Personal Finance Q & A

hot stock tip? let the reader beware

Q Each year at this time we're deluged with newspaper and magazine articles telling us to buy certain mutual funds or stocks, so that we can make "big profits" in the year ahead. Yet, the articles seldom mention the same investments. How can we make certain we've got the right investment plan and the right investments?

- M.S., New York

A "Use these articles as background material," but don't rush out to buy a hot mutual fund or stock just because some media source expects it to outperform all other investments, says James Fraser, of Fraser Management Associates in Burlington, Vt.

Many of these listings are really about "past performance," not future potential, he says. They involve investments that have been hot in recent months, such as Internet stocks.

"As an investor, you have to be grounded and have a sense of self, of what you want to accomplish with your investments," says Mr. Fraser. "You need a [long-range] plan" based on your individual goals.

He suggests you look for investments that match your investment plan that have solid fundamentals, including "a decent past record," but that may not have "exploded out yet."

Q A close relative is listed along with me as co-owner on a number of US savings bonds. Can either of us cash the bonds without the permission of the other person? What happens if one of us dies?

- Name withheld, Seattle

A It's important to be on "friendly terms" with your co-owner, when jointly listed on a US savings bond, laughs Daniel Pederson, author of "Savings Bonds."

Either co-owner can cash in the bonds without the other's consent.

Co-owners own the bonds equally, he says, although the "real power" may belong to the person who has physical possession of the bonds.

In the event of the death of either co-owner, the surviving party becomes the sole owner.

The survivor can also ask Uncle Sam to reissue a substitute bond to replace the old bond, removing the name of the deceased party and listing the survivor's name, along with a new co-owner or beneficiary, if desired.

There is no tax due on interest earnings at the time a substitute bond is issued, Mr. Pederson says.

Questions about finances? Write:

Guy Halverson

The Christian Science Monitor

500 Fifth Ave., Suite 1845

New York, NY 10110

E-mail: halversong@csps.com