Gimme Shelter: For now, money-market funds may be as safe as bank accounts
Illustration: Mark Matcho for Newsweek

If you’re scared, you have reason. We’re BATTLING a financial collapse in the teeth of a spreading recession, not only in the United States but in the other industrialized countries, too. The risks fall especially hard on workers in their 50s and 60s who are hoping to retire (or fearing it, if their companies are pushing them out). But anyone trying to defend a paycheck or personal investments will be facing tougher times. Amid the rubble, only a few things are safe.

• Your insured bank account is safe. Some of the customers of struggling Washington Mutual are moving their money to other banks. That’s a waste of time. Deposits up to $100,000 are totally safe—insured by the Federal Deposit Insurance Corp. Odds are that WaMu won’t fail; it will be sold with government help. In cases of failure, the FDIC arrives on Friday night and moves the accounts to a new bank, which opens for business as usual Monday morning. Over the weekend, you can even use debit cards and ATMs. If there’s no buyer, the FDIC liquidates the bank, mailing out checks for insured deposits immediately. They will always be paid off. By contrast, uninsured deposits are at risk. If you have more than, say, $95,000 in your account, move the excess money to another bank so it, too, can be insured. No sense tempting fate. More than $100,000 can be insured in a single bank if you have different types of accounts—details at www.fdic.gov.
  
• Your money-market mutual fund is safer than it was last week. Money funds serve as checking or savings accounts that pay higher interest rates than you’d get at a bank. Your money is supposed to be safe. For every dollar you put in, you expect to get a dollar back, plus interest, any time you want. These funds aren’t FDIC-insured, but, in their 37 years of life, they’ve never lost a penny for individuals.
  
• That is, until last week. On Wednesday, the Reserve Fund group’s giant Primary Fund—owned by Bruce Bent, the man who invented the business—got stuck with $785 million in worthless commercial paper from the failed investment bank Lehman Brothers. The fund “broke the buck,” meaning that each dollar dropped in value to 97 cents. Redemptions were frozen for seven days, but not before $27.3 billion—more than 40 percent of Primary’s assets—flew out the door, according to Peter Crane, publisher of Money Fund Intelligence. The Primary Fund didn’t return calls.

All the marketing mail you get about retail partners from your credit-card company may be annoying, but take another look. You may be leaving money on the table. Most major credit cards now have their own online shopping portals, stocked with big-name retailers like Target, JCPenney and Zappos. Click from the card company’s site to the merchant of your choice, and you can bump up the amount of money that shows up as cash back on your card. For example, use a Chase cash-back card to shop at Lands’ End through the Chase Rewards Plus program, and you can get as much as $15 in rebates for every $100 you spend. “These programs are a win-win-win,” says Justin McHenry of indexcreditcards.com, who reviewed several portals for NEWSWEEK. Here are four major programs available with no-fee cards:

• Shop Discover (discover card.com/shopcenter). This is the most generous of the programs, according to McHenry. It offers cash rebates as high as 20 percent.
• Chase Rewards Plus (chasecreditcards.com). An online mall with many of the same merchants offered by Discover, though the rebates aren’t always as good. Rebates earned via this portal don’t count against annual cash-back caps that the cards hold.

The sinking stock market could be forecasting the results of the November presidential election— or vice versa. Stocks will behave differently after Nov. 4, depending on who wins. TIP SHEET’S Linda Stern asked Jeffrey Hirsch, editor of the Stock Trader’s Almanac, to read the tea leaves.

STERN: What does the year-to-date performance of the stock market predict about the election’s outcome?
HIRSCH: This is a stock market that was in trouble, even before last week’s sell-offs, and the malaise we’ve been experiencing makes the ouster of the incumbent party more likely. Strong Septembers and Octobers usually lead to an incumbent-party win. You would think despite the closeness of the polls that we still are going to see Democrats retake the White House.

Given all that you know about election-year patterns, how would you expect stocks to perform through the election and for the rest of the year?
Election years are traditionally up years. Incumbent administrations shamelessly attempt to massage the economy so voters will keep them in power. But sometimes overpowering events occur and the market crumbles, as it did last week. The bailing-out was too little, too late, and I think we’re going to continue to have market weakness through October. Once we have the settlement on the election, the market would be more inclined to be happy.

Stock traders can talk about numbers all they want. But it’s emotions that move the market. Anyone who spent last week checking their 401(k), biting their nails, calling their broker and selling everything already knows that.

Now researchers are getting more focused on exactly how investors let their moods move their money. “There is an important relationship between emotional intelligence and investment behavior,” says John Ameriks, of Vanguard Investments. He’s seen investors engage in a host of self-defeating, psychologically driven behaviors.

Sometimes they simply freeze in the face of market turmoil. Or they trade too much. They fall in love with loser stocks they have chosen, and refuse to sell them until they’ve recovered—which may never happen. They follow the pack in and out of tech firms, real estate, oil-company stocks and the Dow, rationalizing that it’s safer to stay with the crowd. They bounce between fear and greed, buying high and selling low. People who are emotional tend to trade more often than people who are emotionally controlled, says Ameriks, and all that trading tends to be unprofitable.

Car sales are flat, dealers are hungry and the price of gasoline is still threatening to revisit the $4-a-gallon levels it saw in July. Does that make it an ideal time to sell the clunker and spring for a fuel-efficient hybrid?

Maybe not. It’s true that as gas prices rise, hybrids will pay for themselves more quickly than they used to. But the combination of getting a low price when you trade or sell your existing car and the extra amount you’ll pay for a hybrid means it’s probably more cost-effective to keep the heap for a while longer. Even if you need a new car, you’d probably be better off buying a regular-engine compact car instead of a hybrid, suggests Jesse Toprak of Edmunds.com. Those regular compacts are almost as fuel-efficient as most hybrids and cost far less. The best candidates for saving money on hybrids are people who drive at least 15,000 miles a year, mostly in city traffic, and “keep a car until the wheels fall off,” says Toprak.

Don’t worry, get busy. These sites will help you figure out how to respond to the Wall Street tumult and how safe your money is now.

• fdic.gov/edie: Use the calculator at this site to see how much of your bank deposits are insured.
• sipc.org: Yes, your brokerage accounts are covered, to a point. The Securities Investor Protection Corp. lays it out.
• naic.org: Find your state’s insurance rules and guarantees via the National Association of Insurance Commissioners Web site.
• finra.org: The brokerage industry’s own cop explains what to do if your broker gets sold or goes belly up.
• treasurydirect.gov: Feel like fleeing to safety? Here’s where you can buy Treasury bills and bonds.

A number of companies are starting to offer consumers free peeks at their credit scores, and not just their credit reports. That’s handy because it’s the score that lenders use to decide how much to charge in interest and whether to approve you for loans or credit cards.

You can get free credit scores at eloan.com, creditkarma.com and credit.com. The hitch is that they offer scores devised by the credit-reporting companies, mostly Trans-Union and Experian, and not the most widely used score developed by Fair Isaac Corp. (FICO). It will still cost you $16 to get a copy of your FICO score at myfico.com.

Why bother? If you’re getting ready to borrow money, your score can make a big difference—particularly in the current tight economy. A high score (760, say) can save you about $250 a month in interest over a middling (650) score on a 30-year fixed rate $300,000 mortgage.

Vacation-home owners are about to lose a sizable tax break. Until now, they could move to their retreat, live in it for two years, then sell and take full advantage of the capital-gains exclusion of up to $500,000 per couple ($250,000 for singles) that applies to primary homes. But Washington closed that loophole in the housing-relief legislation that passed this summer.

Under the new rules, that exclusion will be prorated by the amount of time the owner actually used the home as a primary residence. So if you owned the home for 10 years, but lived in it only the last two, you’d be able to exclude 20 percent of the gain.

See “Leonardo da Vinci: Drawings From the Biblioteca Reale in Turin” at the Birmingham (Ala.) Museum of Art. One of the most significant groups of drawings by the great draftsman, the works appear here for the first time in their entirety outside Italy (through Nov. 9; artsbma.org).

Hear “Rattlin’ Bones” by Australian husband-and-wife duo Shane Nicholson and Kasey Chambers. This raw country album has pitch-perfect harmonies, quick guitar and exuberant banjos, and will get any foot tapping. Song to wind down to: “Wildflower.”

Rent “Ken Russell at the BBC.” Early in his notorious career, Ken Russell reinvented the biopic on TV with these wild and marvelous dramatizations of artists’ lives. This collection features his feverish film on Isadora Duncan and the lyrical “A Song of Summer,” about Frederick Delius.

By Clara Zabludowsky

Framed by mango trees, palm trees and pink and blue haciendas, this oasis town, with its array of galleries, restaurants and uncorrupted natural beauty, offers visitors a breathtaking haven away from Baja’s more touristy locales. In 2006, Todos Santos was named a “Pueblo Magico” or magical village by Mexico’s Secretariat of Tourism. After a brief sojourn there, the town’s undeniable charm will leave no doubt as to why.

SURF or otherwise enjoy the sea at Los Cerritos beach, where the swelling waves are home to world-class surfers. It's also a prime spot for whale watching in the winter months. If you want to try your luck at riding the waves, check out Pescadero Surf Camp. Their certified instructors should have you up on the board in no time.

DINE at Café Santa Fe. Owned by Italian émigré Ezio Colombo and his wife, it is located in front of the main plaza. One of the best Italian restaurants in Mexico, the combination of the unbelievably fresh seafood, the Colombo’s fantastic homegrown organic vegetables and a full bar make for an unforgettable meal. Don’t miss the stir-fried shrimp and octopus with arugula and lime (Calle Centenario #4). For those looking for an authentic Mexican meal, one can do no wrong at Los Adobes. Dining is done al fresco within the wonderful setting of the restaurant’s own botanical garden. The cuisine is top-notch and an excellent opportunity for those unfamiliar with Mexican food to give some of the country’s best dishes a try. The shrimp sautéed in garlic and chile guajillo with a touch of white wine are a must, as is the famous seafood soup, which is made with organic vegetables and the catch of the day. Wash it all down with agua de jamaica, water made from the hibiscus flower, unique to Mexico and incredibly refreshing.

 
Nice Threads: 'Gossip Girl''s Ed Westwick (left) and Taylor Momsen
James Devaney / Getty Images (left); Soul Brother-Film Magic-Getty Images

Fashion consciousness isn’t new to the schoolyard set. But with more and more TV shows about wealthy teens, like the CW network’s “Gossip Girl” and MTV’s “My Super Sweet 16” on the airwaves, parents may find themselves bombarded with an unprecedented number of requests for $140 Coach bags and $60 Abercrombie jeans. Here’s how to balance the desire to make your kids happy with the need to avoid bankruptcy.

• Ask why kids want designer duds. Usually, the motivation is to fit in or acquire social status. Christine Feiler, whose kids are 6, 9, 12 and 14, says she regularly hears: “Everyone else has it!” One strategy is to talk about alternative ways of accomplishing that same goal, says Dee Shepherd-Look, a clinical psychologist who specializes in children and families. Parents can encourage their kids to more actively call friends and organize gatherings. “Studies on adolescent popularity show that popular kids are the ones who reach out, make things happen, who tend to be complimentary to other kids,” says Shepherd-Look.

• Lay out the financial picture. If a kid begs for pricey apparel, “the parents can smile and say, ‘That would be grand, but we can’t afford it’,” says child psychiatrist Elizabeth Berger, author of “Raising Kids With Character.” Then kids will understand a “no” is “not that the parents are just being mean,” says Brad Sagarin, an associate professor of psychology at Northern Illinois University. Don’t dwell on the electric bill and the mortgage with younger kids. Instead, ask if they would give up a birthday party to buy an Abercrombie shirt.

Rent “Dirty Sexy Money,” the complete first season. If you need to be convinced to watch this show, you probably can’t be sold. But here goes nothing: Family secrets. Torrid affairs. Dirty deeds. Not to mention a stunning ensemble cast. You’re still reading this instead of watching?

See “Richard Avedon: Portraits of Power” at the Corcoran Gallery of Art in Washington, D.C. The exhibition features five decades of rare and never-before-seen photos of prized activists, entertainers and political figures taken by America’s portraitist (through Jan. 25, 2009; corcoran.org).

Surf smartertravel.com and click on “travel advice” for tips on how cash-strapped college students can save money on flights home (or that upcoming winter break in Cancún).

Does your child complain that math is his least favorite subject? Jo Boaler, a math-education professor at England’s University of Sussex and author of “What’s Math Got to Do With It? Helping Children Learn to Love Their Least Favorite Subject—And Why It’s Important for America” (Viking/Penguin, $24.95), and Rod Pierce, creator of mathis fun.com, offer some advice.

• Make it fun. To practice geometry, try tangrams, seven-piece puzzles whose pieces can be put together to form different shapes ($7.95 at etacuisenaire.com); or the card game Set ($12 at setgame.com). To develop number skills, check out Equate, which is like math Scrabble ($25 at conceptualmathmedia.com), or Cribbage ($24.99 at target.com).

• Boost their confidence. Never say “You’re wrong,” says Boaler. “There’s always some logic in their thinking. The key is to find the logic.”

Should you discuss salaries with your co-workers? Sure. When you know the guy in the next cube is raking in an extra $500 every month, you can use that knowledge to try to bump up your own salary.

Younger workers are far more comfortable sharing this info, and many companies have become less restrictive about letting people talk, says Robert Hohman of glassdoor.com, a new Web site that offers company-specific salary details. You have to post your own pay to see the info on the site, which now has at least some salary data on 11,000 companies. You can get more-general information at Web sites like payscale.com and salary.com, and check for salary surveys through your own professional association. Or wait until the boss is on vacation and try the old pass-an-anonymous-memo gambit.

The Ford Flex is one of the few crossovers that truly marry the generous passenger space of a minivan with the ample hauling room of an SUV. The boxy look might put some people off, but a long wheelbase provides a nice, smooth ride.

Interior: “Business class”-style front seats are wide and comfy and have stylish contrast stitching. And third-row riders get skylights overhead, which makes the cabin feel even more spacious.

Capless fuel filler: The fuel door pops open and doesn’t require muscle to twist off a tight gas cap. And you won’t have to worry about leaving it behind at the station.

 
Fit Club: You can make a low-tech gym for less money with equipment like resistance bands
Illustration: Michael Klein for Newsweek

Barbara Bushman rolls out of bed as early as 4 a.m. to head to her gym—even though it’s just downstairs. “I don’t really care what I wear or what I look like,” she says about working out at home. “It’s the dogs and me.” She owns free weights, a Universal machine, resistance bands and a treadmill. But that’s not all: Bushman also exercises at the fitness center at Missouri State University, where she is a professor in the department of health and physical education. “I like to mix and match,” she says.

Most of us struggle to find time for just one gym, let alone two. The U.S. Centers for Disease Control and Prevention recommends that Americans get at least 30 minutes of moderate aerobic activity (like walking) or at least 20 minutes of vigorous aerobic activity (like running) three days a week, plus some strength training (like push-ups or lifting weights). But most of us fall far short of that goal. As cooler weather approaches, forcing many to bring their workouts indoors, TIP SHEET provides a guide to what to consider before choosing to work out at home or join a gym—or both.

• Cost: Last year the average annual dues for U.S. health clubs were $402—or $33.46 per month, according to the International Health, Racquet and Sportclub Association. That price can be a bargain if you go frequently—or a rip-off if you don’t. Novice health-club users should pick one that doesn’t require a long-term contract.

By Paul Tolme 

Calm-water kayak tours are like a nature hike on water, offering the chance to see wildlife and view landscapes unreachable on foot. Void of running rapids or raging surf, calm-water tours are ideal for first-timers. Here are a few locations where beginners can get their paddles wet.

Escape the crowded roads of Yellowstone National Park while gliding across Yellowstone Lake, whose 136 miles of shoreline make up the nation’s largest body of fresh water above 7,000 feet. The park’s animals and geology are on full display here. Bald eagles and osprey hunt for fish, playful otters poke their heads above the surface and grizzlies lumber along the shoreline ($175 for a day tour, $400 for an overnight with a gourmet campfire meal; snakeriverkayak.com).

Lake Tahoe’s legendary clarity and aqua-blue color allow visitors to see down 70 feet and draw comparisons with the Caribbean—that is, until you touch the brisk mountain water that flows down from California’s Sierra Nevada and Nevada’s Carson ranges. Navigate around giant rounded boulders deposited by glaciers and land on a secluded beach for lunch ($85 for a five-hour trip; tahoeadventurecompany.com).

By Tina Peng  

Celebrities have fallen for a wave of trendy juice fasts—or “cleanses”—that purportedly flush the body of toxins. Nutritionist Gayl Canfield of the Pritikin Longevity Center & Spa says good diet and exercise habits are more effective and warns that people shouldn’t do cleanses for more than a few days without medical supervision. Here’s what some stars are downing.

L.O.V.E.fast
PRICE: $350 for five days LOCATION: New York INFO: organicavenue.com

Organic Avenue will deliver daily smoothies, soups, milks and salads—all organic and all vegan—to Manhattan customers’ offices. There’s also a less intense L.O.V.E.feast.

Blueprint Cleanse
PRICE: $325 for five days LOCATION: New York INFO: blueprintcleanse.com

The three-day Beginner’s Cleanse includes cashew milk with vanilla and cinnamon; the Excavation Cleanse lasts longer and includes more cayenne to flush out toxins.

Go to the World Festival of Sacred Music in Los Angeles to see 1,000 performers from across the world—including throat singers from Mongolia and Israeli composer Yuval Ron—perform in 41 events of sacred music and movement (Sept. 13–28; festivalofsacredmusic.org).

Read “The Flavor Bible” by Karen Page and Andrew Dornenburg ($35). This unique cookbook encourages chefs to ditch their recipes and follow their imaginations instead. The book lists thousands of classic as well as offbeat flavor combinations. Look up “chicken” and you get “figs, honey, thyme and white wine,” among dozens of other serving ideas.

Hear “How to Walk Away” by Juliana Hatfield. After 20 years, the songstress still packs a wallop on her 10th album, featuring edgy tales of heartbreak sung with that classic sweetness.

By Elisa Mala

The Bronx is the only New York City borough that isn’t situated on an island. But that’s not its only claim to fame – it boasts some of the city's most colorful and entertaining attractions. It's an easy subway ride from virtually anywhere in Manhattan, but on the first Wednesday of every month, there are even free trolley rides from midtown. While the borough is often overshadowed by its neighbor to the south (Manhattan), it's worth seeing up close. Take it from NEWSWEEK’s Elisa Mala, who lived just below the Bronx-Manhattan border for a good part of her life.

Ride the Skyfari at the Bronx Zoo, a cable car that soars over treetops, orangutans and more than 6,000 other furry friends at heights of up to 100 feet. Afraid of heights? Never fear – an internal train ride that’s appropriate for children and adults alike stays closer to the ground and covers quite a lot of it. Or try the narrated tram tour at the New York Botanical Garden, where riders can hop on or off as many times as they like to check out one of the city’s few waterfalls, a serene reflecting pool or numerous verdant gardens.

Stroll past the nautical museum, lighthouse, docks and mom-and-pop shops on City Island, an islet off the coast of Pelham Bay Park that is as picturesque as any North England port town. Settled by the English in 1685, it's steeped in centuries of nautical history and feels far removed from the hustle and bustle of city life, even though it’s only a few miles away from the skyscrapers.