Buying a car? Use common sense
On our “Buying and Maintaining a Car” discussion board online, Fools exchange tips and experiences about cars. A while ago, a former car salesman joined the conversation and posted a series of “confessions” revealing what goes on behind the scenes of many car dealerships. Here’s some of his advice:
The turnover at most dealerships is high, with the average salesman lasting only three or four months. So yours is probably inexperienced and, in some cases, as afraid of you as you are of him. He may work 100 percent on commission. Sometimes when things are slow and credit card bills are due, he will be desperate to make a sale.
The sales manager, who often sits at a raised desk, is usually the one you’re actually negotiating with, through your salesperson. He’s under pressure to move cars, as each new car on the lot is costing him money while it sits there. You may get a better deal shopping at the end of the month, when the sales manager will be trying to meet sales targets. He’s likely to have offered special bonuses and incentives to the sales staff.
Car salespeople are interested in selling you what they have on their lot for the most they can get, not in selling you exactly what you want at a price you want to pay. Watch carefully and you might see them ask you what your top few colors are, not the one color you want. They may ask how much you can pay per month, and then ratchet it up, saying, “OK, $200 up to …” (pausing until you blurt out “uh, $250?”).
When negotiating with a salesperson, don’t: (a) act the tough guy, being loud and aggressive, (b) tell the salesperson you’ve read about all her tricks, or (c) pretend you’re rich and will buy with cash. Instead, remain calm and be prepared to leave if anything makes you uncomfortable. A little research can help you talk numbers and get a good price.
Learn much more about car buying at www.edmunds.com and www.carbuyingtips.com. And drop by our discussion boards at http://boards.fool.com.
Ask the Fool
Q: What’s a 401(k)? — S.D., Panama City, Fla.
A: Most major employers today offer retirement plans to their workers — usually in the form of 401(k) plans. Through them, your employer plunks the portion of your salary that you specify into the plan in the form of pre-tax income. So if you earn $40,000 per year and manage to sock $6,000 away into your 401(k), you’ll have only $34,000 in taxable income to report. Your taxes will be lower, and you’ll have some pre-tax dollars invested for the future. All pre-tax contributions grow untouched by taxes until withdrawn in retirement. Money in a 401(k) can usually be invested in a variety of ways. We recommend index funds — if your plan doesn’t offer one, ask your administrator to add it.
Best of all, many employers match 401(k) contributions — so if you contribute $4,000, your company might chip in an additional 50 percent, or $2,000. If your employer offers matching, take advantage of it — it’s free money!
Learn more about 401(k)s at www.fool.com/money/401k and http://money.howstuffworks.com/401k1.htm.
Q: I know that it’s smart to invest for the long haul. I also keep hearing that I need to watch my investments closely. Just what should I be looking for? — G.R., Bangor, Maine
A: Look for bad news, worrisome developments or red flags, such as: stalling or falling sales, shrinking profit margins, losses of customers, declining market share, new competitors, threatening new technologies and possible accounting irregularities.
Look for this kind of information in press releases, news stories and financial reports. Google’s news search is a handy tool. Just type in your stock’s name at http://news.google.com. You’ll find press releases and financial reports at most companies’ Web sites, in sections titled something like “Investors.”
My dumbest investment
I once got a “hot” tip from a co-worker about an up-and-coming company that designed, built, manufactured and distributed the equipment for video teleconferencing. It had several contracts with the Department of Defense and the Navy. I got in on the ground floor, buying 2,000 shares for $1 each. The price went to $3.75 within a few weeks. I bought another 1,000 shares. About three months later, it was at $2, so I eagerly bought another 1,000 shares. Well, in another three months it was back to $1, then 75 cents, and eventually 10 cents a share — even though the product was viable and practical, and there was a market for it. Bad management can ruin it all. Don’t be greedy. Check the company out before you jump in. — John Rannochio, Vista, Calif.
The Fool Responds: It can be risky to buy more shares of a falling stock. But buying more of a rising stock can be bad, too. If you haven’t studied the firm and don’t have a good idea of its fair value, you may be snapping up grossly overvalued shares that are due to drop soon. Beware of those hot tips!
The Motley Fool Take
The first computer worm to infect a cell phone has been reported. That’s right — those expensive phones, with all those features, now come with a worry: security.
Your standard cell phone is not open to a worm (a computer virus that can duplicate itself). But “smartphones” from Nokia, Siemens, Ericsson and Sony are, because they use a common operating system from Symbian (a company jointly owned by these companies and others).
Hackers have been attacking Microsoft’s Windows operating system for years. A big target simply attracts attention. Symbian’s operating system dominates smartphones — a rapidly growing market that’s becoming a big target.
The first worm is not destructive, just annoying. It shortens battery life (please, not that!) by constantly searching for Bluetooth wireless devices. It also notifies the hacker community that smartphones are vulnerable. If they take the bait, many of the security concerns that plague PCs will plague smartphones. Symbian is prepared for security problems. For example, since 2002, it has had an agreement with software security firm Symantec. Now that a worm has arrived, can product announcements be far behind?
While today’s problem is wormy, Nokia is probably still happy with its offer to buy a majority interest in Symbian. Microsoft has proven there is gold in operating systems — even with worms in the world.