Author: A.T.

Don’t read this column if you disapprove of my straying from money topics. Just go straight to Chapter 15 of Fire and Ice. (You already have Chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14.) Most of us have a great deal to be thankful for — I certainly do. But near the top of the list is not having to work for a guy like Charles Revson.

Now.

You may have heard about the proposed Hate Crimes Prevention Act. Clinton/Gore and most Democrats support it. George Dubya and many Republicans do not. It would extend existing hate crimes legislation to cover serious violent crimes committed on the basis of sexual orientation, gender and disability (not just race, religion, and national origin, as now).

Opponents say that all crime is hateful, that all criminals should be punished, and that it’s not fair to single out certain groups for special protection or to punish crimes against those people more severely — let alone to call in the Feds to do it. Local law should apply, and the punishment for a crime should have nothing to do with whether or not it was motivated by hatred against a particular kind of people (e.g., blacks or Jews or gays).

I just want to say two things. First, it’s not true that our system of justice ignores motivation. Dead is dead, but there’s first degree murder, second degree murder, third degree murder, and manslaughter. We already make distinctions based on motivation — as I think we should. What the Hate Crimes legislation aims to do is send a message that pure hate, as a motivation, is one this society particularly detests. In a society as diverse as ours, it’s an especially important message to send. Be a good citizen, pay your taxes, contribute to the common good — and you’re welcome here.

Second, this involves real people. Maybe even, one day, someone you care about. The Human Rights Campaign held a press conference yesterday prior to House hearings, at which two of the participants were Tony Orr and his partner Tim Beaucamp. Two years ago, they were standing at an ATM in Tulsa when three men approached them, called them “faggots,” and beat them. Orr suffered a concussion and received stitches for the many gashes on his head. Beaucamp suffered permanent nerve damage after the orbital bone around his eye was broken. The attackers were sentenced to 40 hours of community service.

“People like us in communities all across this country need some place to turn when justice is not served,” Orr said at the press conference. “We need to be able to appeal to a higher authority when localities and states do not — for whatever reason — fully investigate and prosecute a hate crime. ”

The Hate Crimes Prevention Act was passed by the Senate this month. It is supported by, among others, 22 state attorneys general, the National Sheriff’s Association, President Bush’s former Attorney General Dick Thornburgh, the Police Foundation and the U.S. Conference of Mayors. The President has promised to sign it if passed by Congress. It’s up to the House.

“We were targeted because of who we are, not for any other reason,” says Orr. “They were trying to send a message that ‘our kind’ are not welcome in Tulsa and deserve to be beaten or die. It is time to send a message that what is not welcome are hate crimes.”

Forty hours of community service may not adequately send that message.

Spread the word . . .

Tristan Ashby: “Re: Biweekly Mortgages. Perfect timing. I, too, almost enrolled, as an easy way to pay down my mortgage. But the kicker was even worse. They wanted to charge me $335 to start off AND $36 a year (or something very close, I can’t remember exactly). Since my mortgage is only $750 a month, I figured I would be better off just to pre-pay the extra $360 today and be done with it. Besides, my mortgage company already makes it easy to pre-pay by offering an extra line with the payment coupon.”

Stephen Gilbert: “There’s a great website that shows the effect of changes in your mortgage payments. Want to add nine dollars a month? You can instantly see the change in your loan term — graphically and with numbers. See: drcalculator.com/mortgage/ .”

Bill Kistler: “Ok, I got the idea on biweekly loans and prepayment. But how about a new purchase of a home? Is it better to pay cash or take a mortgage assuming a 15% or 28% marginal tax rate? And at what point (interest rates/time) might one decision change the other?”

☞ The higher the tax rate, the lower the effective interest rate. And the lower the interest rate, the better to borrow for a long time — if you think you’ll own the house a long time. It’s nice to have the bank on the hook for you for 30 years at a low rate while you are on the hook to it only until you decide to pay off the loan. But there’s no magic number at which it’s suddenly smart or stupid to borrow against your house.

Theoretically, you would do so the instant you can earn more, after tax and all expenses, than it costs to borrow. But you can never do that risk-free. (Mortgage rates will always be higher than short-term Treasury rates.) And you really can’t assume 10% a year in the stock market is “a given” even though the last 17 years have been so extraordinary. In the 16 prior years, the Dow went from a 1966 intra-day peak of 1000 to a 1982 low of 777. It fell.

But whatever the stock market or interest rates may do (and note the big news earlier this week that mortgage rates have bumped back up above 8% on average), one homespun is always true: It’s wonderful to own your home outright. This is not an archaic notion, and you are not a fool if you aspire to it.

This is the MasterCard, you will recall, that is serviced by some other company, yet GM gets all the ill will. It is a terrible card, serviced by a terrible company.

Latest example:

I finally found out how to transfer the $1,500+ rebate I had accumulated to someone else. (The card gave me 5% on every charge against the purchase of a new GM car.) You add the name of the car purchaser to your account, which can be done by phone and takes only a couple of days. He or she need not be a relative. You can specify, as I did, that the additional cardholder not get a separate card, and you can always take the person OFF your account.

So I found a friend actually willing to consider buying a new GM card — not easy! — added him to the card, and prepared to redeem my dollars. (I couldn’t bring myself to waste that rebate and let it go unused.)

As it happened, once my friend started looking for real, he couldn’t find a GM car he liked. He wound up buying a Saturn. Yes, Saturn is a GM car, but it is specifically excluded from this rebate plan. So I didn’t manage to transfer the $1,500+ after all, and it remains to be redeemed.

But I got a letter from James Hogan in the GM Card Customer Center saying they had recently sent me a new card, yada-yada-yada, and if I hadn’t received it I should call the Lost/Stolen Department at 1-800-374-0001 immediately.

Well, I hadn’t received it.

Indeed, I hadn’t realized they were even sending me a one. (My card was not due to expire for a while.) But maybe when you add a name to the account they send a new card. In any case, you don’t want to ignore this kind of thing, so I called the number.

And was placed on hold for 20 minutes. Eventually, I just had to hang up.

What if someone were out charging merchandise even as I was on hold? Wouldn’t the stolen-card department want to answer the phone real quick? If I’m supposed to call them immediately, shouldn’t they be staffed to answer pretty fast?

I called back a few days later, was forced to reveal my entire life’s history for security purposes, to verify it was really me, and then was allowed to explain the reason for my call. I was surprised to get this notice, I said, because I hadn’t been expecting a new card. Had they really sent one?

The (nice) security specialist checked and said, no, I had not in fact been sent another card.

So why the letter saying that I had been, and instructing me to call immediately if it had not been received?

Just part of the GM MasterCard service.

I wrote about the GM Card a couple of years ago after being charged a $20 fee for being (they claimed) 3 days late on a $55 payment — a $20 fee they refused to waive — and got an outpouring of similar stories from readers.

One, dubbed Deep Plastic, wrote: “As an employee of Household Credit Services (the bank that underwrites your GM Gold Card), I can assure you that you are not alone in your Credit Card Billing Rage. . . . I own GM stock, and I’m tired of the bad rap GM gets for the stupid policies of Household. (I say stupid, because it takes Household approximately 4 days to post a payment to an account once the payment is received. Household does not back-date the payment, therefore a late fee is assessed even though 90% of the time they had the payment on time)."

Perhaps this has changed in the last couple of years, but I doubt it. Someday GM will unhitch its trailer from Household Credit Services. That will be one small sign GM is beginning to get its act together. In the meantime, I have a feeling its market-share erosion is not over.

Bill Merkel: “Thought I’d pass this ‘great deal’ on your way. My mortgage company, Norwest, has been bugging me since I first bought my house to sign up for their ‘convenient’ and ‘money saving’ bi-weekly service plan. They claim that by doing so, I can shave over 6 years off my term and reduce interest payments by about $20,000 over the life of the loan. And it only costs $9 a month. Hmmm, the opportunity cost of $9 a month for 23 years, say at 15%, is about $21,500. So I’ll save $20,000 by [foregoing] $21,500. I think I’d do better by just sending in an extra $9 in principal every month. That math is a bit tough for me, though. Any thoughts on bi-weekly payments?”

A biweekly repayment schedule is a relatively painless way to pay down your mortgage faster, and thus save lots of interest. Instead of paying $1,000 a month, say, you pay $500 every two weeks. There being 52 weeks in a year (and 4.3 weeks in a month — a handy fact many people forget), you wind up make 26 such payments, or 13 months’ worth rather than 12. That extra month’s payment greatly accelerates the pay-off.

Is it worth it? Certainly not if you can earn 15% on your money. But you can’t. At least not over the long run, unless you are a very, very rare individual.

The math here is actually very simple. Paying off, or paying down, an 8% mortgage is the same as “earning” 8% — risk-free — by not having to pay it. That’s a tax-free 8% (not bad!) if for some reason you don’t itemize your tax deductions; or more likely the equivalent of a taxable 8% if you do. (Because after-tax the mortgage interest really didn’t cost you 8% at all, but perhaps 5% — so, after tax, that’s all you’re really saving by paying it down early.)

So if you happen to be the last one on earth with a 12% mortgage, it’s a no-brainer — jump at any early pay-off you can make. But while I think mortgage pre-payments are a decent idea for most people, the case grows ever less compelling as the interest rate goes down. Would you rush to pay off a 3% loan (if there were such a thing)? I hope not!

The fact is, the 7% or 8% that most people could “earn” these days, risk-free, is a pretty good rate. After all, it seemed OK to the people who loaned you the money, and they weren’t naive little savers. Indeed, the people who loaned you the money were likely getting a tiny bit less (the bank, as servicing middleman, takes its small cut), and they were taking at least a teeeentsy bit more risk. (There is almost no credit risk in first mortgages, let alone in buying bonds backed by a diversified pool of first mortgages. But “almost no risk” is not zero risk. And believe me, there is zero chance, if you owe 8% interest on your mortgage, it will be forgiven. So there is 100% certainty that by paying down your mortgage you will save the 8% you would most assuredly otherwise have had to pay. Unless, that is, the bank fails to do its math properly — something to watch out for.)

Accelerating the payments on an 8% mortgage is not a way to grow rich quick, but it is, as I say, a relatively painless way to sleep sounder; an easy form of forced saving.

But what about this $9? At first, I thought it was a monthly principal prepayment, but now that I think of it, I assume it is, as you say, a bank service charge — $108 a year, year after year, to have a computer clerk at the bank click one button, one time, to recast your repayment schedule. (Not to mention the 14 extra payments for you to mail or e-transfer each year — 26 instead of 12 — which may have a small cost to you as well.)

So if you have the discipline to do it, I’d skip the $108 fee and just send an extra principal pre-payment (clearly marked as such on your check!) every so often. For example, you might commit to yourself to send the amount of your entire tax refund each year, if you normally get a tax refund. Check with your bank; but every bank I’ve ever had a mortgage with has handled pre-payments routinely. The extra payment is simply subtracted from the balance due. And without service fees.

Don Rintala: “I (still) can’t understand annuities. I get the idea, but I don’t understand why the marketplace fails to deliver any good ones. It you have some chips and you don’t know when you will be dying, then annuities could play a very useful role. This is, of course, the answer to your question as to why not stocks, or bonds. Because with them you leave your capital behind when departing this vale of tears. An annuity could, theoretically, let you live a better life, because you use up all your resources (no capital left behind), and you pool actuarially with a big group. Given the perfectly reasonable need for this kind product, why are the only ones available not very appealing? Must have something to do with the law.”

Good question.

First, to bring everyone up to speed . . . the original idea of an annuity was that you’d put up — or perhaps your spouse would arrange to put up for you in her will — some fairly large sum of money, in return for which an insurance company would promise to pay, say, $800 a month for the rest of your (or your spouse’s) life.

That’s still an option, but it’s not really what most people think of these days when they speak of the tens of billions of dollars in annuities — mainly “variable annuities” — that are being sold today . . . some, even — egad! — for use within an already-tax-deferred IRA (see “Annuity Insanity“). Variable annuities are basically huge IRAs that (a) provide no tax benefit when you put the money in; (b) allow you to put in as much as you want; (c) are invested in the stock market, which is why the outcome is “variable.” Yes, you will have the option, when you start withdrawing the funds, of receiving some fixed monthly payment for life, but you will also have the option to withdraw it all at once or in chunks. However you withdraw it, all but your initial investment will be taxed as ordinary income — not as lightly taxed capital gains.

So the first reason today’s variable annuities are not the world’s greatest deal is that all your long-term “appreciation” from the stock market, which would ordinarily be subject to a favorable capital gains rate, is fully taxed as ordinary income.

The second reason is that they are sold by insurance companies, most of which build into the deal their own high selling and overhead costs and high annual management fees, knowing that it’s hard for the layman to figure out just what those fees amount to, and that few buyers appreciate the huge difference they make over the long run.

(If you do buy an annuity, buy it, don’t be sold it. Actively shop around for the best deal, with the lowest, or near the lowest, annual expenses and fees.)

The third reason is that to satisfy the IRS requirement that these be “insurance” products (and thus qualified for the tax-deferred build-up), there has to be some element of insurance — and fee for insurance — built into the deal. Typically, what you are charged for this all-but-worthless insurance element is way out of proportion to its value.

The fourth reason is that it’s a big pain to switch variable annuities from one manager to another, so most people are essentially stuck with whoever they started with — which may well be a sub-par investment manager.

Those are the main drawbacks I see to the typical variable annuity enthusiastically marketed today. (As always: if you already have a variable annuity, good for you. You should be commended for having put money aside for your old age, and are in far better shape financially than if you had spent the same money on, say, a boat.)

But what of the traditional annuity? Namely, the option to pay a large lump sum in return for a lifetime of fixed payments? This is an appealing notion (especially if you can find an annuity indexed to keep up with inflation), and I expect it may become more competitive in this Internet age. But again there are reasons to pause.

First, to protect itself, the insurer assumes that you will live a long, long time. It will further assume that its own investment returns over that period will be quite modest (as they may be). And it will build into its calculation its selling fees and overhead costs, and a good margin for profit — as it should. If I were an insurance company, I would, too.

And actually, you want it to be conservative, so that no matter what happens, it will have the financial strength to survive and keep making your monthly payments.

But all that conservatism, overhead and profit cut into the size of the pay-out.

(I do think the Internet will allow for sharpened competition in this area, and better deals. Shop around! Shop around! But in addition to price, consider the other is the financial strength of the insurer. Yes, many states have financial guarantee funds to bail out failed insurers. But not all do, and not in every imaginable circumstance. So the more you plan to rely on annuity payments, the more closely you should scrutinize the strength of their provider. Note that while a B+ or A- was pretty darn good in high school, a B+ or A-minus rated insurer is low on the relative-strength totem pole.)

In short:

As IRA-like substitutes for a 35-year-old, I’m no fan of annuities. As annuities in the traditional sense, for you or your spouse, they can be worth a look as you near or enter old-age — especially if you just know you’re going to live to be 94 or 100. But I would personally be reluctant to trust all to an insurance company, or to resign myself to “dying broke.” I want always to feel I have some savings to fall back on, to control, and, ultimately, to leave to some worthy causes. Perhaps even to a worthy person or two. (So be nice.)

Thanks to George Fescos for alerting me to the $15 off for first-time visitors to healthquick.com. I went to the Grand Opening Specials, bumped my order up over $20 to get the free shipping, and wound up with 2 bottles of Echinacea (boosts your immune system), 3 bottles of Ginkgo Biloba (which I used to call Ginko Balboa, until it improved my memory) and 1 bottle of vitamin E (although I’m told you should really take the 200 IU size, not the 400s offered here) — all for $7.34. Including shipping.

Go and do likewise, with two caveats:

• First, although navigation of the site was quick and easy until the last step, “finalizing” the order required several tries — maybe because the server was overloaded or just because it’s new and there are some bugs to work out. I logged out, logged back in (it had retained all my info) and finally got it to accept and confirm my order.

• Second, your taking advantage of this good deal will not get me even a single frequent flier mile. No, for that you need to get your three free items from PlanetRx by clicking here. And today and tomorrow are, I believe, the last two days to do it. Quite a few of you have, but if you saw last night’s Friends re-run, about Ross selling the Girl Scout cookies, you know that there’s always some kid out there who devises some maniac way to sell even more than you did. (Ross sold 511 boxes, then quickly bought 361 more himself when he saw that the little girl next to him had sold 871 — so he could report 872 and beat her — but there was some kid who sold 2000 boxes somehow. So please! Get your free stuff (plus $3.95 shipping)! I won’t bug you about it again! Click here!

Two weeks ago I suggested that the Internet makes comparison shopping so easy, it’s a boon to consumers, but maybe not so much to investors. (I.e., tough price competition isn’t great for profits.) Last week I printed Joshua Rasiel’s response — which elicited more responses still. Among the most thoughtful . . .

Paul Johns: “I actually find myself agreeing with Joshua Rasiel in today’s column: service does matter, even on the Internet. I think you agree. The major point where I disagree with you is where you assume that the entry costs are ‘almost negligible.’ It’s relatively easy and cheap to do a ‘mostly good enough’ job, but to do the kind of consistently superior job Amazon does is hard — and relatively expensive, compared to other Web sites. Some customers will pay for the difference.

“Good people are, in this market, hard to find and expensive. I’d argue that the keys to Amazon’s success is that their site generally ‘just works’ and that their customer service is almost unfailingly perfect. For me, the amazing thing about Amazon is that they give what we call here in Seattle ‘Nordstrom-style’ customer service but charge steeply discounted prices. It’s true that their discounts aren’t as deep as some of their competitors, but having a rock-solid web site and having intellegent, customer-oriented people to back it up makes it worthwhile for me to shop with them.

“For instance: I had a problem with a gift certificate order (probably not due to Amazon). I sent email. I got a great response: it solved the problem. Moreover, it was spelled correctly and formatted neatly. Clearly someone cared enough to take the time to write me a good response. So I wrote a ‘Thank you’ to them. A DIFFERENT person sent another great response. I was so shocked that I sent a second thank-you. A THIRD person sent yet another great response.

“This sequence of events is no accident: Amazon must be selecting folks very carefully for customer service and writing skills. I don’t need to tell you how rare those skills are today. And hiring and retaining good people is frightfully expensive. Amazon gets to be picky because they’ve got lucrative stock options to offer folks. But that costs money none-the-less.

“Contrast this customer experience with what I had to go through the last time (there will not be a next time) I shipped a package with Airborne. When it hadn’t arrived a week later, I called. The first two times I called the people I talked to thought that ‘MI’ stood for ‘Missouri’ and ‘Minnesota,’ not ‘Michigan.’

“A week later, and still no package. I called a third time. This time, ‘MI’ stood for ‘Miami.’ I patiently explained that, no, ‘Miami’ is NOT a state and again asked what was up.

“A couple of days later, Airborne delivered the package. To a neighbor — they didn’t even find the right house. It appeared as though the major problem was that a driver had miscopied the address from the package to the clipboard and therefore was unable to find the address because the mistaken address didn’t exist.

“I believe that this sequence of events is also no accident. It reflects how Airborne is run. And whenever Airborne’s stock drops, I secretly know why, regardless of what the analysts say. (I of course don’t have a ready explaination for why it goes up.)

“The Internet commerece world isn’t really different from the ‘real world’: service will be a key differentiator for some (many?) customers. It’s only different in that you don’t have to have human contact with the vast majority of your customers — so there are some savings there.

“That’s why I think Amazon is a great company. And if their stock price were more reasonable, I’d be pleased to own some of it.”

I guess I would only point out that, while I, too, appreciate Amazon’s service, they did lose $138 million last quarter providing it.

(OK, the loss came from investing in growth. But something tells me that if Amazon had made $50 million from selling books, before all the other stuff that dragged them into the red, they would have announced that.)

So this just makes my point. The Internet is great for consumers, but not necessarily a gold mine of profits for Internet vendors.

And as to service, I expect buying a book may become pretty much like placing a call. Can you really tell MCI-brand long distance quality from AT&T-brand or Sprint-brand? Don’t they really sound pretty much alike?

Anne Speck: “Sure, you throw the box from Amazon away, but **the box comes!** Any company that operates at a loss will eventually go out of business. I think that Amazon will eventually balance the equation so that it runs in the black, and in the meantime, they go to an incredible effort to make shopping with them as pleasant and painless as a well-run bookstore. I know their box will show up.

“However, this week, I was checking out cameras and ended up at www.netmarket.com. They have two prices for every item they sell. A ‘guest’ price and a ‘member’ price. The membership you have to buy is $70 a year. Well, I’ve been doing my homework, and the guest prices are about $20 more than the cost for the same product at my local camera shop. The member prices are about $10 less (assume that the taxes I’d pay locally and the shipping I’d pay on-line are a wash). So, if I want, I can pay $70 to ‘save’ $10 on the camera. Suddenly, my modestly cheaper price (which would have fooled the net bot) has become much more than driving down the street. (I was also put off because several of the product descriptions were flat-out wrong… like they’d linked to the wrong product.)

“The [physical] camera shop also offers lessons for people who buy cameras from them and you get to walk out with the camera that day instead of waiting two weeks and then wondering what the delivery person will do with the box when it finally comes.

“I guess what I mean to point out is, some of the on-line ‘deals’ aren’t deals at all. If Amazon can cut me a percentage point or two off their price because they ‘only’ have to pay for stockers and order fillers and web masters and storage for the books (or clever people to do on-demand delivery scheduling) and can rent space in low-rent districts instead of high profile retail sites, then I will buy some of my books from them.

“But there’s nothing like touching a book to get me to buy it! And, I have been burned at Amazon. I did a search on ‘dog’ and ‘humor’ hoping to turn up something like ‘Poetry for Cats’ for a dog-owning friend. I got ‘How Dogs Work,’ which looked interesting. I ordered it. It was a children’s book. It was fun and funny, and my friend enjoyed it, but nowhere in the descriptions (at the time) did it say it was a children’s book. So now, I only order books I know something about from Amazon.

“The Internet will change a lot of things about business, but it won’t change everything. It will make it easier for companies who do what they do really well to replace companies that don’t do so well. I have an art supplies outfit I love. It’s called ‘Joe’s.’ They only do catalog sales, but the catalogs are funny and pithy and full of good quality names. By putting it on-line, they would easily replace the art supply stores that I have in town. At the four that I’m familiar with, the help is rude, the selection is small, and there isn’t enough information about the products. These places are in jeopardy.

“On the other hand, though I could beat the price I pay for my karate uniforms on-line, I love going to the funky little shop where I buy them. I always learn something new, I’m always happy to have gone there. I just can’t get too apocalyptic about the death of brick-and-mortar commerce.”

Anne, the karate chopping, water-coloring e-mail shopper. Is this a great time to be alive, or what?

And finally . . .

Joshua Rasiel (again): “Maybe right now, yeah, there isn’t much difference in getting the same book from amazon or booksamillion. My point was that I believe amazon will be adding more and more value to their site and to their books. This needn’t be limited to better packaging. Better customer service, for starters. Better guarantees and warrantees, better site navigation (cleaner, faster), all things I might pay a few more bucks for, just to get the same product. Amazon already does a lot of this: they invented 1-click shopping, which I love. And their suggestion software — where they figure out what you’ll like — is pretty cool, too.

“Which reminds me, if you wanna see a cool site, try www.moviecritic.com, it tells you what movies you like with uncanny accuracy.”

“I read a column you wrote years ago as I was entering a career in insurance and mutual fund sales. It was an article explaining why using an annuity in an IRA should be considered ‘financial malpractice.’ I agreed then and I agree now. Hardly a day passes without my encountering a poor soul who has been duped into sharing their wealth with a NEEDLESS middleman. I have lost the article. Could you please revisit the subject?” — Steve Reynolds

OK. A variable annuity is an investment product sold by insurance companies (or their agents). You give them $100,000, say, and it is invested as it would be in stock-market mutual funds, except that more of your money is siphoned off in fees and its harder to get your money back out. The annuity grows without taxes until withdrawal, but then withdrawals are taxed as ordinary income.

For those few of you who may have missed it . . .

Annuity Insanity

September 4, 1996

I’ve never been too enthusiastic about annuities, for reasons I’ve detailed from time to time. They’re heavily promoted (because the sales commissions are high), but that doesn’t make them a good investment. Once you get sucked into an annuity it’s not so easy to get out or even switch managers. And you have annual administration fees and a “life insurance component” that cuts into your return.

Yes, they grow tax deferred, like a giant nondeductible IRA. But why not buy municipal bonds, which are not just tax-deferred but tax-free? Or why not buy growth stocks outside the shelter of a variable annuity? Tax on their appreciation will not only be deferred until you sell them but, very likely, subject to a favorable capital gains tax rate. (Within an annuity, any capital gains advantage is ultimately lost — the gains are fully taxable as ordinary income when withdrawn.)

So I’ve been pretty down on annuities forever — not that this seems to have thwarted in any detectable degree the army of sales folk who sells tens of billions of dollars worth every year.

But what’s really appalling is the large percentage of annuities sold to people for their retirement plans. Their IRA rollovers and Keogh Plans and so on.

This is nuts. Those funds are already tax-deferred. Why on earth would you accept the sales and administration costs of an annuity product — the only real justification for which is the tax deferral aspect — when your funds are already sheltered from tax?

If you are one of the thousands of investors making this mistake — quit it! If a financial advisor put tax-deferred annuities into your tax-deferred retirement account, I’d consider not just switching advisors but even inquiring as to possible “remedies.” You’ve been the victim of something that either is, or appears to me to verge on, professional malpractice.

(Educators with TIAA annuities: don’t be alarmed — they are a better deal.)

Full disclosure: I own a little piece of this. It’s called OneCore.com. And, no, it’s not public. But it might be of interest to those of you who run small businesses, or even if you don’t (you don’t? it’s 1999.com, for heaven’s sake — get with it!). OneCore might be helpful if you have a one-day-a-week housekeeper and find the “payroll” aspects so daunting that, by not filing the proper forms and paying the nanny tax, you are jeopardizing your otherwise very real shot at becoming a Supreme Court justice.

(The household-employee aspect of this may be a little premature. But when I suggested it to OneCore, they thought it might be possible. In the meantime, Charles and I have an accountant working two days a week to tend to the requirements of employing our housekeeper one day a week. Or so it feels, anyway.)

As Business Week On-Line described it last week, “OneCore is a middleman: It bundles the small-business financial services of a number of companies into a single package accessible on one Web site. … [Its] basic service — which all customers must take for a fee of $25 per month — is an interest-bearing checking or sweep account, called the Core Account, administered by mutual-fund company Scudder Financial Services Inc. Aside from that, services are a la carte. Other offerings include payroll processing by Computer Resources Inc., bill payment through CheckFree Corp., 401(k) administration by Bankers Systems Inc., merchant card services from Michigan National Bank, and equipment-leasing loans from BankVest Inc. All transactions are handled online, and clients can download transaction information into their accounting programs. The system is compatible with a number of software packages, including Quicken and Quickbooks.”

Interest on business checking accounts. I like it.

OneCore is the creature of Barry Star, whom I first met when he was at Fidelity Investments. Company lore has it that OneCore was born when Barry was charged 85 cents to deposit a $100,000 check in his — non-interest-bearing — business checking account. (Even the youngest companies need their lore.)

OneCore is just staring out, but already it has clients like Clint Clemons, a photographer whom Business Week Online’s Jeremy Quittner describes this way: “His office is in Rhode Island, his bookkeeper is in New Hampshire, his production facility is in Los Angeles, and his agents are in New York and Italy. He travels about 150,000 miles annually. He has used OneCore since the spring of 1999 to pay bills and handle his payroll. The online access to his business accounts is indispensable . . . ‘It allows me to have personal control of the signing of checks, checking the performance on the accounts, and approving all the money that gets spent out of the company,’ [Clemons says].”

I haven’t tried OneCore yet myself, so cannot vouch for it. But if you’re tired of doing the pizza parlor payroll by pencil, check it out: OneCore.com.

Do you read Barron’s? Alan Abelson, whom I profiled as “The Smartest Man on Wall Street” in 1973, and who probably still is, had a column about a month ago that mentioned something about Japan. Alan has been bullish on Japan, as have been some other smart folks I know, and noted that $100 billion in Japanese 6% and 7% postal savings bonds come due next year. (In Japan, much of the prodigious saving people do is down at the post office.) Are the Japanese really going to roll them over into bonds that now yield practically nothing, Alan wonders? Or will some of them try their hand at the Japanese market? One more reason Alan is betting on Japan.

Then again, I was reading somewhere else that Confucianism prizes obedience before almost anything else, which is why, according to this, the Japanese — even more than the Chinese, for some reason — are slow to revamp their existing institutions, as some of its Asian neighbors have been. This writer was doubtful Japan would make the needed changes.

Someone else told me the rebound in Korea and Thailand had been so swift, the pain so relatively fleeting, he was afraid they had not really “gotten it,” and would largely revert to their bad old ways.

As usual, the world is too complex to scope out with any certainty. But Asia is not going away. And it would be foolish to assume that the Asian economies will never be able to figure out how to compete in the global marketplace. It wasn’t so long ago we actually thought they had won the competition.

Meanwhile, here is Chapter 14 of Fire & Ice. (You already have Chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, and 13.) It’s called, “Women Are Liars and Cheats,” and suggests that beneath that crude exterior, Charles had a somewhat crude interior. But was basically just a lump of insecurities like everyone else. Or well, maybe a bigger lump.

Have a good weekend!

Monday: A New Website for Small Businesses