Feature

What the experts say

Buy the stock, not the commodity; Ditch your bonds?; Last chance for tax cheats

Buy the stock, not the commodity
Commodities are “suddenly all the rage,” and for good reason, said James K. Glassman in Kiplinger’s Personal Finance. Not only do commodities march to a different drummer than stocks and bonds, global demand for natural resources is “booming.” But while exchange-traded funds have made it “easier than ever” to buy these once “exotic” investments, there’s a better way to own commodities: Buy stocks with close ties to them. After all, “the best natural-resources firms allow you to invest not just in things but also in brains.” Instead of speculating on oil, buy shares in, say, ConocoPhillips. Like minerals? Check out Freeport-McMoRan Copper & Gold. And if you “insist” on buying a basket of commodities, avoid any index of raw goods and opt instead for a mutual fund that buys commodity-related stocks, such as Fidelity Select Natural Resources.

Ditch your bonds?
For decades, it’s been “investing gospel” that every portfolio needs at least a smattering of bonds, said Jilian Mincer in SmartMoney. Now many experts “aren’t so sure.” Fearing “rising interest rates, inflation, and credit defaults—all of which are threatening to send the bond market tumbling,” some advisers have even yanked every last bond out of clients’ portfolios. Not everyone is anti-bonds. Plenty of folks insist they add “ballast” to portfolios. Optimists see the “maligned bond market” as an opportunity to score higher yields, particularly in municipal bonds.

Last chance for tax cheats
Uncle Sam recently gave tax evaders yet another ultimatum: Come clean about illegal offshore accounts by the end of August and you’ll enjoy a break on penalties and a get-out-of-jail-free card, said Blake Ellis in CNNMoney.com. In 2009 the IRS made a similar offer and “reeled in 15,000 taxpayers” who had “undisclosed overseas accounts at banks in more than 60 countries.” This time around, tax cheats may need to pay penalties up to 25 percent of their highest account balance going back to 2003—as well as back taxes, interest, and late charges. That’s more than they would have paid in ’09. But, says IRS Commissioner Doug Shulman, it’s also the “last, best chance” for evaders to come clean before the feds try to send them to the clink.

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