share, up 189.3% from the period the year before, but down 29.4% from
the 2nd quarter. The sequential decline in profit was in part due to higher
expenses, including a 66.0% increase in bandwidth expansion costs from
the previous quarter. Revenue came in at $11 million, up from $3.9 million
-- some 28% from the prior quarter.

Future? Baidu expects revenue for the fourth quarter to come in at $12.6
million to $13.1 million. The average of three institutional analysts
covering Baidu had expected fourth quarter revenue of $10.8 million.

Investors did not take kindly to the results, selling Baidu shares down as
much as 15% to $68.40 in after hours trade yesterday. Before the market
close, Baidu.com shares closed up 1.6% to $81.05.

As we reminded our readers many times -- you invest to become a
happier personn with a happy family and to sleep well at night. Do not
ever get into any craze. Be disciplined, stick to fundamentals and invest
regularly for a long time horizon. You'll surely be rewarded -- a good sleep
every night is a reward indeed!

New 'Construction' ETF: PKB

PowerShares Capital Management is launching a new Exchange Traded
Fund (ETF) today: PowerShares Dynamic Building & Construction Portfolio
that may attract interest given the recent strength of home-building
stocks. Although the sector has pulled back recently on fears of a cooling
housing market, the Dow Jones U.S. Home Construction Index (DJ_HOM)
is up 48% over the past year with mortgage rates at historically low levels.

The fund is expected to hold 30 stocks, with about 40% of assets held in
home-building stocks such as D.R. Horton Inc. (DHI) and Lennar Corp.
(LEN). It will also invest in stocks from related industries such as suppliers
Lowe's Companies Inc. (LOW) and Home Depot Inc. (HD).

ETF-based 401(k)

According to a recent report, more than 85% of small businesses in the
U.S. do not offer retirement plans,which means about a third of America's
workers don't have one. This does not ensure a good future for so many
workers, given the low personal savings rate, the dismantling of employer-
sponsored pension plans and questions surrounding SocialSecurity's
viability.

With this target investors in mind, ShareBuilder Corp. has introduced a
new service geared to 401(k) plans at businesses with less than 50
employees. With this new service, small businesses can offer employees a
401(k) plan that allows choices from a lineup of all-ETF portfolios.
Employers pay a one-time set-up fee of $750, a monthly charge of $15
per employee and annual expenses of 0.65% of assets.

The five ShareBuilder portfolios are ranked as stable, conservative,
balanced, moderate and aggressive. The conservative offering, for
instance, has 40% in iShares Lehman Aggregate Bond, 27% in iShares
Lehman TIPS (Symbol: TIP ; The Fund seeks to replicate the
Lehman Brothers U.S. Treasury Inflation Notes Index. In order to
achieve its objective, the fund takes a passive indexing approach), 15%
in large-cap iShares Russell 1000 (IWB), 10% in iShares Russell 1000
Growth (IWF), 6% in iShares MSCI EAFE and 2% in small-cap iShares
Russell 2000 (IWM).

Note: There are other firms offering ETF portfolios through 401(k) plans,
like Invest n Retire, Banneker Capital Management and Fulcrum Financial.

Mutual Funds: Low Minimum

If you want to invest for your retirement, but your current level of income
and expenditure is not allowing you to invest in Funds that demand high
minimum balance, here are a few good choices for you. The funds we
present today will let you start a Roth IRA for $500 or less and do not
have any sales charges, or loads. Furthermore, they all have had a
dividend yield of at least 1% in past 12 months. [Caution: before you start
an account, check the prospectus to ensure that they have no annual
fees].

The following numbers can be compared with performance of average
stock funds: Return: 0.9% (2005), 7% (5-years)

1) Homestead Value, HOVLX [Return: 5.1% (2005), 61% (5-years) ]
2) Excelsior Midcap Value, UMVEX [Return: 0.8% (2005), 58% (5-years) ]
3) Summit Everest, SAEVX [Return: 2.7% (2005), 52% (5-years) ]
4) Westwood Balance AAA, WEBAX [Return: 4.5% (2005), 24% (5-years) ]
5) Russel Life Moderate, RMLEX [Return: 1.4% (2005), 23% (5-years) ]

Weekend Commentary

On Thursday Dow Jones had a triple-digit loss. Good news is that crude
oil price is going down below $60 a barrel. Fed is going to meet on Nov 1
and there is a high probability that another quarter point increase in short
term interest rate will be announced. Asian market also turned downward
last night. Things look confusing but remember this is October. That's how
October usually goes. We recommend that it is a good time to take a few
positions - like in energy sector or in some Large Cap stocks that
consistently increased their dividend.

Don't go for a new position in Google even though they announced a good
quarterly result yesterday. It is too highly priced at this level at this point
of time and eternity. Unless you have too much money and afford to bear
any long-term downtrend, do not invite anxiety to your home.

Dollar: In early Asian currency trade Friday, the dollar was changing
hands for 115.05 yen , sliding from around 115.30 yen in late New York
trade on Thursday. The euro also rose to $1.2070 from $1.2025 a day
earlier.

Crude for November delivery fell to a low of $59.85 a barrel on in New
York on Thursday before closing down $1.38, or 2.2%, at $61.03 a barrel.
That's its lowest close since July 27. Natural-gas futures fell 4%
Thursday after a government report revealed that domestic supplies of
the heating fuel climbed above 3 trillion cubic feet for the first time since
mid-December of last year. The weakness in natural-gas prices combined
with a rise in oil supplies to pull crude futures prices to their lowest levels
since late July.

Mortgage Matters:

The average rate paid on a 30-year fixed loan increased for a 6th
straight week, to 6.1%, up from 6.03% a week earlier, according to
Freddie Mac. This rate is at its highest since the week ending July 1,
2004, when it averaged 6.21%.

The average for the 15-year fixed loan this week was 5.65%, up from
last week's 5.62% and last year's 5.07%. This level was last seen in June
2004 at 5.7%.

The one-year ARM (Adjustable rate Mortgage) averaged 4.89%, up from
last week when it averaged 4.85%. Five-year Treasury-indexed hybrid
ARMs averaged 5.59%, up from last week's 5.57%.

To achieve the mortgage rates this week, the 30-year loan required 0.5
point and the 15-year 0.6 point; the floating loans each required 0.7 point
[A point equals 1% of the loan amount, charged as prepaid interest].

I-Bond, EE-Bond

The current interest rate of Federal Government's inflation-fighting
savings bond, popularly known as I-bond, is 4.8%. That consists of a fixed
rate of 1.2% and a semiannual inflation-adjusted rate of 3.58% (The slight
discrepancy in total is due to the way the composite is calculated). Both
components are adjusted every May 1 and Nov. 1.

The other savings bond that is adjusted semiannually is the EE series. It
currently pays 3.5%. It's a fixed-rate bond, so the rate you get when you
purchase stays with you until you sell. It has the same holding and penalty
provisions as the I-bond. It is expected that EE-Bond's new interest rate
will continue to remain right around 3.5% after Nov 1.

However, due to inflation that can be easily detected around us, it is
estimated that the interest rate on I-bond could come in above 6% when
it's adjusted Nov. 1. The fixed rate, in effect when the bond is purchased,
stays with an investor for as long as he owns the bond. The inflation-
adjusted component is based on inflation data for the previous 6 months
as measured by the U.S. Consumer Price Index.

CPI numbers for the previous six months gives an annualized inflation
rate of 5.7%. That ombined with the current I bond's 1.2% fixed rate may
give an effective rate of 6.9%. But with a rate that high there's a strong
likelihood that the fixed rate will get reduced. But even if it gets scalped all
the way down to 0.5%, the I-bond would still have a composite rate of
approximately 6.2%.

There is an advantage in buying I-bond right now. You will get 4.8%
(=1.2%+3.58%, as explained in first paragraph) for the next 6 months
until late April when only the adjustable rate will be increased to whatever
inflation component is issued on this coming Nov. 1. If that combined rate
is 6.9%, you'll be able to average 5.85% for the full year.

Retirement Benefit

Today we post some contact addresses and resources related to
retirement benefits. Obviously, our first stop should be the
Social Security Administration (800) 772-1213
which has 1,300 offices across the nation and might be the fastest route to
your question or to order printed material related to your retirement.

National Organization of Social Security Claimants’ Representatives
(800) 431-2804 is a referral service directing callers to attorneys who
handle Social Security Cases.

For an explanation of your rights under federal law you may visit
Pension and Welfare Benefits Administration, Department of labor,
(202) 219-8840.

Pension Benefits Guaranty Corporation (PBGC) (202) 326-4040
answers questions and offers advice on pensions.

Pensionrights.org (202) 296-3778 is a legal referral service for pension
related problems.

Oily News

Before the start of the summer, in our May 24th Posting, we advised our
readers to be cautious about rising oil price. Our predictions in that
posting came to be true.

Yesterday in a speech in Tokyo Fed Chairman Alan Greenspan said,
"Although the global economic expansion appears to have been on
reasonably firm path through the summer months, the recent surge in
energy prices will undoubtedly be a drag from now on."

Among other topics ..he mentioned about china and expressed his concern
about the oil wastefulness of the planned Chinese economy. While the
U.S. and Japanese economies have significantly trimmed their use of
energy relative to their Gross Domestic Products, the Chinese have not,
he said. "At present, China consumers roughly twice as much oil per dollar
of GDP as the United States," Greenspan said.

Today crude for November delivery climbed $1.73, or 2.8%, to finish at
$64.36 a barrel on the New York Mercantile Exchange, its highest closing
level since Oct. 3. Meanwhile, November natural gas added 66.8 cents
to close at $13.887 per million British thermal units, its highest ending
level since Oct. 5.

Prices for Petroleum-product also increased. November heating oil
tacked on 3.33 cents, or 1.7%, to close at $1.9833 a gallon, and
November unleaded gasoline closed at $1.8153 a gallon, up 6.67 cents,
or 3.8%.

Gold futures closed with an almost $5-an-ounce gain at $472.6 as the
rally in oil rekindled inflation concern. This is 10.7% gain from the level of
$426.9 on May 11 when we advised our readers to accumulate Gold.

All ETF Retirement Fund

Today we talk about 3 new funds from the New York-based asset manager
J. & W. Seligman & Co. Inc. : Seligman TargetETFund Core, TargetETFund
2015 and TargetETFund 2025.

These funds have combined two of the hottest trends in investing:
exchange-traded funds (ETFs) and "target-date" retirement funds. ETFs,
which are indexed baskets of securities that trade on exchanges like
stocks, have blossomed into a $250 billion business in the U.S. alone.
Target-Date Funds ( See our past Posting on this type of Funds ) allocate a
portfolio to broad asset classes such as stocks and bonds, reducing
investment risk as the retirement date approaches. Assets in these
securities jumped 65% to $43.9 billion in 2004.

The Core portfolio of these Seligman funds have 55% in stocks, 35% in
fixed-income, and 10% in real estate investment trusts (REITs). Within
the equity allocation, 30% is in U.S. large-cap funds, 5% in midcap, 10%
in international large-cap and 10% in dividend-focused funds. Seligman
says the new mutual funds overcome one of the main obstacles of building
portfolio of ETFs and rebalancing it over time. Although ETFs have low
expense ratios, investors must pay brokerage commissions to buy and sell
shares. ETFs' cost advantage is diminished when contributing small
amounts on a periodic basis.

Investors will have to pay for that convenience, however. Including fee
waivers, expenses for Class A shares of the three new Seligman funds are
1.09%, for example, with a maximum sales charge or "load" of 4.75%,
according to the prospectus. The average expense ratio for a U.S.-listed
ETF is 0.42%, according to investment research firm Morningstar Inc.

Mortgage Commentary

-- 10-year Treasury yield, a major reference for the mortgage market,
reached a 6-month high of 4.5% this week.

-- The average rate paid on a 30-year loan this week was 6.03%, up
from last week's 5.98%, and the highest since hitting 6.04% in the week
ended March 31. The rate has been up for five weeks without pause. Last
year at this time, the popular 30-year fixed rate averaged 5.74%.

-- The average paid for a 15-year loan this week was 5.62%, up from
last week's 5.54% and last year's 5.14%.

-- The 5-year Treasury-indexed hybrid adjustable-rate mortgage, or
ARM, averaged 5.57% this week, up from last week when it averaged 5.48%.

-- One-year Treasury-indexed ARMs averaged 4.85%. That compares to
4.77% a week ago and rates near 4% a year ago.

-- To achieve these mortgage rates this week, the 30-year, 15-year and
one-year loans required the payment of an average 0.6 point; the 5-year
hybrid ARM required 0.7 point [A point equals 1% of the loan amount,
charged as prepaid interest].

[source: Freddie Mac's weekly report]

Title Insurance

"Title Insurance" is a topic hardly any homeowner or potential buyer is
aware of, even though they pay or are bound to pay the cost for it. Most
property owners think title insurance is just one of those expensive closing
costs and nothing really ever comes back from it. Some people do not
even know 'What does it insure for'.

There are two types of title insurance policies:
(A) Lender's Title Insurance: Almost every institutional mortgage lender
needs lender's title insurance policy. The buyer (and occasionally the
home seller) usually pays for this policy. A lender's title insurance policy
protects the lender against title losses due to forged signatures (the
biggest cause of title insurance losses), recording mistakes, errors in deed
indexing, unpaid property taxes and other recorded liens, improper
foreclosures, title search mistakes, undisclosed easements and title claims
by heirs and ex-spouses. So, it protects the lender not the homeowner.

(B) Homeowner's Title Insurance: The homeowner's equity up to the policy
limit of the purchase price for can be insured by an extra one-time
premium. This insures homeowners and the owner's heirs from loss of
equity against most of the common causes of title losses as described
above. At the time of home purchase, this equity (basically your
down-payment) may not be much. However, as time passes by, mortgage
balance is paid down and the homeowner's title protection grows as the
lender's title coverage reduces.

You may not find anyone you know who got something back from this
insurance. According to a report from The American Land Title Association
in Washington, D.C., the title insurance companies pay less than 10% of
title insurance premiums collected for title claims, which is no doubt a
shockingly low pay back. The reason they provide is that the insurers
spend most of the premiums on background research on the title before
issuing policies. However, there is no doubt that some serious cases of title
losses cannot be prevented and that is why this insurance is a necessity.
For example, "Forging signature by collaborating with some corrupt
notary public by some close relative or partner to sell a house without
letting the owner know" is not an uncommon case. In such cases, the title
insurer must pay the forgery loss claim.

ADR: Foreign Investment

It is a good practice to own some foreign stocks thus lowering your risk
with diversification and increasing your return. Investors still need to do
their homework well on any country and company in which they wish to
invest. However, ready access to such research is sometimes very hard to
get. Lower dollar in recent months have been favorable for some of the
stocks, but if the dollar starts strengthening itself for an extended period,
investors may find themselves in troubled water.

American Depository Receipts (ADR) have been a popular investment
tool in recent months. The bulk of these listings are from Europe, though
emerging markets are increasing in representation. ADRs from China and
India have been very popular and successful investments. We can tell
you so many names which have consistently produced good return, but,
as we know, we always hesitate several times before investing in any
individual stock.

If you think it is too tough to do research and keep track of these foreign
companies, our suggestion is to go with one of the Exchange-Traded
Funds (ETF) that track U.S. ADRs. The BLDRS funds, offered by
Nasdaq and the Bank of New York, include BLDRS Emerging Markets
50 ADR Index (ADRE) , BLDRS Developed Markets 100 ADR Index
(ADRD) , BLDRS Europe 100 ADR Index (ADRU) or the BLDRS Asia
50 ADR Index (ADRA).

Life-Cycle Mutual Funds

Target retirement funds, also known as life-cycle or target maturity funds,
take less risk with stocks and add conservative bonds as an investor nears
retirement. In retirement, these funds give greater prominence to income-
producing bonds. If a bad bear market hit the year before you retired (for
example in 2000), if you were in a target retirement fund, your asset
allocation to equities would have been greatly reduced. This provides a
cushion for your nest-egg. For those within a decade or so of retirement,
the stock-bond percentage generally would be closer to 60-40. The stock
portion gradually declines to about 20% over a 30-year span after retirement.

Workers who aren't participating in employer-sponsored retirement plans
say they'd be more likely to contribute to an investment vehicle that
automatically becomes more conservative as they approach retirement.
Accordingly, U.S. fund companies such as Fidelity Investments, T. Rowe
Price Group, the Vanguard Group and Charles Schwab & Co., among
others, have launched versions of the life-cycle strategy. Nowadays the
earliest retirement funds mature in 2010, with others offered in 5- or 10-
year increments up to 2045. Various 529 programs (for college funds) also
offer such schemes in order to ensure availability of money at the time of
college years.

Target retirement funds are so-called fund of funds, which invest in
several of the sponsoring firm's stock and bond portfolios. The funds
maximize capital appreciation for investors with long horizons until
retirement, while income is emphasized for older investors. While most of
these funds are not much more than a year old and performance records
are short, they've been generally well-received.

Foreign Exchange Rate

If you are going abroad, here are 6 tips for getting good exchange rates
for dollar:

First for credit cards and checks:
Tip 1: Before you go abroad, check out what fees your credit-card
company will charge you for international transactions.
Tip 2: For traveler's checks, try to exchange them at a branch of the
bank that issued them.
Tip 3: Check the back of your ATM card or credit card for symbols of
international ATM network companies like Cirrus and Plus. If those are
on your card, then your cards will be accepted at their international
ATM networks. You can get very good exchange rates --sometimes even
the best rates -- simply using your credit card or debit card.

Then for actual Forex dealing to be done by you:
Tip 4: Foreign exchange dealers in USA tend to charge more than those in
other countries. So, it is better to make most of your exchanges at your
destination country.
Tip 5: Change only enough money for your immediate expenses (i.e. taxi
fare, coffee and snack, tips, etc) either in USA or at your port of entry to
the country you are visiting. Some of the worst exchange rates are usually
found at airport and train-station booths.
Tip 6: The best rates are usually found at banks and post offices. For
example, in France, you will get the best rate with almost no exchange fee
at La Poste. The worst are hotels and the "tourist" exchange bureaus found
on every street of Europe.

Mortgage Commentary

-- Average 30-year fixed mortgage rates are at their highest in six
months, almost touching the 6% area, according to the latest survey from
Freddie Mac. It rose for a 4th week without a pause to 5.98% this week.
Last year at this time, 30-year rates were averaging 5.82%.

-- The average for a 15-year fixed loan was 5.54% this week, up from
last week when it averaged 5.48%. A year ago, the 15-year loan rate
averaged 5.24%.

-- Five-year, Treasury-indexed hybrid ARMs (Adjustable Rate
Mortgage) averaged 5.48%, up from last week, when it averaged 5.44%.

-- One-year, Treasury-indexed ARMs averaged 4.77% this week, up
from last week when it averaged 4.68%. At this time last year, it averaged
4.08%.

--The above rates for 30-year and 15-year loans required the payment of
an average 0.5 point; the ARMs required 0.6 point [A point equals 1% of
the loan amount, charged as prepaid interest].

Second Home Investment

Before the changes in the rules of capital gains, many people did not
purchase a second home until they had sold their primary home. That
was the rule of the day. That's the way they could roll over any gain and
avoid a high tax bill. The changes in capital gain taxes now allow couples
to pocket a $500,000 gain (For singles, it is just the half - $250,000) on
that primary home.

If you want a place to vacation in now and move to later, try to locate a
well-populated area with good healthcare facilities and a job market and
also a good school district. You may not need the last criteria for your
retired life but a good school district is always associated with greater
appreciation of your home value.. Also, if you choose an income-tax free
state, that can put about 10% of your income back to your pocket after
you move.

Last tip: If you live in your second home at least 2 of the last 5 years, you
will again be able to get the same capital gain tax break if you wish to sell.
These 2 years need not be consecutive. For example, you could live in
your house for a year, rent it for two, move back in for another year and
rent it again the year before you sell and qualify for the tax break.

Best Credit Cards

On Monday ConsumerReports.org, the nonprofit,
independent consumer group has issued a list of
10 most consumer-friendly credit cards:


1) Platinum MasterCard, issued by Town North, 877-866-2265
2) Visa Platinum, issued by First Tennessee, 800-234-2840
3) Visa Gold, issued by Pulaski, 800-217-7715
4) Visa Platinum, issued by Simmons First National, 877-245-1234
5) Target Visa, issued by Target National, 877-474-8378
6) Visa Platinum, issued by BB&T, 800-476-4228
7) Platinum MasterCard, issued by Franklin Templeton Bank & Trust,
800-238-2761
8) Visa Platinum, issued by RBC Centura, 800-236-8872
9) Visa Platinum, issued by Commerce, 888-751-9000
10) Visa Platinum, issued by Zions, 800-789-8800

These cards are good to keep in your wallet because their issuers don't
employ universal default policies and don't charge balance transfer fees.
These cards also have a grace period of at least 25 days and don't charge
an annual fee, according to the study.

These cards also offer other favorable terms than many other cards. They
offer introductory rates ranging from zero to 3.9%. After the introductory
period ends, those rates are followed by regular rate ranging from 7.99%
for the No. 1 card listed, to 11.5% for No. 10 card on the list. (Note that
these terms are offered only to card-holders with high credit scores.). As
far as the sensitive question of late fee is concerned, the Commerce card
(No. 9) charges no late fee at all, and the Town North card (No. 1) charges
a late fee of just $15, whereas some others among them charge $35.

Inflation Linked Investment

As of August 2005 the inflation rate (for unadjusted 12 months) is 3.6%.
Inflation is defined as a sustained rise in the general level of prices of
consumer goods and services and is measured by the non-seasonally
adjusted Consumer Price Index (CPI) for All Urban Consumers. The CPI
is a good measure of inflation as experienced by consumers in their day to
day living expenses and is often referred to as the cost-of-living index.
For getting additional information about the Consumer Price Index, visit
the website of U.S. Department of Labor .

In an inflationary environment, today’s dollar may be worth only a fraction
of a dollar next year. Inflation poses a problem for all investors, including
holders of fixed-income investments, because the effects of inflation can
erode the real value and purchasing power of coupon payments received
in the future. To illustrate, it takes $12,746 in 2004 to buy what could be
purchased for only $10,000 in 1994.

For investors who rely on the stability and predictability of fixed-income
investing, finding ways to limit or mitigate the effects of inflation are
crucial. It’s clear from the example above that investors who are saving
for some future expenditure, be it a major purchase or living expenses in
retirement, could benefit from an investment that preserved purchasing
power. Individuals already in retirement are keenly aware of the effect of
inflation on the fixed payments generated by many investments.

An investment with coupon payments linked to changes in the CPI can
help investors maintain the same standard of living even as prices rise. In
fact, any investor with a well thought out asset allocation strategy would
be wise to consider adding inflation-linked investments to their portfolio.
Such investments provide diversification benefits when combined with
equity and fixed-income investments and also help to offset the negative
effect inflation can have on other asset classes.