The 3 Biggest Risks Faced By International Investors

Investing internationally has often been the advice given to investors looking to increase the diversification and total return of their portfolio. The diversification benefits are achieved through the addition of low correlation assets of international markets that serve to reduce the overall risk of the portfolio. However, although the benefits of investing internationally are widely accepted theories, many investors are still hesitant to invest abroad. In this article, we'll discuss the reasons why this may be the case and help highlight key concerns for investors so they can make a more informed decision. TUTORIAL: Risk and Diversification
Transaction Costs
Likely the biggest barriers to investing in international markets are the transaction costs. Although we live in a relatively globalized and connected world, transactions costs can still vary greatly depending on which foreign market you are investing in. Brokerage commissions are almost always higher in international markets compared to domestic rates. In addition, on top of the higher brokerage commissions, there are frequently additional charges that are piled on top that are specific to the local market, which can include stamp duties, levies, taxes, clearing fees and exchange fees.
As an example, here is a general breakdown of what a single purchase of stock in Hong Kong by a U.S. investor could look like on a per trade basis:

Fee Type	Fee
Brokerage Commission	HK$299
Stamp Duty	0.1%
Trading Fees	0.005%
Transaction Levy	0.003%
TOTAL	HK$299 + 0.108%

In addition, if you are investing through a fund manager or professional manager, you will also see a higher fee structure. To become knowledgeable about a foreign market to the point where the manager can generate good returns, the process involves spending significant amounts of time money on research and analysis. These costs will often include the hiring of analysts and researchers who are familiar with the market, accounting expertise for foreign financial statements, data collection, and other administrative services. For investors, these fees altogether usually end up showing up in the management expense ratio.
One way to minimize transaction costs on buying foreign stock is through the use of American Depository Receipts (ADRs). ADRs trade on local U.S. exchanges and can typically be bought with the same transaction costs as other stocks listed on U.S. exchanges. It should be noted however, that although ADRs are denominated in U.S. dollars, they are still exposed to fluctuations in exchange rates that can significantly affect its value. A depreciating foreign currency relative to the USD will cause the value of the ADR to go down, so some caution is warranted in ADRs. (For more, see An Introduction To Depository Receipts.)
Currency RisksThe next area of concern for retail investors is in the area of currency volatility. When investing directly in a foreign market (and not through ADRs), you have to exchange your domestic currency (USD for U.S. investors) into a foreign currency at the current exchange rate in order to purchase the foreign stock. If you then hold the foreign stock for a year and sell it, you will have to convert the foreign currency back into USD at the prevailing exchange rate one year later. It is the uncertainty of what the future exchange rate will be that scares many investors. Also, since a significant part of your foreign stock return will be affected by the currency return, investors investing internationally should eliminate this risk.

The solution to mitigating this currency risk, as any financial professional will likely tell you, is to simply hedge your currency exposure. However, not many retail investors know how to hedge currency risk and which products to use. There are tools such as currency futures, options, and forwards that can be used to hedge this risk, but these instruments are usually too complex for a normal investor.  Alternatively, one tool to hedge currency exposure that may be more "user-friendly" for the average investor is the currency ETF. This is due to their good liquidity, accessibility and relative simplicity. (If you want to learn the mechanics of hedging with a currency ETF, see Hedge Against Exchange Rate Risk With Currency ETFs.)
Liquidity RisksAnother risk inherent in foreign markets, especially in emerging markets, is liquidity risk. Liquidity risk is the risk of not being able to sell your stock quickly enough once a sell order is entered. In the previous discussion on currency risk we described how currency risks can be eliminated, however there is typically no way for the average investor to protect themselves from liquidity risk. Therefore, investors should pay particular attention to foreign investments that are, or can become, illiquid by the time they want to close their position.
Further, there are some common ways to evaluate the liquidity of an asset before purchase. One method is to simply observe the bid-ask spread of the asset over time. Illiquid assets will have wider bid-ask spread relative to other assets. Narrower spreads and high volume typically point to higher liquidity. Altogether, these basic measures can help you create a picture of an asset's liquidity.
Bottom LineInvesting in international stocks is often a great way to diversify your portfolio and get potentially higher returns. However, for the average investor, navigating the international markets can be a difficult task that can be fraught with challenges. By understanding some of the main risks and barriers faced in international markets, an investor can position themselves to minimize these risks. Lastly, investors face more than just these three risks when investing abroad, but knowing these key ones will start you off on a strong footing. (For additional reading, also check out Going International.)

source: http://www.investopedia.com/articles/basics/11/biggest-risks-international-investing.asp#ixzz1XhVwAQHr

What to look for when selecting a business bank account

What to look for when selecting a business bank account

Due to laziness alone, we often do our business banking with the same people our personal bank account is held with. If you shop around, you won’t get much of a better deal financially (rates and services are generally almost identical) but you will find banks who offer better service, better personnel and advice.

Business banking is very different to personal banking. To begin with, your choice of banks is different and much more limited than with your personal bank account. You won’t get the benefit of the new rash of internet banks- but the high street banks are becoming more competitive for your business custom. This is because business banking is where they usually make some money.

You should expect at least to get your first year’s business banking free (provided you remain in credit). Thereafter you’ll be expected to pay a fee per transaction, so factor that into your cost base. You should also expect access to a business banking advisor; who is there to help. Tales of woe abound about these people- plenty of business advisors never call you up except to try to sell you things like mortgages, but Barclays in particular is improving by having advisors who are specialists in particular businesses e.g. construction, technology etc.

You should also get some sort of credit- even if it’s a card you pay off each month. And before opening your account, see what overdraft and loan facilities are available- you may not need them now, but you should know what their attitude to lending is so you’ll be prepared when you need it.

Finally, you have some options that may not be immediately apparent. As you may not be in your branch so often, smaller regional banks may be preferable to the big high street banks. The Allied Irish Bank, for example, has an astonishing record for looking after its business banking customers, but might not have been on your list.

www.bank.org.uk

New Debit Cards for Compromised Bank of America (NYSE: BAC) Accounts

New Debit Cards for Compromised Bank of America (NYSE: BAC) Accounts - Some customer’s of Bank of America (NYSE: BAC) may receive new debit cards in the mail, as their personal information and account details may have been compromised. The bank is not releasing details as to how much data was compromised, but that the corporation has discovered irregular activities involving the debit cards issued by the bank. Despite no unauthorized activities being reported on debit cards in relation to this discover or potentially compromised data, the bank has canceled old cards and re-issued new debit cards to anyone they feel was affected.

California laws require that Bank of America contact customers regarding any data breach. “Through our fraud monitoring and based on information we receive from the card associations [such as Mastercard and Visa], we will notify a customer and block and reissue their card if we believe their card information has been compromised at a third-party location,” Bank of America’s Reiss said in an email.

Some financial experts advise consumers not to use debit cards, at all. They say debit cards do not fall under the same laws as credit cards with their $0 liability for unauthorized use, and in some cases, debit card users are faced with paying for unauthorized purchases made with their debit card. If you go for 60 days or more without noticing the fraudulent purchases, the law says you are liable for them and the bank is not required to reimburse you. Since the debit cards are tied to funds in a bank account, this means you can find yourself without any cash available.

Even if you’re lucky enough to have a bank replenish the money stolen through fraud, it can take a month or more to get your money back. Using debit cards may be convenient, but it’s important to weigh the disadvantages before swiping the card every where you go. If you do need to use debit cards, you may want to take some time and compare different bank policies to find one that has strong protections in the event of fraud or identity theft associated with the debit card.

http://www.americanbankingnews.com/

Making A Profit With IPO Investing

Many people are watchful as companies begin to go public. Even in a time when the economy is down, this can be seen as a way to get in on the ground floor of a great money making opportunity. IPO investing is tricky and can be a financial gold mine for those who know how to make the right judgments through the process. IPO is the initial public offering of stock for a private company that is trying to raise money by offering to sell stock on the open market.

Make sure to do the research before making investments. All companies are required to provide a prospectus. This is a document that provides financial information as well as forward looking statements. The company puts this together to provide potential investors with information to help them make the decision on whether or not to purchase stock.

Initial offerings are typically controlled based on price and amount of original investment. This is a way for the company to try and reach their goals in the first sale. Often, larger sales require a minimum investment to prevent millions of initial sales. When this happens, many smaller investors are left out of the original round. The price can be driven up as the stock begins to be sold in smaller lots.

The product and market are critical in making the investment decision. Many IPOs are in the news because they are for huge or well-known companies. Many smaller companies go through this process as well. In all cases, understanding the product and the market for this product will help you develop an understanding of the future of the company.

Learn what the original investors are planning with their stock. Some investors may use the IPO as a way to get their original investment back. The founders usually will sell some, but hold on to the majority because they believe in the company and its potential. If the founders are getting rid of all of their ownership, this may be a cause for concern.

There are two types of underwriting that explain the backing bank’s assumptions. If the bank that is backing the IPO is operating under a firm commitment, they are guaranteeing that the sale will reach a certain level or they will purchase stock to make up the difference. If they do not feel the company is a great investment, they may operate a best effort sale where they do not have to make the commitment to buy the remaining stock.

Determine the reason for your interest. Some investors for the initial offering are looking to make money by buying fast and selling just as fast. Often the first day will see the price jump high, and then begin to level out. Other investors truly believe in the company and are planning to hold the stock to develop dividends or sell later when the company as built a stronger financial foundation.

IPO investing can be a very profitable venture if the homework is done. Making sure you are aware of the founders’ intentions, the banks backing, and have read the prospectus are all necessary before deciding to invest in any company. With these understandings, you will be much better equipped to make a profit through this type of activity.

If you are aware of the markets and new technology, IPO investing can be rewarding and profitable. For more information on how to become involved, check out the the article at SF Gate right now!

source:http://www.howtoinvesttoday.com/2011/06/25/making-a-profit-with-ipo-investing/

What Your Credit Card Won't Let You Buy

What Your Credit Card Won't Let You Buy - A little-noticed move by American Express to ban the purchase of medical marijuana with its credit cards has reignited a longstanding debate: How much can a credit card company control what you buy?

To the surprise of consumers, major credit card companies are making decisions about what they can and can't buy with their credit cards. What's off-limits? Legal purchases like gambling chips and donations to at least one controversial non-profit organization; in some cases, buying pornography is also restricted, and so, increasingly, is medical marijuana. Last month, shortly before Delaware became the 16th state to legalize medical marijuana, American Express told merchants that its cards could not be used to buy it.

Companies say they're protecting themselves against legal risk, but critics say this kind of corporate policy is an inconvenience for merchants, infringes on consumers' rights and amounts to moral policy-setting. "You ought to be able to use a credit card for any legal purchase," says John M. Simpson from the non-profit Consumer Watchdog. "It seems to me that credit card companies are imposing their moral values on the world."

The specifics of the companies' policies vary. American Express is the most conservative of the big three: it bans the purchase of medical marijuana in the 16 states that have legalized it and online pornography. Visa and MasterCard allow both for their credit and debit card holders. Last winter, Visa and MasterCard prevented cardholders from using their cards to donate to the whistleblower website WikiLeaks. (The site never accepted American Express.) All three forbid using their cards to buy chips in a legal bricks-and-mortar casino. (Paying for online gambling, which is illegal in the U.S., is also prohibited.)

But the gambling restrictions also point out the gray areas in these policies, which critics say don't always make sense. While cardholders can't charge gambling chips, they can use their cards to get a cash advance at a casino's ATM -- cash they might then use to buy chips. "It's arbitrary," says Curtis Arnold, founder of the credit card comparison website CardRatings.com.

MasterCard and Visa said that their cards can be used for any legal purchases, though they declined to comment on the legal purchase of gambling chips. A MasterCard spokesman also said that the company has a number of programs that it uses to "combat illegal or brand-damaging behavior."

American Express explained a more nuanced calculus: It said its business model, which primarily issues cards directly to customers instead of through a bank, requires it to be more conservative about risk. The company says it abides by federal law and prohibits transactions where the risk of dispute is unusually high.

The company also says its total ban on online pornography helps in the fight against child pornography, which is commonly disseminated or sold online. The ban on all pornography, even legal adult material, is "an additional safeguard," said company spokeswoman Christine S. Elliott. As for marijuana, American Express points to federal law, which still prohibits the use of marijuana even for medical purposes. "We wouldn't want to unduly inconvenience cardholders," Elliott says, "but we are adhering to federal law."

That's not unreasonable, says Warren Redlich, a lawyer in Albany, N.Y., who specializes in consumer issues and criminal law. If the federal government were to ramp up its efforts to stop the sales of medical marijuana in states, it could theoretically try to implicate financial services companies that support the industry, he says. "You could sympathize with Amex's position," Redlich says, "I wouldn't be surprised if MasterCard and Visa eventually go along with it."

Some of these policies have been longstanding. American Express first banned the purchase of online pornography in May 2000, saying it faced an unacceptably high level of disputed transactions. "It's a risk-based decision," Elliott says. "This is not a moral judgment." The company allows the purchase of pornography from brick-and-mortar stores.

But as more states legalize marijuana, the company's policies are drawing criticism from new sources, including medical groups and doctors who support the medicinal use of the herb. Lester Grinspoon, Associate Professor of Psychiatry, Emeritus at Harvard Medical School who served for over 40 years as Senior Psychiatrist at the Massachusetts Mental Health Center in Boston, notes its medicinal properties to lessen nausea, incontinence and symptoms of Tourettes' Syndrome. "Yet you get American Express saying they won't honor a charge for that purpose," he says. "That's amazing."

As of now, there has been little pressure on credit companies to reverse their policies. Industry experts says consumers may have little choice but to watch credit card companies further restrict their spending habits, especially where there is a legal question mark. Arnold says, "Given their track record they're going to be much more cautious when it comes to these grey areas given the increasingly strict regulatory environment."

In other words, when in doubt, pay cash.

finance.yahoo.com

The Tricks Behind Infomercial Get-Rich Pitches

The Tricks Behind Infomercial Get-Rich Pitches - As an impulse buy, you might plunk down a few bucks for a Shamwow, an Aluma Wallet or a Shake Weight. But would a TV infomercial persuade you to part with thousands of dollars on a get-rich-quick scheme?

There are many thousands who would and do. If there were no suckers, there wouldn't be so many get-rich ads on TV.

The persuasiveness of infomercials works on multiple levels. They often appear on reputable financial news channels, giving them an air of respectability and, perhaps, giving naive viewers a sense they are either regular programming or geared to the "insiders."

At a time many Americans are out of work and overextended by debt, the prospect of a streamlined path to wealth can be an easy sell. The offerings promise lucrative earnings and back up those testimonials with satisfied customers bragging of stellar successes.

As is so often a rule to live by: If it sounds too good to be true, it probably isn't. No amount of celebrity endorsements or alleged success stories can change that when it comes to infomercials.

Broadly speaking, this subset of infomercials creeps along the fine line between common advertising hyperbole and outright misrepresentation. For the most part, these are not fly-by-night con artists or overseas spammers. Many of the familiar faces in infomercials have been at it for years. There really are books, charts, DVDs and mentoring services, as promised; the catch is that you won't always get them by calling a phone number or attending a free seminar. The deal you see on TV is typically no more than a means to hook you into buying added materials that can cost hundreds or thousands of dollars over time.

And as for those promised results, echoed in rose-colored testimonials, they are often either exaggerations, aberrations or outright lies.

Last month, the Federal Trade Commission went after one prominent infomercial king and joined forces with Colorado Attorney General John Suthers to take the uncommon step of going after a woman who offered a testimonial.

Russell Dalbey, CEO and founder of the company behind the "wealth-building" program "Winning in the Cash Flow Business" is charged by the FTC with defrauding consumers with what were described as "phony claims that they could make large amounts of money quickly."

"When someone is selling a program designed to help people make money, they have to accurately describe how much consumers can expect to make and be truthful about how quickly they will be able to do so," says David Vladeck, director of the FTC's Bureau of Consumer Protection. "None of that happened in this case, and people who bought the program paid the price."

©SEC

According to the FTC, "millions of consumers nationwide" saw infomercials for Winning in the Cash Flow Business hosted by TV personality Gary Collins. The program claimed to teach customers how to find, broker and earn commissions on seller-financed promissory notes -- privately held mortgages or notes often secured by the home or land that is the subject of the loan.

"You'll be amazed at just how easy it is to generate a stream of extra income every month. Build financial freedom and a better quality of life in just minutes a day. Or even retire earlier than you ever dreamed possible. Order now and you'll be ready to profit in minutes," one of the infomercials claimed.

The complaint says consumers spent approximately $40 to $160 on the initial program and were later encouraged to spend hundreds or thousands of dollars more on additional products and services.

Promoting the "system" were testimonials from consumers who claimed to have made "$1.2 million in 30 days," "$79,000 in a few hours" and "$262,216 part time."

The FTC and Colorado's AG charged Marsha Kellogg with falsely claiming she earned $79,975.01 from one transaction using Dalbey's program, and that her total earnings were more than $134,000. The complaint alleges she earned $50,000 less than what she claimed.

The charges faced by Dalbey come as no surprise to Suzann Bacon, vice president of operations for the Better Business Bureau's Denver office.

"We've been working with this particular case since 2003. It has been a long time," she says. "It is not just the infomercials, it is the whole business model in this particular case. It is a really small handful of folks who made money with what they are selling."

The BBB did initially accredit Dalbey's company in 2003, but revoked that seal of approval within a year.

Bacon's office has collected 170 complaints related to infomercials in the past three years, most about service, sales practices and false advertising.

A common tactic the BBB looks for in its reviews are fraudulent claims that may not relate directly to the content of what is offered -- claiming something is a "limited time offer" or a "$100 value," for instance, even though the promotion is constant and the pricing arbitrary.

"In an economy of today, when people are looking for jobs and everything is so slow, people are looking for something that is too good to be true," Bacon says.

Dalbey is not the only infomercial star to face legal woes.

In 2008, Utah residents Linda Woolf and David Gengler were charged in connection to the "Teach Me to Trade" stock-picking system. Customers paid between $3,000 to $40,000 to learn the system, even though the duo were, in the words of the Securities and Exchange Commission, "unsuccessful traders." Combined, they earned more than $6 million selling the product.

An SEC complaint alleges that at their workshop presentations between 2003-06, Woolf and Gengler made false and misleading statements to sell TMTT packages of personal mentoring, software and classes, often targeting retirees. In his workshops, Gengler urged investors to borrow against their retirement accounts to buy these products, the SEC says.

This month a federal judge in Texas sentenced Eric Rulack Farrington, another infomercial star, to 11 years in prison for "orchestrating a multimillion-dollar mortgage fraud scheme in the Dallas area." He was also ordered to pay approximately $1.6 in restitution and forfeit approximately $1.2 million to the U.S.

Author Kevin Trudeau's infomercial for "Free Money -- They Don't Want You to Know About" is a variation of the infomercials once made popular by Martin Lesko (known for wearing a Riddler-like suit adorned with question marks).

Trudeau, perhaps trying to appeal to a tea party sensibility even as he espouses how to collect no-strings-attached money from the government, spends much of the infomercial promoting these secrets as though they were divined from the "Da Vinci Code." The government wants him taken down, you see, because the information he espouses is dangerous. In reality, it appears to be a revisited list of various government programs, most of which can be easily found with an Internet search.

The consumer news and advocacy site ConsumerAffairs.com, however, has logged numerous complaints that ordering Trudeau's books has led to pushy upsells and being charged for additional, unwanted products.

Real estate, in particular, is a ripe category for infomercials, with many offering tips on how to buy and flip distressed property. It's a theme many may have first seen via the late-1980s infomercials featuring Tom Vu, a Vietnamese immigrant who claimed to have amassed a fortune by flipping property.

Dean Graziosi's "Real Estate & Foreclosure Profits" program is a near constant presence on late-night TV.

Graziosi, a self-proclaimed real estate mogul who rose to that status after a poverty-ridden childhood, seeks to inform those who buy his system of how the current housing downturn can be tapped.

He claims various methods allow users to buy property for as little as a few hundred bucks, and that the housing market has already bottomed out and is ready to soar once again. For $19.95 you can order a copy of Graziosi's book and learn his secrets. One can be assured, though, that the disclaimer that "Some students may have purchased optional support program. Results not typical" means buyers will get still more sales calls promoting more expensive materials. To Graziosi's credit, the majority of complaints logged with the Better Business Bureau in his home base of Arizona were "resolved," and he retain a sizable Internet following.

Armando Montelongo parlayed exposure as former host of the A&E network's "Flip This House" into a national slate of free seminars promoting the tactics needed to buy and fix up run-down property for profit. His infomercial boasts that he is "America's No. 1 and top real estate investing expert."

An investigation by a Nashville TV station WTVF, Channel 5, however, found that the seminar was little more than a pitch to buy a follow-up event for $1,500. Despite infomercial claims Montelongo would be present at the seminars (free or paid), he failed to appear.

The reporters learned that Montelongo had 30 seminars that week across the nation and didn't go to any. Actual face time, they said (citing complaints received by the Texas Attorney General's Office) would set you back upward of $20,000.

The news team also uncovered that one of the star pupils in the infomercial faced eviction and multiple foreclosures in Nevada. Another claimed to have made $110,000 in eight months, despite the reality of having declared bankruptcy and not having earned more than $17,000 a year.

Also, while it may be possible to buy distressed properties and flip them when the economy improves, do you have the means to travel to where the properties are, assess them and the surrounding neighboring, buy them, fix them up and maintain them, pay the taxes on each and sell them for a profit possibly years later when the time comes? if you have a job already, the answer is almost certainly not.

finance.yahoo.com

Financial Advice Gleaned From a Day in the Hot Seat

Financial Advice Gleaned From a Day in the Hot Seat - When I started writing this column almost three years ago, one of my goals was to figure out what the wealthiest Americans knew and pass along those lessons to middle- and upper-middle-class readers.

This past Monday, I put that idea to the test, spending the afternoon in a Manhattan town house with eight wealthy men who are all members of an investment club called Tiger 21. I was there to hear an unvarnished critique of how my wife and I save, spend and think about money.

Each of the 180 members of Tiger 21 has a net worth of at least $10 million, pays $30,000 in annual membership fees and commits to spending one day a month with other members. Nearly all of them made their money -- they didn't inherit it -- and most are men.

I had asked to sit in on one of the group's signature sessions, the portfolio defense, but a few weeks ago, the members invited me to be in the hot seat. I jumped at the chance. Beyond looking at how money is invested, the portfolio defense is intended to force members to discuss their wealth in the broadest terms.

Chester Higgins Jr./The New York Times

The members of Tiger 21, an investment club, during one of their signature sessions.

I had heard horror stories. One member was told he needed to lose a lot of weight if he was going to get people to invest in his new fund. Another was chastised for telling his children that he had lost his money in the financial crash so that he would not have to talk to them about his immense wealth.

Michael Sonnenfeldt, the founder of Tiger 21, used the term "carefrontation" to describe what happens in a portfolio defense. The assessments are meant to be direct, unsettling and possibly painful to hear, Mr. Sonnenfeldt told me. But the goal is to get members to think differently about what they are doing with their investments and about everything in their lives that is affected by their wealth, from their family to charities.

"It's not meant for the faint-hearted," Mr. Sonnenfeldt said. "This is a process that some people could clearly find offensive or discomforting."

What I experienced was rough, but it was also thought-provoking. The value to me -- and to anyone given a similar opportunity -- was that the members challenged everything about my assumptions on saving and spending. Here's some of what I took away.

OUR MISTAKES In the week leading up to this, I worked with Joel Treisman, an executive coach and the chairman of one of Tiger's 17 groups, to gather up all of our financial reports.

I was confident that the group would think my wife and I were in good financial shape. We save a good percentage of our income. We don't have any debt beyond mortgages and a car payment. We probably spend a bit too much on food and pet care, but we don't run up credit card bills to do it.

The members were warm and welcoming as we filled our plates with poached salmon, grilled asparagus and buffalo mozzarella from the buffet. But as soon as we were seated, it was all business. And I was immediately on the defensive. There were two big surprises but also blunt advice and some thoughtful questions about our portfolio.

First, the surprises. The group agreed that we did not have enough life or disability insurance. We both have insurance that would cover about three or four years of earnings if one of us died. This seemed sufficient to get past a few years of sorting things out. The group disagreed. Going from two incomes to one would mean a radical rethinking of our life.

We needed more sizable policies to give us the freedom to sort through things. Though we both carry disability insurance, the policies are old and do not reflect our current income. They would also cover only 50 to 60 percent of our old base salaries. The members thought we should buy individual policies to add to this.

The second surprise was about our savings. We have been saving about 15 percent of our post-tax income. Alan Mantell, a lawyer who made his money in real estate, development and investment, said the issue was not how much we saved but how we thought about spending.

"You need to ask, 'What can I afford to spend versus what do I need to spend?' " he said. We could be saving more money for retirement -- or in case something bad happens -- if we cut back on things we did not really need, he said.

All the members agreed that we should sell our vacation condominium. "You need to become more liquid," said Thomas Gallagher, the former vice chairman of CIBC World Markets. "If something bad happens, it's easy to get rid of a dog walker; it's hard to get rid of a house in Naples."

Florida real estate is in a sad state, so I asked what they would do with an offer that was less than our mortgage?

"Take it," Mr. Gallagher said. "Write the check and be done with it."

As for our portfolio of stocks and bonds, the questions were more basic. Leslie C. Quick III, whose money came from Quick & Reilly, the discount brokerage firm, looked at our investments -- 50 percent in equities, 34 percent in fixed income, 12 percent in commodities and real estate and 4 percent in cash -- and wanted to know how our investment manager had done in the bear market. He also thought we should ask our adviser how he balances the risks in our jobs against those in our portfolio.

OUR SOLUTIONS Because I had parachuted into Tiger 21 for one meeting, I was taken aback by the group's brutal honesty. I walked out after three hours in a daze. Over the next couple of days, though, I concluded that the members had made some great points.

Some solutions were simple. We can increase our term life insurance for comparatively little money -- $1 million of term life costs about $700 a year. Individual disability policies cost more. Barry Lundquist, president of the Council for Disability Awareness, said the yearly premium would usually be 1 to 3 percent of a person's salary, but the payout would still be limited to a percentage of that person's income.

As for our portfolio, I put the questions to our adviser, K. C. King of Emerson Investment Management. I liked that he did not sidestep the bear market question: Emerson's portfolios did better than the benchmarks in 2008, but they lost value like everything other than cash, gold and Treasuries.

Where I took comfort, though, was in how he thought about our portfolio. "We're very mindful that what we're managing for you and most of our clients is their core portfolio," Mr. King said. "If someone said from the Tiger group that this is fairly conservative and you're not taking big swings, we'd say you're right. This is the portfolio that we're trying to keep for your daughter's education and into your retirement."

The issue that Mr. Mantell raised about spending is the thorniest one. My wife and I are under no illusions that having a condo in Florida makes financial sense. Trimming spending in other places is easier: Walking the dogs ourselves, for instance, would save $100 a week or $5,200 a year.

In the end, though, there are such radical differences between the wealth of the Tiger members and most Americans that some of their advice could not apply.

Mr. Sonnenfeldt estimated that 90 percent of Tiger members had paid off the mortgages on all of their homes.

They also tend to view money as something to preserve rather than accumulate. Mr. Sonnenfeldt said members spent about 3 percent of their wealth annually, which allowed the principal to continue to grow. But at the $10 million entry level, this would mean $300,000 a year.

Perhaps most important, none of the members became rich by eating out less. They became rich by working in industries that paid extremely well or by building businesses that they later sold.

Still, what was best about the session was that no one pulled any punches. Their honesty forced us to think hard about the assumptions we were making. Yes, it was difficult. But really, who wouldn't want advice from those who have made it?

finance.yahoo.com