The A, B, Cs of Money: J & K

JEKYLL AND HYDE: If a company's financial statements seem to show strong performance but a close look reveals a weakness, it's said to be Jekyll and Hyde, from the book by Robert Louis Stevenson. And if a stock is fluctuating dramatically in price, that volatility is referred to as Jekyll and Hyde.  Your teenage daughter might also be Jekyll and Hyde.

JOINT: You can hold title to assets in a couple of ways: If you are joint tenants (on title to a property) then you have the right of survivorship so that if one owner croaks, the other gets the whole kit and kaboodle. If you hold title as "tenants in common" then if you croak, your share would pass to your estate. This same idea applies to joint accounts: by holding the account jointly, the asset avoids probate and passes directly to the other guy signed on the account. But it also means the other guy can empty the account any time she chooses if only one signature is required. And if you're jointly signed on debt and one of you goes bankrupt or skips town, the other is left holding the bag. NO ONE SHOULD HAVE A JOINT CREDIT CARD! EVER!

JUNK BONDS: Bonds that offer high rates of return with loads and loads of risk to your capital are said to be "junk."  Sometimes investment salespeople clean up the language to "high-yield debt" to avoid the flinch some investors have when they hear the word "junk." Bonds are rated from AAA on down to AA then down to A and then to BBB. Typically, anything at BB (speculative) or lower is considered "junk". You can end up in the junk bond market accidentally if the bonds you've bought are downgraded.

KICKING THE TIRES: If you do your due diligence on a new investment, asking your advisor about a company and doing indepth research before slapping down your money, you're said to be kicking the tires. If you aren't prepared to kick tires, then you should stick with indexed investing or have someone who will tire-kick for you.

KNOW YOUR CLIENT RULE: There is a rule that says Canadian financial advisors have to understand their client's investment objectives and make appropriate recommendations.  Rather than following the intent of this rule, this good idea has been replaced by the KYC form, which many advisors will have you update every year and then stick in a file and ignore the rest of the time. HOWEVER, if you've been put into an investment that goes into the tank, and that investment is contrary to the info on your KYC form, you have recourse with the securities folks.

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