Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.



The 411 on Index Funds

Karen Gibbs

Karen, what is an index fund?

- Kevin, Randallstown

Charts and CalculatorsKevin, an index fund is a type of mutual fund.  A mutual fund is a fund that pools your money with other investor’s money to get economies of scale.  You get the benefit of diversification for a fraction of the cost and none of the management worries.

An index fund is a fund that tracks or mirrors the movement of an underlying asset; it could be bonds, gold, oil or one of the major stock market indices.  This form of investing is called “passive” investing as you don’t do anything; the index does all the work.  

Index investing has exploded over the past decade as more investors sock away retirement funds with companies such as Fidelity and Vanguard.  Index investing recently has outperformed “active investing”, funds investing in a basket of assets determined by an active manager – one that picks stocks, bonds and other assets according to a proprietary model. ...

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Retired and strapped for cash!

Karen Gibbs

Help!  I’m retired and my pension is deposited directly into my checking account.  Now my bank wants to charge me a monthly fee if I don’t carry a large daily balance.  What can I do?

-Strapped for cash in Maryland

Drawing of Dollar BillDear Strapped, you’ve identified one of the reasons that banks are so disliked, but they may have done you a favor.

Financial reform laws enacted after the financial collapse of 2008 robbed banks of easy trading profits.  Now, they are looking for ways to replace those lost profits and have turned to fees, fees and more fees.

One major money center bank will soon start charging $25 a month if customers don’t maintain an average daily checking account balance of $5,000 or even more in CDs, retirement savings, outstanding installment loan balances or brokerage accounts.

These are large amounts for many of us and charging fees for not maintaining the above balances will generate a lot of money for this bank, with little or ...

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