Motley Fool reporting that load funds underperform no-load funds

The Motley Fool reports in the article Don't Touch These With a Ten Foot Pole that :

"It turns out that load funds consistently underperform no-load funds, even when you back out fees."

Loaded funds are mutual funds that have a commission to buy them up front. So you have to pay a percent of the investment to the broker just to get into the fund. Because there is such a commission they are start with a negative return that you have to dig out from. Its no surprise then that loaded funds would have a disadvantage versus the no-load funds without a commission charge. But what is interesting is that Motley Fool is reporting that research shows that the loaded funds underperform no-load funds even when you take out the impact of the load fee.

So in short.. Stay away from loaded funds.

GPS navigation for your car saves time and money.

Recently I spent a week in Hawaii on the big island with my new wife on our honeymoon. We had a great time. Somewhat surprisingly one of the things that really helped make the trip more enjoyable was my TomTom GPS navigation unit. I bought a basic TomTom One unit around Thanksgiving last year on sale for $150. We used it a lot in Hawaii to get around and it really made things easier for us. We didn't have to worry about getting lost, it was easy to find places and we saved lots of time and money.

I'd recommend getting a cheap portable GPS navigation unit like mine. Ours is pretty basic but it has full street maps of the US, plus there are tons of restaurants, gas stations and other points of interest all ready in it and it works just fine. Bestbuy has around a dozen portable GPS navigation models on sale right now for under $200. Amazon carries a lot of GPS navigation units too. Newegg.com has a variety of GPS navigators as well with some as low as $90.

I've been quite happy with the TomTom. Amazon also has the TomTom ONE for $150 right now. There are some variations on the TomTom models. I'd assume they're pretty similar but you should compare to make sure.

If you do look for a unit then I'd recommend making sure you have one with extensive built in maps, the ability to update the maps, voice prompting (to keep your eyes on the road) and built in POIs (point of interest).

I think its easy to see that a GPS navigation unit saves you time. With one you spend less time looking up places with maps or calling around for directions. Plus it can save you time you might waste if you take a wrong turn or otherwise get lost.

A GPS navigator can also save you some money. Using an indirect route or getting lost will end up costing you extra gas. I remember once getting lost going to a relatives lake cabin and I literally spend over an hour driving around in circles trying to find it. I must have wasted several gallons of gas. While that's not a typical situation, I'm certain my GPS is saving me small amounts of gas here and there when I'm in unfamiliar areas. Another way GPS can save you money is by making you aware of cheaper options for food, lodging, gas or the like. For example if you're on vacation and in a hotel with an expensive restaurant then you may end up spending more money there, but if you have a GPS with a list of nearby restaurants then this opens up your options to look for more practical, less expensive dining.

A portable GPS navigator has the extra benefit that you can take it along with you. We easily toted ours along on vacation and used it in the rental car. With two cars my wife and I can share the one unit and use it in either car as needed.

Overall the convenience and time savings with a GPS navigator are its main benefit. I'd recommend getting a GPS unit for the convenience alone. But it can also save you some cash as well in unwasted gas costs. For us it really did make our vacation more enjoyable.

Return of premium term life insurance - Is it a good deal?

Return of Premium term life insurance is a form of term life insurance that promises to pay you back the premiums at the end of the term. This sounds almost too good to be true as if you're getting the insurance for free. Say you sign up for a 20 year return of premium term policy and pay $50 a month for the policy the whole 20 years. Then at the end of 20 years (assuming you didn't die) you'd be paid the $50 x 12 months x 20 years = $12,000.

Like most things that seem too good to be true there is often a catch. In this case the catch is basically just that return of premium policies have a higher fee than a standard term policy and while you're paying the insurance company premiums for years they are making interest on your money.

For sake of comparison, I got a quote on a term policy for 20 years. The standard term rate was $32 a month and the return of premium rate was $72 per month. That's a $40 difference per month or $480 per year. Lets compare the 2 options:

Standard term insurance: You pay $32 a month and get term insurance for 20 years. You take another $40 and put it in the bank at 6% interest. At the end of 20 years you would have $17,657 in the bank.

Return of premium term insurance: You pay $72 a month for your policy. At the end of 20 years the insurance company refunds $72 x 12 x 20 = $17,280

If you can make 6% or better on your investment then you would come out ahead with the standard term policy. Plus you would also have ready access to your money.

It appears to me that a return of premium term life insurance is not a good idea. Generally if something seems to good to be true then it probably is.

Term versus permanent life insurance : Which is best?

First of all what are term life and permanent life? Simply speaking term life insurance is insurance that covers a set period of time between typically 1 and 30 years. Permanent life insurance is structured to cover your entire life. A big difference between the two is that permanent life insurance such as whole life or universal life have a cash investment mechanism by which you save money into an account via your insurance. Term life insurance is just insurance and has no investment system.

Here is a Matrix comparing the insurance options.

Lets look at what other sources say about these two options:

Smartmoney compares Term or Whole life? and they say : "FOR MOST PEOPLE, the right type of life insurance can be summed up in a single word: term"

MSN Money has an article "The Debate over Term versus Permanent Life Insurance" and they say: " If the answer is less than 10 years, term is clearly the solution.If it is more than 20 years, permanent life is probably the way to go."

Suze Orman discusses life insurance at "Don't Let the Kind of Life Insurance You Buy Kill You" and says: "In my opinion, level term insurance is usually the best way to go for the vast majority of people."

Dave Ramsey talks about "The Truth about Life Insurance" and he concludes with: "Don't do cash value insurance! Buy term and invest the difference."


So Smartmoney, Suze and Ramsey all say that term insurance is the better option. MSN Money says it matters on how long you have the policy.

I'm going to agree with Smartmoney, Suze & Ramsey on this one. Personally I believe that term insurance is your best option in general. Permanent insurance only provides a savings account in addition to the insurance coverage and the returns are hard to figure and generally beaten by standard retirement investments in mutual funds.