Oddball Update

By now, most Americans are intimately familiar with the “credit crisis” that’s affected our lives in a myriad of ways, from losses on the stock market to difficulty in getting a loan. Lately I’ve been passively listening to the Clark Howard Show on local radio, a talk show about money management, consumer protection and other such topics. Normally I find such topics massively monotonous, which has kept me from ever listening to such radio shows simply on principle. Once I started hearing some of Clark Howard’s show, quite by accident in fact, I’ve realized that it can be somewhat enlightening.

It was during the Clark Howard Show this afternoon that I heard a news bite about the ongoing meltdown in auction rate securities, and how tons of people are losing their shirts after investing in what they thought were only slightly-higher risk funds — funds that were billed by investment firms as safe places to park some money for a few months. Ironically, I recently did a little contract work for a local law firm here in town whose specialty is the Charles Schwab YieldPlus Fund and the bath its investors have taken lately.

The Schwab YieldPlus fund is like the poster child for investment disasters on this scale. It’s apparently fell over 20% in the first quarter of 2008 alone, which was four times more than the NASDAQ fell during the same period. As a result, a variety of law firms have sprung up around the country to tackle cases of fraud that a number of investors are starting to bring against Charles Schwab over the YieldPlus Fund fiasco.

It’s been a long time since I did much investing. My grandfather was a bit of a stock market wiz, to the point where he would routinely become irritated with brokers who knew less than he did, and he commonly made his own buying decisions. I have to admit, I owe a lot to my grandfather’s financial wisdom. My wife and I have taken a conservative approach by comparison; other than our retirement accounts, which are comprised mostly of globally diversified long-term growth funds and contributed to each year, we keep our liquid assets in a variety of old-fashioned savings accounts. It’s not quite “cash box chained to the bedpost,” but it’s not far removed.

At my previous job, several of the guys were big-time day traders. Some of them made a fair amount of money doing that. Regardless of the potential benefits, that kind of thing is just not my bag. In the end, I’m more content to have a long-term retirement account and then a stable account with money that I’m sure will be there if I need it. It may not be terribly “high yield,” but at least it’s not going to turn into a Schwab YieldPlus style meltdown.

Tagged as money, Schwab YieldPlus + Categorized as Headlines, Life