Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, October 18, 1993 TAG: 9310160015
SECTION: MONEY PAGE: A-10 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Medium
What I need to know is what is the best mutual fund I can invest in that will allow monthly income from interest, and the minimum amount that can be invested.
I am a member of the American Association of Retired Persons, and I am considering their Ginnie Mae fund. How do I find out how safe this investment is?
A: A Ginnie Mae fund is considered a very conservative investment. The shares of the fund can change in value, going down as well as up, but should not be volatile.
A Ginnie Mae fund invests in pools of home mortgages. Although the fund itself is not insured, an agency created by the federal government insures the underlying mortgages. It sees that principal and interest on the mortgages are paid in a timely manner.
Business Week's "Guide to Mutual Funds" rates the AARP Ginnie Mae and Treasury fund at two stars or "very good." The top rating is three stars.
You also can check Morningstar's guide to mutual funds at the public library. It provides information on virtually all mutual funds. With mutual funds, the idea is to look for a solid performance over time, not top performance in any single year. Usually, last year's high flyer is this year's dog.
Law soon to apply to credit unions
Q: Why are credit unions apparently exempt from the Truth in Savings law that became effective in July?
I recently received a statement from my credit union which did not give me credit for money withdrawn in mid-September.
It is my understanding that in accordance with the provisions of the Truth in Savings Act, I should have received interest for the withdrawn amount for the months of July and August.
A: Many credit unions follow the practice of paying interest only on the lowest balance during a calendar quarter. That is presumably the policy of your credit union. Thus, when you withdrew money in September, you lost interest for July and August, as well.
Virtually all banks, on the other hand, long have followed the practice of paying interest on money while it is actually in the bank.
Credit unions had the political clout to have themselves exempted from the record-keeping burdens of the law that now covers banks and thrifts.
That privilege is ending, however.
The National Credit Union Administration voted last month to apply the act to credit unions. They thus will come under all of the act's provisions, including payment of interest on all money on deposit.
The catch is that this provision will not become mandatory until Jan. 1, 1995. That's to give credit unions time to bring their data processing systems into compliance, a big job.
Meanwhile, credit unions have the option of complying with the new standards at any time between now and 1995.
One thing to remember is that credit unions, unlike banks, are owned by their members, who elect a board to run the institution. Credit unions are supposed to be democracies, and their policies are set by the members to whom they apply.
Your remedy lies with the board of your credit union. Tell the board members that you believe the credit union should comply with the Truth in Savings law - or at least that provision of it - as soon as possible.
Mag Poff will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke 24010.
by CNB