Questionable investment

Dear Dave,My broker has recommended a managed futures fund. I’ve never heard of these, and I got the feeling she doesn’t know much about them, either. She’s always been very conservative and reliable before, so we’re concerned. Can you explain something about them?Krista

Dear Krista,It sounds a little like she jumped off the cliff and became a roulette dealer. The term “managed futures” is virtually an oxymoron. I think she needs to explain her behavior and the investment after this stunt!

With managed futures you’re basically betting on the future price of a commodity. What’s the price of gold, or oil, or wheat going to be somewhere down the road? You’re guessing as to what the future will bring, and managing a group of those guesses. What a joke!

People in the brokerage business represent dumb things every day. The sad thing is this is someone you thought you could trust.—Dave

Dear Dave,I know you usually recommend having eight to 10 times your income in life insurance. I’m 25, single, and I have no kids. Do I still need that much life insurance?Anonymous

Dear Anonymous,The need for life insurance is very low in situations like yours. All you really want is enough to cover burial expenses, and clean up any mess you may leave behind. If you own a home you may not have to worry about any remaining debt, because the sale of the house might cover it.

Many times an employer will furnish you with life insurance equal to your yearly salary, or maybe twice that amount. In lots of cases, that alone will take care of things for young singles. Check into it!—Dave

Dear Dave,I’m 19 and about to start college. Thanks to my part-time job and generous parents, I’ll be able to pay for college without student loans. Since I won’t be borrowing money, what’s my next financial step?Patrick

Dear Patrick,Stay away from the free t-shirt tables. Those things always have credit cards hiding behind them. Remember, if it seems too good to be true, it probably is. But since the money is already there for school, the only thing you really need to do is save all the cash you can for after graduation.

The first couple of years after college may be the most life-changing, and volatile period of your life. If you keep working and saving like you have already, you’ll have cash on hand for an emergency fund and to start your new life. Plus, you’ll be able to plan for the future by investing in good, growth stock mutual funds, and maybe a Roth IRA after that!—Dave