Should you stop contributing to your 401(k) or other retirement account and sell everything you've got? That's a question that Clark hears from people multiple times a day.

Barron's recently ran a story comparing our current market situation to the 1930s. These kinds of stories create anxiety that is not necessarily a bad thing when it comes to investing. During the last 20 or 30 years, we'd gotten to a place where we practically expected that money will grow if you just pop it in the market. This is now the first time many investors are experiencing rough seas.

Retirees are particularly scared about their holdings declining before their eyes. So many people at the studio have asked Clark to talk to their elderly parents and set their minds at ease. Clark's own mother-in-law even calls him a Pollyanna!

If you're still in the working years, the antidote for anxiety is simple. Stop trying to figure out if we've hit the bottom and stop trying to find safe havens for your money.

As an aside, Clark says the speed with which oil and gas prices have declined is actually a negative indicator. It may feel good when we fill up at the pump, but the decline is not for a good reason. A good reason would be that we have a new economical method to fuel our vehicles, and he still believes this will happen.

So why would the penny-pincher still encourage you to put money into your retirement plan month-by-month and paycheck-by-paycheck? Even in the darkest days of the '30s, people who continued contributing eventually made big money. They simply bought more shares at lower prices.

One tip for our older listeners who have retired: Do not sell out all your holdings. If you are truly worried, try doing reverse dollar cost averaging. That's where you take out a little money each month. By still leaving the bulk of your money in the market, you won't miss the recovery. But you will lower your exposure in increments and that may give you some psychological peace.

It's very likely that the Nov. 4 election results mean we'll see higher taxes for people who make $100,000 or more. So what do you do if you are fortunate enough to earn that kind of money? Where can you look for a safe harbor from potentially higher taxes?

There's phenomenal opportunity right now in tax-free municipal bonds -- which is where state or local governments issue a bond that comes with a lower rate of interest but your earnings are exempt from federal taxes. So even though the yield is lower, the tax-free status makes for a higher effective yield.

Clark recommends tax-free municipal bond funds instead of individual bond choices. That's because the buy/sell spread costs involved with the latter can be too high. Look for intermediate-term bond funds, which usually require a minimum investment of $3,000. And no big surprise here, but Clark thinks Vanguard is a great place to get into a tax-free municipal bond fund.

Still want to buy individual bonds? There are 2 main things to know. First, make sure the bond is not subject to alternative minimum tax (AMT). Second, you must know if the bond is "callable," which means that the state can cash you out prematurely even if you agreed to a longer term.

Finally, Clark believes there will be great opportunity in emerging markets and Third World countries. These funds have done horribly as of late, so that makes them an attractive option since you can buy low. Clark recommends having about 5% or 10% of your portfolio in the international realm.

Two months ago, the nearly unthinkable happened when the Reserve Fund "broke the buck" by devaluing shares below $1 within its family of money-market funds. What a shock that was to those who had traditionally thought of money-market funds as an ultra-safe place to park cash. For more on the background of this story, see the explanation Clark offered last month.

Now comes word that the Reserve Fund is giving back a mere 50 cents on the dollar. They may eventually pony up another 45 or 47 cents. So people will likely lose 3% or 5% on something that was supposed to be completely safe.

However, heed these words: Other than the Reserve Fund, your money is A-OK in most money-market funds. After all, they're now federally guaranteed. And with Ameriprise Financial, for example, they'll generally make up the 3 or 5 cents on a dollar that their customers lost on the Reserve Fund.

But there's no denying that the Reserve Fund's blunder took a psychological toll on investors. The important thing to know is that it's OK to get back on the horse.

Going back to May 2007, Clark went berserk about the Circuit City CEO who decided to fire experienced employees and managers in order to cut costs. Clark was outraged at the inhumane way the company treated loyal longtime employees.

It didn't take an analyst to see what the result of the move would be: Customers walked when they couldn't get any decent help in the stores. Now Circuit City is barely alive and Clark doesn't see how they'll get out of this jam. After all, many suppliers aren't shipping merchandise to them anymore -- because they know the company is on its last leg.

Retail is entirely self-cleansing. If you don't meet the needs of your customers, you cease to exist. Circuit City is simply getting what it deserves.

Remember, you're nothing without your employees. Businesses have to romance their workers, so that their workers will romance the customers. Managers should use specific individualized positive reinforcement when dealing with employees. Clark compares it to the process of raising a child; you've got to nurture, encourage, support and discipline that child with specific examples.

CLARKONOMICS: In past weeks, Clark told you how the world of money-market funds was rocked to its core when the Reserve Fund "broke the buck" by devaluing shares below $1. It was the first time ever in 28 years that a money-market fund made that misstep.

Great panic ensued among investors. After all, money-market funds have long been considered just about the safest place to stash cash. The Reserve Fund's blunder was tied up with the collapse of Lehman Brothers, which had been funneling the Fund's money-market dollars into some very goofy investments.

When investors got wind of what was going on, they tried to pull billions out all at once. That move effectively froze everything. To this date, customers have still only gotten back 97 cents on every dollar.

As the panic spread, people started pulling money out from other money-market funds like mad to the tune of one-half trillion dollars. So the feds initially put in place some temporary protection for money-market funds through September. That coverage has now been replaced with a new program to federally guarantee the funds through April.

Clark wants you to know that he has several money-market funds and did not make a single change through all the turmoil. The reality is that it was a fluke and he doesn't believe it's a signal that the very structure of money-market funds is unsound. So rest easy, America. You can feel OK putting your money back in.

Clark recently provoked heated listener response when he revealed his portfolio was down 3.8% for the year. Some thought he was lying through his teeth, while others thought he was lying about how his portfolio was invested.

Well, you wanted clarification, you got it.

The 3.8% figure was only through Aug. 31. Today, Clark pulled up his account again and saw…drum roll, please…that he was down 10.06% through October 8. Do you feel better now?

Many of you have asked for Clark to again detail his investments. Because of his age and income level, Clark has 37.5% in tax-free municipal bonds and bond funds. The other 62.5% of his money is divided out among big company stocks, small companies and international markets (Europe, Japan, Australia and New Zealand). The biggest hit he took over the year has been in his international holdings.

But consider this: If the average 401(k) is down 20%, why is Clark only down 10%? In a word, dollar cost averaging. Each month like clockwork, he buys more shares at a lower price. When the market recovers, his gains won't keep pace. But he reduces his risk by putting money in over time -- instead of all at one time.

Let's take this opportunity to get a little market perspective. Syndicated financial columnist Kathleen Pender reports that there have been 18 bear markets (defined as a 20% drop) since the modern market era started some 80 years ago. The average bear market decline has been 36% -- which is exactly where we're at right now.

Since the Great Depression, the market has fallen by 50% or more in 4 individual instances. Remember the last time that happened? It was in 2000-2002! That was just 6 years ago. So it's good to keep perspective. Clark believes we are much closer to the bottom than we might realize. You know you're bottoming out when everybody is afraid.

A recent AARP study found that 1 in 5 baby boomers have stopped contributing to their retirement accounts. People are losing their nerve in the face of the market as money evaporates right before their eyes. This is an understandable reaction and may even feel rational.

After all, we make financial decisions using a rearview mirror as a predictor of the future. During the "dot-bomb" era, the average American believed the market would climb 20% a year forever! But things eventually collapse back to true market value. Today, the NASDAQ for tech stocks is only at 36% of its peak. Some baby boomers have even had to continue to work because of bad bets in the dot-bomb era. Think how few of the '90s Internet-era companies survived.

When he jogs, Clark's wife calls him "the Turtle" because it looks like slow-motion video. Clark calls it "waddling" -- instead of running. Likewise, he waddles through financial life too; he's well diversified and he contributes every pay period -- in a word, dullsville. But he didn't get hurt by the dot-bomb fallout.

Those who swore off investing after the dot-bomb doldrums missed out on the recovery. They moved on to real estate, and we all know how that ended up. Today, Clark continues to invest exactly as he did before all the market turmoil of the recent weeks and months.

So you should know that human nature is at work conspiring against you when it comes to planning for retirement and investing. Yet the reality is that there's a better chance to make money today by getting into multiple investments than there was in the late '90s. You're missing out if you get out of the game. Now is the time to buy things extra cheap when nobody wants them.

The financial meltdown on Wall Street making big headlines today really began in earnest last summer. It was such a New York/Washington D.C. kind of story that you probably didn't pay attention to it unless you were involved in the financial sector.

About 10 days ago -- when mortgage underwriters Fannie Mae and Freddie Mac failed -- the general public started taking notice. There was some interest several months ago when Bear Stearns failed, but the Fannie/Freddie failure put the story over the top.

Now Lehman Brothers -- a legacy financial house -- has gone bust. If you had an account with them, there's no problem at all. Your holdings will simply be transferred to another company. As a result of the Lehman crash, the government decided to make $200 billion available to aid Wall Street as it unwinds from the damage.

In related news, Merrill Lynch -- with its $2.5 trillion in assets -- will be taken over by Bank of America. That makes BoA the largest investment house in the world; the largest consumer bank in America; and the largest retailer of mortgage loans (through Countrywide) in the country. They've become a behemoth, and perhaps the most powerful private financial institutions in the world.

AIG -- the 18th largest company in the world -- is on the ropes. The New York Times reports they've gone to the government and asked for a humongous bailout to stay solvent. Clark has no idea how that will play out. Meanwhile, Washington Mutual -- the 7th largest bank in the U.S. -- is also ailing and may fail soon.

Make no bones about it -- more failures will come. But the darkest hour in a financial market is usually before the dawn.

This is not the end of the world; it's not even close. We messed up as a country. Both Obama and McCain released statements talking about the failure of regulators to police the markets. As far back as 1998, Clark has been saying we need a cop on the beat in capitalism. Think about that -- as far back as 1998. So this is not just a Bush problem; it goes back to the Clinton days.

Our "Big Easy" financial mentality -- where we "let the good times roll" -- is only good until the levees break. And that's what is going on right now.

Clark's been getting a lot of questions about some of the biggest financial institutions in our country like Fidelity, Vanguard and Charles Schwab. All 3 of these institutions are absolutely fine and weren't involved with the shenanigans that got others in trouble.

Fidelity was the only one of the 3 that was briefly caught with its pants down when it came to auction rate securities. As much as Clark loves the company, Fidelity fought hard when contacted by regulators about their wrongdoing. But they soon realized the error of their ways and will fully compensate individuals who were ripped off.

Are you afraid to open your own mail for fear of seeing your 401(k) statement? Clark recently spoke to one man who referred to his plan as a 301(j) because it keeps going the wrong way!

The Financial Times of London reports that every mutual fund company is seeing people pull money out with all the market volatility. American Funds saw a 7% decline in assets during the last 90 days, while Vanguard has seen a 4% decline.

Why is this happening? People fear a loss twice as much as they enjoy a gain. It's part of being human. We're backwards creatures; when stocks roar along, people pour money into them. So we're always paying too much on the way up and getting too little on the way down.

No one can time the market. Rather, it's time in the market that matters. Clark has 3 rules of thumb to help you maximize your money over the years.


Avoid these 3 gotchas and you'll have more money over time. Just don't try to figure out when to sell and when to buy. Keep buying every month through your 401(k) or other retirement plan.

Time in is more important than timing. People are always asking Clark, "Is it time yet to get back in the market?" His standard reply is, "I never got out."

Business Week reports that Morgan Keegan -- a regional brokerage located in Tennessee -- has destroyed the savings of some clients by steering them into inappropriate investments. Morgan Keegan currently is under investigation by regulators in 5 states; facing 6 lawsuits; and undergoing countless arbitrations.

In one instance, an 81 year old looking to safely invest a $250,000 nest egg was put in ultra-risky securities backed by sub-prime mortgages. The result? The nest egg was reduced to $37,000. In another instance, one of Morgan Keegan's supposedly safe funds lost over 80% over the last year.

Some of the brokerage's sales materials have the following verbiage: "This fund is noted for its relative conservative credit posture without excessive risk." Yeah, right.

Clark is not specifically targeting Morgan Keegan; he's just telling you what Business Week said about them. But he is saying that there has been enormous excess with respected banks and brokerages systematically misleading individuals and costing them tons.

During the next few days, he'll be bringing you details about restitution for those ripped off by the brokerage houses. The attorney general of the state of New York is almost single-handedly taking on the task of restitution for people in a number of states.

As always, if you invest in what you understand, you'll run less risk of getting ripped off. Remember that brokerage houses do not have fiduciary duty to you. That simply means they don't have to look out for your best interest.

If you have trouble making wise investment choices, hire a fee-only financial planner who won't gain anything from steering you toward a particular investment.

RIP-OFF ALERT: There's a controversy brewing over supposedly ultra-safe cash investments that were sold by some of the biggest banks and brokerage houses in the country.

These so-called "auction rate securities" (aka "cash holdings") were touted as the equivalent of a money-market account. Banks and brokerage houses including Merrill Lynch, Citibank, UBS, Morgan Stanley, J.P. Morgan Chase and Wachovia sold $300 billion of these to non-profits, local governments and individuals.

These auction-rate securities were pushed as a substitute to savings or money-market accounts -- even though it was known they were garbage. When the music finally stopped, people had their life savings wiped out and non-profits went insolvent.

This raises 2 points in Clark's mind: First, where is the moral compass of the banking and brokerage business? Why would they go out of their way to rip off customers and destroy them financially? The answer is simple -- the commissions were humongous.

Second, where is the federal government? The SEC, the Federal Reserve and the OCC haven't done anything. The only actions are coming from the attorneys general of New York and Massachusetts.

There are just 2 lone wolves going after the bad guys! The banks and brokerages have been fined in the millions, but that's just a slap on the wrist for them. The attorneys general are trying to force full restitution to those who were ripped off. Clark applauds that effort and thinks jail time is in order for the culprits.

Always remember the core principle of investing: Know what you are buying. If you can't explain it to a fifth grader, don't buy it. That should help you stay out of harm.

Have you ever heard the expression, "There's no such thing as a free lunch"? Clark gets advertisements for free lunch investing seminars all the time. They're typically billed as educational workshops and promise you that nothing is being sold. They have names like "wealth preservation seminars" or "income security planning sessions" and are usually operated out of well-known restaurants or fancy ballrooms.

For years, Clark has told you that these things are rip-offs -- based on what he's heard anecdotally. Today, he has some hard numbers to back up his belief.

The North American Securities Administrators Association recently did a study that showed 50% of these seminars are guilty of false or exaggerated advertising; 25% of them actually push products that are completely unsuitable for you; and 13% are engaged in out-and-out fraud.

That could be the most expensive free meal you'll ever eat -- if money saved over a lifetime gets taken from you!

If you need help planning your investments or retirement, Clark advises you to pay for that advice by hiring a fee-only financial planner. Visit NAPFA.org to find one near you. Or you can also seek in-house financial planning from Vanguard, Fidelity or T. Rowe Price for a nominal fee.

CLARKONOMICS: It's not often that we have back-to-back Clarkonomics segments on the show. But there's been so much in the media about the bear stock market that Clark felt compelled to do it.

A bear market is when things are down 20% from their peak. That understandably has people frightened. So many folks stop Clark on the street to tell him they're dumping their mutual fund stock-type holdings and going into safe stable-value kind of things.

It got Clark thinking about how far down he is this year. After crunching the numbers, it turns out he's down 4.8% over the last 12 months. Sure, that hurts, but it's not a decline of 20%.

So how is he "beating" the market? The secret is not that he knows about special stocks or has an exotic investment strategy; it's that he's taken a meat-and-potatoes approach to investing.

His largest allocation is putting just under 40% of his money into tax-free municipal bonds. The rest is divided evenly among large companies, small companies and the international markets. Clark also has a small amount of money in commodities and REITs.

In a word, he's diversified.

The penny-pincher also benefits through dollar-cost averaging. This means he keeps buying more shares every month instead of playing red light/green light based on market conditions. So as the market declines, his dollar buys more shares. T. Rowe Price's Automatic Asset Builder allows you to take advantage of dollar-cost averaging by investing as little as $50/month automatically out of your paycheck.

The purpose of investing is to create financial security. If you have a need to treat investing as a sport, Charles Schwab advises the "core and explore" approach. Put the money you really need to have into your core investments, similar to those that Clark described above. Then take a small amount that you won't lose sleep over and spread it around among the more volatile investments you crave.

As always, check Clark's investing guide if you're just getting started. He particularly likes the targeted retirement funds for those who want to take a "set it and forget it" approach to investing.

Clark has a serious obsession with cost. That passion comes through in his emphasis on low-cost investments. The lowest-cost provider in the United States is Vanguard. Fidelity and T. Rowe Price are right behind Vanguard.

Syndicated financial writer Scott Burns has done an analysis and found that if you don't go the low-cost route, you'll have 40% less money at retirement. The commissions you'll pay are like a cancer eating at your retirement security.

When you buy a mutual fund, you pay a management fee every year. Vanguard, for example, charges only 1/8 what other expensive facilitators do. When it comes to variable annuities, Vanguard charges one-thirteenth less than others.

Some people think they can't go the low-cost route because it means they'll have to pick their own investments -- something they don't understand. But investing is not brain surgery. You just have to know the basics.

Pay yourself first so you have money to invest. And go for a Roth IRA! Your money will grow tax-free and it will be spent tax free. The Roth, however, is just a house and you've got to decide how to furnish it. That's where Clark's investing guide comes in handy. It contains his favorite picks for ultra low cost mutual funds, among other things.

Vanguard founder John Bogle is a fan of the targeted retirement funds. With these funds, you put your money in the year closest to when you expect to retire. It's a "set it and forget it" kind of thing. Vanguard, Fidelity and T. Rowe Price all offer this kind of investment.

One last thought: Beware of "employees" inside banks trying to sell you variable annuities when you go to renew your CDs -- unless you want to pay humongous commissions, face massive expenses and have immense tax problems.

Once upon a time, Americans worked for 1 employer for an entire lifetime. They also got a pension for their years of service. Back then, you didn't have to save for retirement or make any of the accompanying investment decisions.

Today, only government jobs and a small number of large companies still offer pensions. The rest of us are on our own. Unfortunately, the average worker is faced with an alphabet soup of retirement options -- everything from the 401(k); to the 403(b); to the SEP if you're self-employed. Just figuring out the terminology itself can exhaust, bore or intimidate you.

Once you get past weighing the merits of a 401(k) or a Roth IRA, for example, then you have to choose individual investments to actually put your money in. Most people don't have the first clue. That's why Clark compiled his investment guide to give you a starting point.

Clark is a big fan of targeted retirement funds, which offer a very hands-off approach to retirement planning. With these choices, you pick the year you expect to retire -- let's say 2040. Then you buy the 2040 portfolio and sit back. Over the next 30 years, the company you choose picks a mix of stocks and bonds to get the best returns with the lowest overall risk. As you get closer to 2040, your investments automatically become less risky.

Forbes now reports there are 289 different targeted retirement funds in the marketplace. So which company offers the best? That would be Vanguard. This financial house offers no load mutual funds; no hidden 12b-1 fees; and management costs that are about one-sixth the average of other companies. T. Rowe Price and Fidelity Investments are also good places for your targeted retirement funds. You can't go wrong with any of these 3 low cost houses.

Are you afraid to open your own mail for fear of seeing your 401(k) statement? Clark recently spoke to one man who referred to his plan as a 301(j) because it keeps going the wrong way!

The Financial Times of London reports that every mutual fund company is seeing people pull money out with all the market volatility. American Funds saw a 7% decline in assets during the last 90 days, while Vanguard has seen a 4% decline.

Why is this happening? People fear a loss twice as much as they enjoy a gain. It's part of being human. We're backwards creatures; when stocks roar along, people pour money into them. So we're always paying too much on the way up and getting too little on the way down.

No one can time the market. Rather, it's time in the market that matters. Clark has 3 rules of thumb to help you maximize your money over the years. First, avoid paying commission fees. Buy only no-load funds. Second, beware of 12b-1 fees. These are phony charges that won't be disclosed unless you read through the prospectus. They are a made-up fee designed to take money out of your pocket. Finally, make sure your management fees don't exceed 1% or more. Avoid those 3 gotchas and you'll have more money over time.

Just don't try to figure out when to sell and when to buy. Keep buying every month through your 401(k) or other retirement plan. Time in is more important than timing. People are always asking Clark, "Is it time yet to get back in the market?" His standard reply is, "I never got out."

Blind risk pools (also known as blank check investing) are the newest thing going in investing. Clark wants you to be diligent in avoiding these options. How will you know if you're being pitched? You may get a circular touting a new investment brain trust comprised of some of the top minds in finance. The talent is impressive, but there's no disclosure as to what your money will be invested in! That's because it hasn't been determined yet.

People are pouring billions of dollars into this stuff right now. But blind risk pools violate the first rule of investing: Understand the investment. Clark jokes that he'd rather you go to Vegas, take in a few shows, enjoy the Strip and then put on a blindfold and plunk your money down on the roulette wheel. You might get just about the same yield. So be smart about this. Your country club buddies or colleagues at the chamber of commerce may be getting into blank check investing. But you don't have to fall for it.

Saving just $5 a day everyday can have an enormous impact on your financial future, syndicated Los Angeles Times columnist Kathy Kristof writes in a recent article. When it comes to this topic, everybody loves picking on Starbucks! But people also blow a Lincoln a day on buying breakfast or lunch on the go. For those who do come up with the extra $5 everyday, here's how it can grow with interest over the years: After 10 years, you'll have $29K; after 20 years, it will be $105K; and after 40 years, a whopping $800K!

Some of us are so careful with our money that we couldn't come up with an extra $5 a day. However, most of us could. Clark challenges listeners to write down everything they spend money on while walking around during the next 2 weeks. This will help you see where you can trim your budget.

In addition to frivolous purchases, our inability to delay gratification conspires against our future financial security. Money magazine reports that when people were offered $20 today vs. more money about 6 months in the future, the people overwhelmingly took the $20. In fact, people had to be offered money with an average interest rate growth of 4,800% to get them to delay gratification! The only way to overcome our innate bias towards immediate gratification is to set up automatic withdrawals before the money gets to you -- like with a 401(k), for example.

RIP-OFF ALERT: In times of economic uncertainty, you're more likely to be taken in investment scams. With CDs, treasuries and stocks all hurting, people are desperately searching for a safe and profitable place to stash their money. Even Schwab is being sued over its YieldPlus Fund…and that's a legitimate company that made an honest mistake.

In a separate instance, The Los Angeles Times recently reported on a duo selling private investments in public equities (PIPEs) with the promise of returns of about 40% a year! The duo stands accused of conning more than $40 million out of everyone from retirees to sophisticated investors. One of alleged cons bought 2 multi-million dollar homes in Nevada, jewelry, clothing, cars and more. People trusted them and they were able to exploit that trust.

Meanwhile, Clark was recently approached by someone at the studio asking him about foreign CDs promising a "guaranteed" return of 18% a year. Anyone promising a number beyond 4% or 5% annually for a "safe" investment is suspect. "Safe returns" and "decent returns" are mutually exclusive. People just have to get used to the idea that right now you can't keep up with inflation. For long-term investors, Clark's advice is to get past your fear of the stock market and diversify your portfolio -- that's the key to creating wealth in the long run.

Vanguard took in more than $76 billion in deposits and crossed the $1 trillion mark in total assets during the past year. That's more money than Doctor Evil can get his arms around! Clark has long been a Vanguard fan. They're probably the world's largest cooperative; when you invest with them, you become a part owner of the company. All the money that normally goes out to traditional shareholders instead comes back to you in the form of expenses that are one-tenth what some competitors charge. Clark would love for you to look at them if you want to open a Roth account or have a 401(k) rollover from a former employer. Vanguard is self-serve, which means you must make your own decisions about what to do with your money. If you still want to use a commissioned person, the American Funds family is your best bet. Though their fees are substantially higher than Vanguard, they're still less than most other commission-based places. If you make more than $100K/year, consider putting your idle cash in a municipal bond fund, also available through Vanguard.

Other no-commission companies Clark likes include T. Rowe Price and Fidelity Investments. They both have fund managers who select mutual fund investments for you. Vanguard's specialty, meanwhile, is index funds where you buy slices and dices of many companies, like a Total Stock Market Index. Regardless of where you invest, you should consider putting a portion of your money in foreign capitalist markets. There are both established international funds and emerging market funds available -- known as BRIC investing (Brazil, Russia, India, China). Clark has not gone down the traditional BRIC road, but he has put 5% of his stock holdings in other third world countries. Fidelity, meanwhile, allows you to own the world in one purchase. Their 4-in-1 fund owns big companies, small companies, international companies and bonds. So if you don't want to think too much, this is simple one-stop shopping where you can put your money.

One caveat: Most of the investing world thrives on trying to use confusing language that impresses and intimidates. The goal is to make you feel incapable of making basic investment decisions. But Clark is all about trying to make things clear for you. Sometimes he succeeds, and other times he doesn't. Yet the first thing to do is spend less than what you make. There's no investing if there's no money left from your paycheck at the end of the day. That's the great American challenge right now.

For many years, the Big 3 discount investing houses -- Fidelity, Schwab and Vanguard -- operated on a simple full service vs. self service model. You could either pay them to handle your investments or you could do it yourself. But now most of those companies offer an in-between option that's like limited service. You could have knocked Clark over with a feather when he learned that Vanguard is offering some level of advice and charging you for it. That's never been their modus operandi, but now this option is available for a charge of less than 1% for those with $500K. It's like the whole investing world has turned on its axis! This new investing model among the Big 3 is really a result of the "dot.bomb" era, when people lost confidence in their financial decisions and never regained it.

Clark almost never puts a guest on the air, but a couple of times he's invited a personal finance columnist named Jonathan Clements on the show. Clements does a lot of great research into behavioral economics. One of his most recent articles addressed the age-old question: Are men or women better investors? It turns out women end up with less money over time because, as Clements argues, they're hard-wired to be conservative to a fault. They also live longer on average, so they have less money that has to stretch over a longer period of time.

Here's a disclaimer: This is a generalization, and there are differences from person to person. But generally, women tend to pick "safe" choices like CDs. Men, on the other hand, trade excessively and hurt themselves by buying and selling too much. Yet the average man ends up with a lot more money at the end of a working lifetime -- even accounting for income differences. If a woman puts money in CDs, she barely keeps up with inflation and loses in the long term. We are hardwired to fear loss more than appreciate gain. Clements suggests that we should each try to learn a bit of investing style from the opposite sex.

Many people are uncertain what to do when it comes to the question of stocks. In a continuing segment of Clarkonomics, Clark examined the investing angle of the economic slump. The real question is should any of it matter to how you create long-term security? Clark recently saw a couple of alarming headlines in The Wall Street Journal: "When is it time to buy stocks again?" and "Are stocks cheap?" There are two things Clark doesn't believe in: Buying individual stocks and timing when to get in and when to get out of the market. Clark believes in buying stocks through mutual funds or ETFs (exchange-rated funds). Basically, he buys a basket of investments with little slices and dices of a lot of different companies. He also buys on a consistent basis -- via his 401(k) every pay period and via an investment plan every month. But let's cut to the chase: Should you be worried by the market volatility? If you're near retirement age and aren't diversified in your assets, yes, you probably should be. But if you're young, it's good to have a decline in share prices now. The decline means that you can buy more shares for the same dollar.

During a recent show, Clark explained why he doesn't like the refund loans pushed by many tax-prep chains. Now H&R Block has another offer called the Emerald Prepaid MasterCard that's an equally bad idea. This is basically a stored-value card that you take in lieu of getting a standard refund or a refund loan. This seems like a great idea -- until you get to the fees. You'll pay between $1.85-2.50 whenever you use an ATM, and that's in addition to whatever fee you're charged by the ATM itself. Clark has no idea who would benefit from this option. But this is the Super Bowl of tax return season for H&R Block and Jackson Hewitt. Everyone who overpaid wants to rush in to file at the chains and get money back as soon as possible. Special thanks to our listener Chuck for bringing this to Clark's attention.

On the saving side of the ledger, interest rates and CD rates are dropping. However, some outfits like Countrywide are still paying good money. Countrywide currently is trying to attract CDs of $250,000 and above -- probably because they're in dire financial straits and need big infusions of cash. Clark is warning people to stay away from this offer. Should you choose to bring your money to Countrywide, keep it within the limits of FDIC protection at $90,000 or less. Otherwise, you may get wiped out in the event of a bank failure. Don't go chasing yield above the FDIC limit.

We're in the midst of the season for New Year's resolutions. Yet only 8 percent of people achieve their resolutions, and half actually fail before January is through. Almost no one makes investment resolutions. Instead people usually focus on getting fit, losing weight, being nicer, etc. Apparently, people don't feel guilty about not getting their finances in order. So what's your investment plan? Do you have one? Do you even have any money to invest? Clark recently read a story in Smart Money magazine about how people who buy mutual funds from full commission stock brokers like Merrill Lynch get ripped. Most of us lack the willpower to invest in our future or we're intimidated by the concept. So we hire others to do it for us.

What is a mutual fund? Essentially it's when people pool their money and invest together. They benefit from strength in numbers. But you pay a manager to manage your mutual funds whether you go the no load (aka no fee) route or full commission. So why pay a broker on top of that?? Meanwhile, full commission mutual funds can be loaded with hidden charges like 12b-1 fees. So what's the solution? Well, it's now very easy to pick your own mutual funds through Vanguard, Fidelity and T. Rowe Price. For example, Clark has the annual report from the Vanguard Star Fund. Once you get past all the government disclosures, there are roughly 8 pages of info that explain in plain English what you're buying into. So Clark wants you to re-think the ideas that you don't know about this stuff and you're not interested in it. The bottom line is you want your money working for you. If nothing else, do a targeted-retirement fund at work to get your investment strategy off the ground. This stuff is not rocket science -- even though some financial types want you to think it is!

The state of Florida is in a mess that illustrates something important about how each of us handles cash. Many of Florida's counties and school systems aren't able to meet payroll or pay bills. Some of their checks are even bouncing because the state got cute with funds from its local government investment pool. Municipalities were encouraged to put their money from taxes, fees and fines into this pool where they could earn interest until they needed the money. It was kind of like a money market fund for government. But the state tried to goose the returns by investing in risky weirdo mortgage things like CDOs and SIVs. When the local governments caught word of this unsound investment strategy, there was a run on the bank that prompted the state to freeze all investment pool funds. Now the municipalities don't know how they're going to pay their bills.

If your goal is to have cash for cash flow's sake, you can't have it flowing away. Sometimes you need a parking space like a savings account, a CD or a true money market fund. If even those options seem too risky, try a high-yield savings account from EmigrantDirect.com, INGDirect.com or HSBCDirect.com. You'd be surprised how well they pay. BankRate.com reports that the average savings account at a giant monster mega bank pays .4 percent. Emigrant, ING and HSBC pay more than 10 times that amount, plus they have no fees and no minimums! So go back to basics when you're analyzing your non-long term investment needs. Sometimes you want safe, not sexy. Just park it and get decent money!

About three weeks ago, Clark told you that E*TRADE was in danger of becoming insolvent. Customers began to flee after news broke, though there wasn't a full run on the bank. But those 60,000 people who had E*TRADE accounts with more than $100,000 in them narrowly escaped losing their shirts. Things didn't look too promising for a while. Some 30 companies were offered the chance to provide a bailout and passed up on the opportunity. Finally the Office of Thrift Supervision -- an obscure government department that becomes very important when banks fold -- intervened and got Citadel to invest $2.55 billion to keep things afloat.

Even if it E*TRADE had failed, those who were within FDIC limits would have been safe. The feds are very good at knowing how to handle these kinds of things. They got a lot of experience during the banking collapses of the late '80s! The good news is that your money is usually available the next day after a collapse if you had less than $100,000. But rest assured of this: More financial institutions will fail. Citibank nearly folded and Countrywide is in need of cash bailouts. So the important thing to know is that you must keep your investments within the safety range provided by FDIC coverage. Don't play with fire! Remember that the limit is $100,000, unless you're talking about an IRA. Then you're protected up to $250,000.

The fallout from the mortgage market can affect you even if you don't have a mortgage! Some 30 percent of people own their homes free and clear. Many of them are also investors who are now suffering because some major money-market funds have been diluted by getting into the subprime market. There's currently about $3.7 trillion floating around in money-market funds. GE has been in the news lately for allegedly breaking the buck by dropping the value of their enhanced cash fund to 96 cents. This may not affect anyone you know because this particular GE fund is usually held by major financial players, not everyday individuals. But most brokerage houses have similar money-market fund options. Clark's advice is to get out if you are in a fund that breaks the buck. How do you know if you're at risk? Check your monthly statements and make sure the value is listed at $1 a share. If not, it might be time to jump ship to an insured money-market account (usually at a slightly lower interest rate) or go into a government money-market fund.

The financial world is swimming around in an alphabet soup that's really been harming a lot of people. Banks got into making weirdo exotic loans just so they could bundle and resell them as CDOs (collateralized debt obligations) and SIVs (structured investment vehicles). This is part of what fueled the bubble and meltdown in the housing sector. The banks were packaging dynamite and it blew up on them as people started defaulting on their loans. While the monster mega-banks were hit hardest, it was something of a shock when E*TRADE fell on hard times. Bankruptcy rumors recently drove the company's stock down 60 percent. The price made a slight rebound when news of a buyout or takeover broke. Barron's now reports that almost 60,000 people have more than $100,000 each in E*TRADE. The obvious danger is that those folks are above FDIC limits. But there's no need to do a run on the bank, Clark says; just lessen your exposure to below $100,000 so you won't get burned if E*TRADE goes under. We'll keep you updated on this story. On a similar note, Bank of America has had to cough up $600 million to avoid "breaking the buck" in money-market funds. The problem arose when BoA started to take the cash from money-market funds and get into dangerous weirdo exotic loans. Make no mistake, though -- BoA did the right thing by putting out the $600 million to ensure that no one lost on the usually stable money-market funds.

Merrill Lynch -- the largest financial house in the United States -- has just written off $8.5 billion in losses stemming from weirdo exotic investments that didn't work out. Clark makes no bones about having issues with Merrill Lynch. He believes they've fought being a good corporate citizen for years. Specifically, they've battled against their brokers being fiduciaries. What this means is that Merrill's stockbrokers aren't required to help make the smartest investment choices for you; they just need to steer you toward "suitable" investments. The investments they push you towards, however, can be very lucrative for them. And there's no telling where you'll bottom out once you go down that slippery slope of ethics. For instance, one Merrill broker had a senile elderly couple as customers and put them in variable annuities. The broker made $600,000 and Merrill made $2.5 million on the deal. That was just plain unethical, and a jury assessed a six million dollar penalty against the financial house for wrongdoing. But instead of acknowledging their mistake, Merrill is still fighting the verdict.

You have the choice to use fee only or full commission brokers to help you invest your money. But it's obvious that there's a risk of compromised ethics when you go the full commission route. Clark isn't saying that there aren't decent people working at Merrill Lynch. The problem comes when brokers are held to a lower standard of ethics -- it creates a real "buyer beware" mentality. Any spokespeople from Merrill Lynch who dispute Clark's characterization of the company are welcome to discuss it on the show.

It's been several years since the last "Clarkonomics" segment, but today we have another installment for you. This may again become a regular feature on the show since we're in a time of economic uncertainty. Before coming to the studio today, Clark was talking to a man about the stock market. It got him thinking about how what happens on Wall Street affects Main Street America. If you're one of those people with leveraged investments (investments you've made with borrowed money) this is not a good time. You may be getting "margin calls" from the broker who lent you the money. That's when they call you up and basically ask for more dough or they'll sell out your position.

A lot of people are hurting financially; the very rich have gotten burned by hedge funds and those who are struggling to get ahead in the housing market are getting clobbered on their mortgages. Are the rest of us also going to get squeezed soon? There are so many unknowns. But Clark has a standard piece of advice he gives people when the economy is facing tough times: Reduce the amount of debt you carry. Get your life in a position so that regardless of larger economic trends you're not feeling squeezed. Clark himself is now doing something that he hasn't done in 26 years: He's putting cash into a tax-free money market fund. He wants to build reserves because he believes that next year there'll be good opportunities to buy distress real estate.

There's a lot of turmoil in the savings world -- once considered the safest part of market -- and much of it involves money market mutual funds. Money market funds are not federally insured, but have historically been designed to be a safe place to put your money and allow you easy access to it when needed. The way they work is that you buy them for a dollar per share and then earn on every dollar with the change in interest rates. They're often sold by mutual fund companies and stockbrokers, and have proven to be a safe haven for three decades. Money market funds obey the "don't break the buck" principle, which is like an unwritten law stating that they'll always be a dollar per share.

Now there are news reports about similar investment opportunities that mimic money market funds but take on additional risks. Sentinel Management Group, for one, is sitting on nearly $1.6 billion in investments of this type and is not allowing people to get to their money. Other major players in the field have experienced a drop in value. For example, Yield Plus is down five-and-a-half percent. Keep in mind that a true money market fund couldn't drop in value because it's always a buck. So how do you know if you have one of these impostors? Clark says to beware if they have the word "plus" in their names. But Wall Street couldn't be happier that a lot of people have these cousins of traditional money market funds. After all, investors are being socked with higher fees for these new investments that are supposedly safe. Clark wants everyone to look at their money market funds statement and know what they own. If you're in one of these fake money market funds, try putting your savings in CDs, a plain vanilla money market fund or a tax-free municipal bond. The latter works well for those in a high tax bracket who make more than $100,000 per year. Meanwhile, for everyone else who lives paycheck to paycheck, retailers like Wal-Mart have hit tough times because their customer base doesn't have much expendable income. Looks like it might be tough holiday season for retailers.

The stock market has been very unstable the last several weeks with huge gains one day and huge losses the next. The volatility has caused a lot of fear in investors. There was a recent study that found people who pay too much attention to the market make poor investment decisions. That's probably because the financial press and outlets like CNBC tend to hype stock news and get people worried. But if you're still years away from retirement, just diversify your investments to spread out the risk and don't worry about every little bump in the market. After all, even investors who rode out the Great Depression eventually got some nice returns. Clark doesn't plan to adjust his investing strategy just because of stock market volatility. He thinks CDs and 401(k) options are relatively safe choices. If, on the other hand, you need your money in the next few months or years, you have to make investments that are very safe. Clark's Investing Guide provides info on some great options.

Clark has often talked about how free meal seminars offered by annuity salespeople are to be avoided at all costs -- unless you want to get indigestion in your wallet for the rest of your life. An annuity is basically an insurance contract. The money you put in is not taxed until you spend it. Salespeople love to sell them because they get giant commissions. In fact, the commission is so large that it's hard for even a decent person to avoid the temptation of selling this garbage. Now The Wall Street Journal reports that a class action lawsuit has been filed against Allianz. This German-based company has been selling equity index annuities to older people via seminars, infomercials and free-dinner events.

Equity index annuities promise a portion of the gain of the stock market, while assuring holders against losses. They offer the allure of getting money without risk. But Clark thinks they're a piece of trash because all insurance companies cheat you on the gain -- only giving you a tiny portion of the actual gain in return for their guarantee of safety against market loss. Worse still, you usually have to stay in for 15 or more years to get the benefit. So salespeople target senior citizens, who may not live long enough to qualify for the guarantee. And if you are lucky enough to get wise to how bad equity index annuities can be, you may lose between 10 and 15 percent in penalty fees for surrender if you try to get out. Regulators across the country are calling this an instance of fraud. As Clark says, the "just say no" rule applies here to these free meal seminars.

The stock brokerage industry is divided into two camps: There are the brokers who work on a full commission from the investments they sell you, and those that get paid based on the financial advice they give you. Meanwhile, consumer protection in the field is very weak. The industry has a mentality that brokers are salespeople who shouldn't have to follow any business code of ethics. It's as if the majority of the industry doesn't really care about the financial interests of its clients. In fact, the industry even conned the federal government into passing a law that says brokers aren't liable for bringing you to financial ruin so long as they presented you with "suitable" investment options. If you sign up with a stock broker, you actually waive your right to take them to court if they cheat you. You have to sign a form that forces you to go through company-run arbitration if there's a dispute. That makes it nearly impossible to get back your lost money! A study showed that you have a one in ten chance of winning in arbitration against stock brokers. It's a real kangaroo court scenario, according to Clark. Now, Clark has no problem with arbitration if it's mutually agreed upon by both parties. But this kind is crammed down your throat. Sure there are good brokers out there, but many others are not ethical. Clark's advice is that you never go to a full-commission stock broker. Only use brokers who get paid for their advice, not those who earn a commission from the investments they sell you.

What are the odds that you will become a millionaire? When you are counting up your assets to decide whether you are or not remember that it doesn’t include your house. It is based on “real” money and assets. The “World Wealth Report” reports that 1 in 100 Americans are true millionaires. America has 3 million of the world’s 6 million wealthy. What about you? It is possible for many of us to become wealthy even if we don’t make that much. Most wealthy people become wealthy not through making huge money but by doing the basics like not living flashy. Some people go to the extent of doing things like only spending 50% of what they make. There is a school of thought that you shouldn’t save money. Being economically wealthy empowers you. What you don’t spend makes the difference.

Clark says he needs to get better about talking in "shorthand" -- using specific industry terms without fully explaining them for the average listener. He sometimes forgets that most people just aren't as familiar with these words. This is especially true on the topic of investing. One example is the term "asset allocation"-- less than one in five people knows that it means to "diversify" your funds, or, not put all your eggs into one basket. Clark wants to define these things more clearly for listeners in the future. "Bonds" are another topic not fully understood. Here's how they work: A company or organization needs money and issues some bonds. People buy the bonds, get the interest promised, and ideally, hold onto them for the life of the term in order to get the purchase price back at the end. But let's say you have a bond that promises 5% interest, and now interest rates are at 6%. The issuing company would have to discount the initial price of the bond to get people to buy them. On the other hand, if a bond is paying higher interest than the current interest rate, it's worth more, and will therefore cost more to buy. So, as interest rates go up, the value of bonds go down, and vice versa. Another misunderstood topic is Roth IRAs, which are investments that allow you to save money tax-free. But if all these terms bore and confuse you, read Clark's online investment guide. He lists what he feels are the best companies and services that can help make retirement investing much, much easier for you.

Interest rates are moving up and it means very different things to savers versus borrowers. We’ve been in a great economic environment for years, with low inflation, prices of goods getting cheaper, and exceedingly low interest rates. However inflation is looming. Prices for clothing and consumer goods we’ve been getting inexpensively from China are rising as workers demand higher wages, oil prices increase, etc. It looks like the continuous drop in price is coming to an end. In the future, variable-rate credit card rates could run higher. Home equity lines of credit are not yet affected, as the Fed controls those, and there no hints that the feds will raise interest rates. In the short term, car loan rates might step up some. For savers, the direct result is that you’ll see better deals on savings and CDs in the next 90 days.

A lot of baby boomers are trying to figure out how to spend their money now that they are settling into retirement. It can be frustrating, but it’s also a good problem to have. Some folks have used low cost, self-service companies for years, and now they don’t know what to do next. In the next few years, there will be half a trillion dollars moving from the working world into retirement. No-commission houses are now trying to figure out how to serve people who’ve always done self serve investing. Well, Vanguard is opening a limited-service and a full-service window. They’ll come up with a plan for you, depending on how much help you want. Fidelity is doing something similar. The company has a program that analyzes every single account you have on a continual basis. The analysis tells you how much you have to spend and from which accounts you should pull it. These programs are designed to keep people loyal to them and bring new folks in. In addition, eTrade has come out with a product called “Risk analyzer.” It’s allows people to meet their goals and possibly quit working early to retire.

In years 1998, 1999, 2000 and 2001, Clark talked quite a bit about what a great deal Series I savings bonds were. Known as inflation adjusted bonds, they were a great opportunity for the small saver. People who bought the bonds back then are now earning 9.4 percent on their money. Today, you still have an opportunity to buy them. And at today’s rate, you’ll earn 6.73 percent. Six months from now, however, that rate could move higher or lower. You get a base guaranteed interest rate plus the rate of inflation. So, when inflation rises, you’ll make more and vice versa. You can own between $50 and $30,000 worth of I-bonds. In some cases, people will hold onto them for 30 years. But if they turn out to be not such a good deal down the road, you can cash in the I-bonds for free after 5 years. As long as you keep them a year, the penalty for cashing them in before five years is not so bad. To buy them, go to savingsbonds.gov and enter your checking information. It’s ok to do because the U.S. Treasury takes the information and issues you an electronic statement. Think about getting some!

Let’s say you’re 25 years old and you’re earning $30,000 a year. Over the years, you earn a bit more because of inflation and you start saving about 10 percent of your pay each year. You put the money into mutual funds, either through a 401k or through an IRA, until you retire. If you’ve put the money into a low cost mutual fund, you will have $1 million more dollars than if you’d put the money into high-cost funds, according to a study published in the Boston Globe. The study compared money put into high cost funds, mid-level mutual funds and low-cost funds. To explain further, someone who puts his money into a high cost fund at that rate will have $1.7 million at retirement. With a moderate-cost fund, he would have $2.2 million. And with a low-cost fund, it would be just under $2.9 million. In addition, people investing in the low-cost funds have 70 percent more money to spend in retirement. It’s simple math and it can make a huge difference.

Your brokerage firm may be taking advantage of you. Historically, brokerage house has paid you true money market rates. That would mean you’d get 3.5 or 3.8 percent on your money today. But right now, brokerages are giving much less. If you have a standard brokerage account at eTrade for example, you are getting one-sixth of 1 percent. Charles Schwab is paying half a percent, and Merrill Lynch is paying just over 1 percent. So, these brokerages are basically looting your account by reducing fees. Clark wants you to take the opposite of his traditional advice and transfer money from these brokerage accounts to a bank account that pays more. Emigrantdirect.com for example offers 3 percent on cash, which is much better.

When people leave a job, what percentage of people with 401ks cash out their accounts instead of rolling them over into an IRA? Would you believe just under 90 percent? When you do that, you get eaten up in taxes. The average tax burden is just under 40 percent because of penalties assessed for early withdrawal. So, if your former company sends you a check for $4,000 and you spend it, you’ll have to pay $1,600 in taxes. So the $4K just became $2,400. All you have to do is tell your ex-employer where you want the money to go and they handle everything. Once you cross the $1,000 market, you can’t be cashed out or mess it up. It’s automatic. So, should you leave money in the former plan or transfer it to another company? If you’re working for a big company, usually it’s okay to leave the money in that plan. If you work for a small company, you’re better off moving the money into an IRA. But don’t ever accept a check offered to you. And, if you have a 401k plan at a small business, keep your eyes and ears open. Watch how quickly your paycheck money is going into your account while you’re working there. If your account doesn’t go up when you get a deposit slip, it’s time to think about moving on and moving your money. That means the company is withholding 401k money to stay afloat. Think about stopping your contributions, something Clark doesn’t recommend often. And get the money into an IRA immediately.

If you took economics classes, you probably learned about the “Rule of Threes.” As business competitors slug it out over time, they typically end up with three strong competitors. Yes, there are exceptions, such as Coke and Pepsi in the soft drink industry. When the government grants a monopoly, there is just the cable company and satellite company. But in the long distance telephone industry, there was always AT&T, MCI and Sprint. With domestic cars, it was GM, Ford and Chrysler. In the investment industry, the three bigs are T. Rowe Price, Vanguard and Fidelity. These companies cannot stand each other, so they keep cutting commissions for customers. As a result, you can’t go wrong having your savings with any of these three companies. Vanguard is the least expensive of them all. T. Rowe. Price is next and Fidelity is a smidge more pricey. It’s because there are three that the prices are so low. And it’s great news for you!

Sometimes things happen in life that just aren’t fair. Sometimes, it is the laws that are written that allow terrible injustices to happen with no regard to consumers. Clark has one example. There was a large auto repair chain known as “M2 Automotive” that recently went bust. At the time, there were hundreds of cars under repair or complete in the shops, but people couldn’t get their cars back. In fact, there were armed guards standing outside the businesses, refusing the let people in. No one in law enforcement or the judicial system made an attempt to reunite people with their cars. There were no laws n place, supporting the stranded motorists. The only company that did anything about it was AllState, which filed a lawsuit and went to court. The AllState customers got their cars back and eventually the other people’s cars were released. But people had to wait for several more weeks. Where is the justice in that?

About 10 years ago, a Canadian man wrote a book called “The Wealthy Barber.” It was about a fellow who cut people’s hair and heard their stories. In doing so, he heard stories about basic tips on making money and how to become wealthy. It has sold 2 million copies so far, yet it’s so simple and basic. The main idea is that people should save 10 percent of their income. The rest of the book is used to convince people why they need to do that. So, are people saving that money? Well, some people are saving money, but the majority of Americans are negative net savers. So, overall, Americans are saving 0 percent. What are the top ten reasons people give for not saving money? They include “My brain isn’t into planning,” “Money math is too confusing,” and “I have no interest in financial stuff.” These are just excuses. It’s all about your attitude. It has nothing to do with how much you earn. You can save no matter how much you make.

Are you saving for your retirement? If so, how much have you saved? According to the U.S. Census Bureau, more than 30 percent of people have not saved a penny. That means that more than one in three people from ages 21 to 64 have saved nothing. If you save a dollar today, it doubles every two years. So, after 40 years, that dollar is worth $16. Imagine how much your money will be compounded if you have more than that. The earlier you start saving the better off you’ll be down the road. Of course, no matter how old you are when you start saving it’s a good idea. But according to the Washington Post, the average balance in accounts will generate only about $1,000 a year in retirement. You aren’t going to be able to live on that. Clark challenges you to start saving NOW! Just start small and add more as you go. Increase the percentage you save by 1 percent each year. You won’t even notice, but it will pay off big in the long run.

Years ago, Clark had listeners in a frenzy about buying U.S. Savings bonds. They were the best deal out there for about three years, and people were buying them like crazy. People used to get a cool looking paper bond in the mail when they bought bonds. But now, the Feds are encouraging people to buy bonds electronically and turn in your paper bonds. Clark likes this idea, but he thinks the U.S. Treasury should offer some type of incentive to do that. Your bonds may not even be earning anything now. So, find them and check out their value online.

The stock brokerage industry is in a clear division between discount brokers and the full commission brokers. The discount brokers include Charles Schwab, Fidelity, eTrade, Ameritrade, TD Waterhouse, Scottrade, Harris Direct and Muriel Siebert. And they’re all discounting trades. Trade rates are all about $7 to $10, and the highest rate on any trade is about $20. As recently as two years ago, the line between discount brokers and full commission brokers was erasing. But now, there are clearly two camps. On the other end of the spectrum, full commission brokers are becoming even stricter and fee happy. They’re able to do this because people are not confident about the economy, and they’re willing to pay outrageous fees for all of the handholding.

Rates on CDs and savings accounts are moving up. So, it’s time to make your money work for you. Five-year CDs are bumping up to about 5 percent these days. Two-year CDs are at 4.12 percent and 6 month CDs are about 3.35 percent. Those are great rates and those rates are much higher than the average rates on CDs. So it’s important to move your money if you’re in a mediocre CD. Just make sure that you “ladder” your money. That means that you divide your investments into piles. Have some in 6-month CDs, and some in 5-year CDs, etc. Each time a CD comes due, you purchase another CD. If you have money you’re just saving for the purchase of a home or some specific purchase, savings rates are also moving up. ING Direct, the staple high player, is paying 2.6 percent, but Emigrant bank, emigrant.com is offering 3.5 percent. These accounts are all insured by the FDIC. So, don’t let your cash just sit there.

A study done recently by Oppenheimer funds shows that people are one of four types of investors. First are the “Pensive Procrastinators.” These people are unprepared but they’re worried they haven’t done enough. The next group is the “Unrealistic Optimists.” They are not prepared and they don’t care. They’ve already been dipping into retirement accounts and spending most of what they have. “Nervous Nellys” are prepared for retirement, but they’re still worried. “Smooth Sailors” are prepared for retirement and they’re confident about their financial futures. So, of the four groups, which one has the most people? One out of three people are “Unrealistic Optimists,” which is a sobering statistic. Before you know it, it will be retirement age and you will have no money. Nervous Nellys represent about one-fourth of people and Smooth Sailors are one-fifth of the population. Clark hopes more people move into those two groups.

One of the most popular links on Clark’s Web site is his IRAs & Investments page, which lists Clark’s favorite, low-cost funds. Clark has just learned that there are some great new investment opportunities out there. So he is going to revamp this page and offer you even more choices. We’ll tell you about them here, too. Fidelity Investments has always had good, low-cost funds, and some of them are listed on his page. But, now Fidelity has outshined Vanguard and is offering a mutual fund with the lowest expense ratio ever on a mutual fund. Most brokerage houses charge 1.5 percent per year extra to manage your fund. In addition, there are typically commission fees taken out. It means that for every $1, that amount is immediately knocked down to 93 cents as soon as you invest it. Under Fidelity’s new, low-cost plans will have expenses of one-tenth of 1 percent. In other words, the average mutual fund charges you 15 times what Fidelity will charge. The funds include the “Total Stock Market Index Fund,” and the “Fidelity 500 Index Fund,” but there are a total of five funds. The minimum is sometimes more than you’d like to pay. But it’s worth it if you have the cash.

Alan Greenspan recently testified before Congress about the current financial state of our country. The stock market started dropping immediately after Greenspan’s testimony because he talked extensively about overall interest rates and the current Social Security system. He said that there is no way to accomplish President Bush’s plan without causing severe problems for the U.S. economy and the dollar. We can’t borrow any more money from the federal government, yet Bush proposes that we borrow a tremendous amount more. The system right now is based on the whims of politicians. It needs to be based the individual. We have a great opportunity to allow people to save for their own retirements, and reduce the amount of government involvement. There is no immediate crisis with social security but there will be soon. Clark doesn’t like the idea of taxing people to fulfill the needs of the future. Setting up our own accounts is the only way to go. By doing so, we take power out of Washington and put it in our hands. Clark would like money to go into the system with the option of putting additional money in if we’d like. That way, people would save 6 percent for the government and an additional 4 percent for themselves. We need to have an open, honest discussion about this and keep an open mind as we tread this course.

For the past 12 to 14 years, Clark has been stressing the need to end our belief in the Social Security system and start our own individualized accounts. President Bush talked about it in his State of the Union address the other night, and that is something no other president has done. But his proposals are somewhat weak, in Clark’s opinion. Bush’s proposal allows people to put only $1,000 a year into an account. That doesn’t deal with the issue of the lack of savings people will have at retirement age. People 35 and younger were recently polled and overwhelmingly supported the idea of investing personal retirement accounts in the stock market. Meanwhile, people age 65 and over are horrified by the idea of any change in the social security system. That’s why Clark thinks there should be a strict divide based on age. For people who want a new system, give it to them but make investments mandatory. Taking 10 percent of each paycheck is what Clark proposes. For older folks, let them keep with the status quo. That way everyone gets what they want.

Clark has always encouraged people to learn about investing and to do it themselves whenever possible. It’s a wealth of knowledge and it can save you tons. But how much difference does it really make? Financial writer Jane Bryant Quinn conducted an analysis into this subject recently. She compared what people make when putting their money in a low cost mutual fund versus one sold by a high-commissioned broker or salesperson. In the first scenario, she compared investments of $10,000 over 15 years. If you choose the low cost fund, you’ll have $26,000 after 15 years. In a commissioned fund, you’ll have only $20,000. And, after 30 years, you’ll have 64 percent more money! That’s huge. It happens because, year after year, your money grows exponentially. So the longer you have the money in the fund, the bigger the difference. The problem is that most people don’t know what expenses they’re paying for their mutual funds, and companies make it very hard to understand. But you can’t go wrong with Vanguard, TIAA-Cref, Fidelity Investments and T. Rowe Price. These are all low to moderately low fee companies, with Vanguard having the least expensive fee structure. Check them out. It’s your money!

How are you doing preparing for retirement? Researchers from Hewitt Associates found that even people who work for large employers are not preparing for their retirement. Only one in six people who work at companies that offer plenty of handholding will have enough money at retirement age, according to the survey. It’s not what you make. It’s what you do with what you make. So, take charge of your future and come up with a plan. Determine how much you will need and start saving!

Clark saw an article recently about the basic fundamental investing philosophy known as “core and explore.” The idea is basically that you want to be part of American capitalism, but you want to be average. Putting between 75 and 80 percent of your money in simple investments that will give you average returns. No one wants to be average in life and that includes Clark. He considers himself an achiever, but when it comes to investing he wants to be average. One of the accounts he likes best is the “Total Stock Market Index,” which allows you to own little pieces of thousands of American companies. It’s the way to go because, over time, you will end up with wealth. Owning more pieces of the puzzle gives you much more potential. Plus, there are almost no management expenses. It’s probably a good idea to also dabble in some large company stocks and some smaller company stocks, the true entrepreneurial drivers of capitalism. Diversifying is the answer, and the best company to invest with is Vanguard. They offer great products and they charge the least of any company.

Clark reads several personal finance magazines every day. Many of the stories recommend what you should do with your finances and they all sound very well-reasoned. One story a few years ago predicted that bonds were likely to be a crummy deal for 2004 and beyond. It was because the Federal Reserve was starting to bump up interest rates. And, as interest rates rise, the value of bonds goes down. So, publications urged people to bail out of bonds. Clark read the news, but stayed on the same course. He puts three-quarters in stocks, one-quarter in bonds and he invests in real estate. As it turned out, people made more money in bonds than they did in stocks. This year it’s the opposite. So, one can never predict what is going to happen and it’s important to stick with your choices. Clark reviews his investments once every two years and sometimes he doesn’t change a thing. Know why you’re doing what you’re doing and stick to it.

Do you buy and sell stocks or own a brokerage account? The brokerage industry has full-service brokerage houses and discount brokerage houses. Full service houses have someone assigned to you, and they make recommendations on stocks. In some cases, they don’t even consult you before they buy or sell your stocks. Clark doesn’t like to do business that way. He likes people to make their own decisions. If you also prefer this method, the commissions will be a fraction of what a traditional broker will charge. The typical charge is $5 to $30 for a trade, as opposed to hundreds of dollars a trade. Three sources offer rankings on these houses: Kiplinger, Forbes and Money Magazine. Kiplinger says one particular brokerage is the best, and that is Muriel Siebert. It’s the only stock brokerage owned and run by a woman, and her name is Muriel Siebert. The company offers trades for $15 and very affordable margin borrowing rates. There is a fantastic selection of mutual funds on the site, and many customers say they have a great experience with the company. ScottTrade also did well in the survey. The company is considered a “deep discounter” with trades costing $7, and it caters to people who like to trade stocks. The biggest disappointment, according to Kiplinger, is Charles Schwab. They came in 11th, which is last place. The company cannot get a break these days. The Washington Post also ran a recent story about how Schwab has spiraled downward. Charles Schwab himself is trying to turn the company around by getting rid of some silly policies and procedures. Clark, who is a customer, is going to stick around to see if that happens because he has had good experiences with the company. So, you make your decision.

It’s been about one year since the mutual fund scandal broke. Companies were trading in and out of mutual funds after hours and committing all kinds of various abuses. But some companies are still ripping us off with the unbelievable expenses they charge. First of all, you’re charged huge commissions to go into a fund. Secondly, you are charged a 12B1 fee, which is a bogus amount charged every year by most commissioned brokerage houses. And, on top of that, there is an annual fee that all brokerage houses charge. It’s a triple whammy. But not everyone in the industry is playing it fast and loose with your money. One of the most respected companies out there is Fidelity Investments. Fidelity has always been a leader in the industry, but Vanguard has been eating them up in recent years. Vanguard’s charges are generally much lower than Fidelity’s. But Fidelity is changing that. The company is putting a number of its index mutual funds on sale. In fact, its expense ratio will be below what Vanguard charges. The company is cutting expenses down to one-tenth of one percent. That’s even less than what Vanguard charges. So, you can either pay 1.5 percent of your money to normal brokerage houses or one-tenth of a percent to Fidelity. Which one sounds better? The only hurdle is that Fidelity charges a $10,000 minimum investment. Other great companies are T. Rowe Price and TIAA-Cref. So, they are out there. There is no reason to put your money with the commissioned players in the market.

People who talk about investing and finance are frequently very wrong. For example, interest rates shot up over the last few months, which many people predicted. But then they came down just as quickly, which no one expected. In another turn of events, bonds have actually returned more money to investors than stocks have. But it’s a toss up. Investing in the short term is so unpredictable that you can never tell what’s going to happen. It’s a risky game that Clark doesn’t like to play. So, he does a mix of long term investments, including tax free municipal bonds, big company stocks and international stocks. He puts 75 percent of his money into stocks and 25 percent into bonds, and he didn’t change a thing when people predicted bonds were going to go down in value. Unless you have time to research this topic on a daily basis, put your money into a plan that will work for the long term.

You’ve probably heard about all of the Wall Street mutual fund scandals, so you may be nervous about a commissioned salesperson talking about your retirement. But there are other alternatives out there. You can invest in commission-free investments that help you meet your retirement goals on automatic pilot. You don’t need a commissioned salesperson at all. Three of the finest investment houses in the country are competing for you business. There are: Fidelity, Vanguard and T. Rowe Price. In each organization’s case, you pick a date for when you want to retire, and the company does the work for you. Fidelity’s auto pilot program is called the “Freedom Fund,” Vanguard calls its the “Target Retirement Fund” , and T. Rowe Price’s is the “Target Date Retirement Fund.” And these companies change your mix of investments over the years based on how old you were when you started the account. As you near your retirement date, the choices get more conservative and less risky. So, they do the homework for you and it’s a one-stop shop. That’s not to say there is no risk at all. But if you’re okay leaving your money in the hands of these well-respected companies, it will cost you very little in fees and the return is likely to be a nice one.

We’ve had a really bad run of dishonesty in brokerage houses, mutual fund companies and insurance salespeople. Many millions of Americans have suffered financially because of these scandals. But Clark still sees ads every day for phony investments. These companies promise that they have a strategy for you to make tons of money. And, it could even be a legitimate brokerage house telling you this. But the result is always the same: someone runs off with your money. The problem is that we are years away from people receiving restitution for these crimes. And when it does come, the restitution is going to be pennies on the dollar compared to how much money these companies took from people. So, the lesson should be to do your research before you agree to invest in one of these companies. Almost all of the scandals involved high-cost, commissioned mutual funds. Steer clear of them and trust the low-cost, reputable companies that are tride and true in the investment world. Some of these are Vanguard, TIAA-CREF and T. Rowe Price.

Over the years, the calls Clark has received regarding investing have increased and changed in tone. In part, that is because most of us have to fund our own future. Many people used to receive a pension from our work when they retired, but that doesn’t happen nearly as often anymore. People must invest the money they earn wisely in order to plan for their retirement. But, in recent years, brokerages have been lying to customers – by lying to their brokers - about the performance of certain stocks. The brokers, often without realizing it, were suggesting crummy stocks and people were losing their hard-earned money. It was all to help line the pockets of the big wigs at these brokerages. But this unethical practice is about to stop. The big brokerage houses recently reached a settlement with the government that requires brokerages to tell you what their company and what other companies know about a stock. The new law goes into effect July 27. They’ll still be trying to sell you certain stocks, but you’ll be mailed information about that stock and how it is performing. So, IT’S UP TO YOU to confirm whether they are telling you the truth. So, sending you the information won’t matter unless you read it.

New statistics show that people have not learned how to be smart about money in their 401k plans. Approximately one in eight people have virtually all of their retirement money in their employer stock. And, almost $1 in $4 of our money in 401k plans is in company stock. What percentage of your money should be in company stock? Clark says none! The only exception is if there is a match in your 401k if you do company stock. But, in general, it’s very dangerous to have your money tied to company stock. If the stock does well, great. But if it doesn’t – as is more likely the case – you see your retirement money disappear. It’s like putting all of your eggs in one basket and that is not smart – ever. Get your money out of company stock first. Then, diversify it. Total stock market index funds are a great place to start.

Standard & Poors is a highly respected financial company that rates the financial strength of companies. Most recently, S & P rated mutual fund companies in nine different categories over a 10-year-period. The company was trying to find out if it was worth paying extra money to be in a high-cost mutual fund. Will you get more for your money if you pay more? When you buy a mutual fund, you’ll pay a management fee. It’s what you pay throughout the year for someone to handle your accounts. But an ultra low cost fund will charge you one-fifth of one percent per year. A typical fund will charge about eight times more than that. So, what did S&P find out? In eight out of nine categories, the advantage of being in a low cost fund was overwhelming. The average low cost fund outperformed the typical fund by an average of 20 percent over that 10-year period. In one category - small cap funds – the low cost fund outperformed the other fund by 37.5 percent. So, it’s not even close. Buying funds that have the lowest costs will make you the most amount of money over time. Three-quarters of money going into mutual funds this year has been put into low cost operators. The top three low-cost providers are Vanguard, Fidelity and American Funds. Why does this matter? Clark believes we face half a generation of very low returns from the stock market. It’s likely that our real return could be somewhere around five percent. So, if you’re paying high cost fees, that’s coming right out of your return. We’re in an era where you’re going to have to save more than you’re earning. You also need to be diversified in your investments, and try to have as little debt as possible. It gives you control or freedom.

There are 2,272,000 millionaires in the country, according to Merrill Lynch. That means liquid assets, including stocks, bonds and mutual funds. Real estate is not included. So, about one in every 130 Americans is now a millionaire. How do they do it? Sometimes people inherit it, others start their own business and become a huge success. But most of the millionaires out there are great savers who started putting away money very early on in life. You can see how long it will take you to earn $1 million at the Web site armchairmillionaire.com. There are more important things than earning millions of dollars. But i