A: This is going to surprise you. In Michigan, you can become a legal, registered investment adviser just by filling out a form, proving to the state Securities Division that you’re solvent and paying $150. You’ll find the application at cis.state.mi.us.
You wouldn’t be allowed to hold and manage money, but you could charge for your advice. If you don’t charge, you don’t have to register at all. Look at all the free advisers on the Web. They shoot off their mouths about stocks, and the only thing “certified” about them may be their mental state. (Users of advice, take note.)
For some training, consider the correspondence courses offered by the College for Financial Planning in Greenwood Village, Colo. Enrollment costs $2,195 (fp.edu or 800-237-9990).
Q: I’m getting married next summer, and unfortunately am bringing with me a credit history that couldn’t be much worse. My fiance has an unblemished history and thinks my credit will be fixed once it joins his. I think my rating will bring his down. Who’s right? Jan, Baltimore
A: Lucky for me, I can offer an evenhanded answer to this first public tiff of your premarital life. Neither of you is right. Your credit won’t improve just because you marry someone who always pays. His credit won’t go bad just because he’s marrying you.
Credit bureaus maintain separate credit histories for husbands and wives, according to Maxine Sweet of Experian. Your loving man should have no trouble with future credit as long as he applies for it in his name alone. But if you apply as a couple for a mortgage or credit card, the lender will hate your half of the record. You may be turned down or forced to pay higher interest rates. Best advice: make timely payments on your personal debt for the next several years. Eventually your credit will smell good again.
Q: I’m a college student, 21, and already thinking about funding my retirement. During the summer I usually earn about $4,500, but I don’t work during school. I’ve heard some good things about Roth IRAs. How do they work, and do you think they’re a good option for me? Alexander Garbe, Rockford, Ill.
A: You get a big YES, if you truly think you can leave the account alone. Are you sure you won’t have any college expenses? Sure you won’t need this money after school, before you find a job? Sure you can save separately for marriage and family? Silly questions, really. You can’t be sure. So it never hurts to have some ready savings on hand, says planner Thomas Muldowney, head of Savant Capital Management in Rockford. A lot of life’s problems can be sidestepped with the help of a stash of cash.
That said, a Roth IRA has some pluses:
You can set up a Roth IRA with any mutual-fund group. For more information, check out rothira.com.
Q: I’d like to know your opinion about investing in trust deeds. The returns look pretty good: 9 to 12 percent. There’s very low risk, because the investment is secured by property. K. Cliff Maldonado, Bellflower, Calif.
A: Wow, you think trust deeds are low risk? Sorry–there are no free baloney sandwiches here. High rates always tell the truth.
A trust deed is a loan against real estate. In other states, you’d call it a mortgage. You lend to the property owner, who makes monthly payments. Fat and happy, you say to yourself, “The worst thing that can happen is that the owner doesn’t pay and I get the property.”
Wrong, wrong, wrong, says John Reed, editor of the Real Estate Investor’s Monthly in Alamo, Calif. The worst thing that can happen is that the debtor quits paying, you don’t get the property and you spend tens of thousands of dollars on lawyer’s fees before givingup. The debtor might save the property in a bankruptcy action. In foreclosure, there might not be enough equity to cover your loan.
William Mencarow, an expert on real-estate notes, says he’d invest only in properties worth at least 20 percent more than the loans against it plus expenses (such as insurance) plus potential expenses, such as foreclosure. This game is more complex than you think.
Send questions, with your phone number, to Jane Bryant Quinn, NEWSWEEK Focus: On Your Money, 251 West 57th Street, New York, N.Y., 10019, or jbq@NEWSWEEK.com. Letters are answered only in the column.
