A firm's weak stock isn't always bad for its bonds

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Q: When auto stocks are not recommended, what about investing in an individual auto bond from a firm like General Motors? A broker recently grew impatient with me when I did not readily accept his invitation to invest in such a bond. I thought the view of stocks should probably apply to bonds as well. Was I correct?
V.S., Seattle

A: Stocks and bonds need to be examined on their separate merits, says Chris Mahony, head of the taxable fixed income (bond) team for mutual-fund firm J.& W. Seligman in New York.

For starters, stock and bond analysts look for different fundamentals, regarding both the specific instruments and the overall economy.

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"A booming economy may be great for a stock, for example, but could lead to higher interest rates, which is bad news for bonds, since they could lower their value," Mr. Mahony says. "Always look at stocks and bonds separately," he emphasizes.

Q: I was convicted of a number of crimes and am currently serving a prison sentence. Will my convictions appear on my wife's credit report? I am concerned about her getting credit. She has never been convicted of any crime.
D.V., Boston

A: No. "Criminal records do not appear on credit reports," says Rod Griffin, an official at the credit-reporting firm Experian.

Court judgments regarding money obligations, however, do appear, so if there was a joint judgment that included her it would appear on her report, he says.

Q: My wife does contract work from our home. We considered writing off a percentage of the value of our house as a business expense. How do I determine how much I can write off each month? What are the financial advantages and disadvantages?
C.S., Lakeville, Mass.

A: To see if you qualify for the write-off, check IRS publication 587, "Business Use of Your Home." The IRS walks you through a deduction formula.

You may be able to allocate part of your mortgage interest, property taxes, and casualty losses to business expenses, according to J.K. Lasser's "Investment Tax Guide (2002)."

You may also be able to partly deduct depreciation, insurance, utilities, and repairs. Advantage: a lower total tax bite. Possible disadvantage: When you take an allowance for depreciation, you must lower the cost basis on your home. You would not be able to exclude the depreciated portion from capital-gains taxes. You must also keep good records.

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