ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, April 15, 1996 TAG: 9604160030
SECTION: MONEY PAGE: 6 EDITION: METRO
COLUMN: money matters
SOURCE: MAG POFF
Q: I would like to know the difference between a credit union and a bank. What are the pros and cons? We have money in a credit union, and I wonder if we should switch to a bank.
A: There are three kinds of financial institutions that accept consumers' deposits: banks, thrifts (called savings banks or savings and loan associations) and credit unions.
Accounts in all of them are insured by federal agencies up to $100,000. Your deposits are equally safe in any of the three types of institutions.
At one time, these institutions acted in completely different ways. Since 1986, however, the three types have come more and more to resemble each other. In other words, thrifts and credit unions are behaving more like banks.
Banks traditionally have served both consumers and commercial customers. They take deposits, make all kinds of loans and serve a variety of financial needs. Most of them have trust departments and sell a wide array of uninsured products such as mutual funds and annuities. Most banks are publicly traded companies owned by stockholders.
Thrifts in the past took savings deposits and made home mortgage loans. Many of them still largely operate that way, but now most of them also offer checking accounts and make consumer installment loans. They used to be owned by their customers, but the majority have converted into stock companies.
Credit unions are owned by their members, who also are their customers. What sets them apart is that they are supposed to serve specific groups, such as the employees of a company or the members of a church. They are closed to the public at large, even though some large credit unions have thousands of members. The bigger credit unions offer such services as checking accounts, but the smaller ones just take savings deposits and grant installment loans to members.
Safety is not an issue. You should be guided by the type of services you need, the convenience you find and such factors as loan and deposit interest rates.
Calling on union
for help with pension
Q: A friend of mine worked full time at A&P with more than 25 years of service. A&P later closed.
When she went to get her retirement pension from A&P, they told her she was only part time, even though she has the papers to prove otherwise. She is living off $500 a month in Social Security. How can she get in touch with the union to help her?
A: The Retail Clerks' union represented most workers of The Great Atlantic & Pacific Tea Co. when the supermarket chain operated in this area, while the Meat Cutters' union represented its butchers.
The Retail Clerks' union later merged with the United Food and Commercial Workers Union, which still represents area employees of The Kroger Co. You can get in touch with Local 400 of the United Food and Commercial Workers Union in Roanoke by calling 562-1925.
How to hook up with
an investment club
Q: I'm interested in getting in touch with a local investment club. How do I go about it?
A: Marie Flynn, spokeswoman for the Central Virginia Council of the National Association of Investors in Richmond, said neither the Virginia group nor the national organization is willing to match people with investors clubs. She said the Securities and Exchange Commission considers investment clubs to be small mutual funds. Matching investors with funds without issuing a prospectus is a violation of the law. The organizations are also leery of the potential legal liability involved in such an activity.
In any case, many investment clubs are made up of acquaintances and are closed to the general public.
Unless you know similar investors through social or civic contacts, your best course may be to start your own investment club among your acquaintances. The state and national organizations can provide you with materials about forming such a group.
You can leave your number on the recorded line that also provides news of the chapter's activities. The number is (804) 756-8084. Some Roanokers do attend events sponsored by the Richmond group.
You can also get help from the National Association of Investors Corp, 711 West 13-Mile Road, Madison Heights, Mich. 48071. Or you can call the organization at (810) 583-6242.
Investment clubs can help their members learn about investing in the market. The procedures also show you how to study a company and force you to undertake that exercise. Pooling your money can help you to diversify and spread your risk.
But be aware that club members sometimes disagree on investment philosophy so that many clubs break up each year. You also must keep careful records of stock performance and the investment of the various members. Try to find people who agree with you on the level of risk or aggressiveness you are willing to accept.
LENGTH: Medium: 93 linesby CNB