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November 16, 2007
Debunking four financial fallacies
People have enough money trouble without these “four financial myths,” says Marshall Loeb in MarketWatch. So, four corrections: First, its no longer best to park your money in the local “brick-and-mortar” bank. Many “online savings/money accounts” offer 5 percent annual returns, rather than the local branch’s 0.2 percent. Second, don’t save for your kid’s college education rather than your retirement—there are many more options for funding college. Third, you always earn enough to save. And fourth, “overdraft protection” won’t save you from your bank’s “overdraft fees,” which earned banks $17 billion last year. “Wouldn’t you rather put that money in savings?”
Overestimating the A-Rod market
In the end, Alex Rodriguez was “simply not worth” more than $30 million a season, says Tom Van Riper in Forbes.com, “despite being the best player in baseball.” Super agent Scot Boras thought teams would jump at a $350 million, 10-year contract, but the Yankees got A-Rod for an essentially flat $275 million—and only after “Rodriguez ditched Boras’ counsel.” Why the “shocking” lack of offers? First, baseball teams “just don’t win championships” by throwing that much at one player. And second, only the Yankees and the Red Sox could really afford him, and “neither need an ‘icon’ to put meat in the seats.”
of The Week magazine.