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My dumbest investment

Gushing losses

My dumbest investment was in an oil project. It was supposed to get great returns. Right! I collected money from it for six months, and then the company went bankrupt after the well dried up. The second well is still sitting there, ready to go, and no one is willing to take the oil. Go figure. — B.M., online

The Fool responds: First off, be wary of investments that offer promises: Most carry some risks, and they might be much riskier than you think. Don't buy based on hopes or rumors. A company might be working on a promising cure for cancer, but that might not pan out or get approved by the FDA.

Be careful with any company that's too dependent on any source of revenue, too, such as just one or two oil wells. Companies dependent on electronic components from Japan suffered after the earthquake and tsunami. If a sugar company sells most of its sugar to Hershey, it's vulnerable. Hershey might hit a rough patch, or it might simply start demanding lower prices. Favor companies with proven revenue, ideally from diverse sources.

Fool's school

Should you refinance?

If you're struggling with a mortgage that has become hard to pay, perhaps due to an adjustable rate that adjusted itself upward by a lot, you might want to refinance into a different, more stable, loan. After all, interest rates are still near record lows. You might consider refinancing just because current rates are considerably lower than what you're paying.

Refinancing involves taking out a new mortgage on your home — usually at a lower interest rate, decreasing the amount of your monthly payments (sometimes by as much as several hundred dollars). You also can increase the amount of the loan for other purposes, such as making home improvements or paying off credit card debt. (But beware: Your once-unsecured credit-card debt will now be secured, with your home as collateral.) Alternatively, lower your rate, keep payments not much lower or possibly even a little higher, and get a 15-year loan instead of 30-year one. You'll enjoy massive interest savings that way.

Check out available loans and interest rates, and assess the costs built into each one. Consider what "points," if any, you might have to pay. A point, equal to 1 percent of the value of your loan, is paid up front in order to lower the interest rate. Make sure you plan to be in the house long enough for the reduced monthly payments to compensate for any points and the closing costs of the new loan.

If you can get a new mortgage at a rate 1 percentage point lower than your current mortgage, you can reap sizable interest savings over 15 to 30 years, depending on how much you borrow. Saving tens of thousands of dollars over the life of the loan is not uncommon.

Before deciding whether to refinance, learn much more at sites such as and The Fed also offers some great info, at

Ask your current mortgage lender about refinancing, too. You might get a good deal without having to jump through too many hoops, because the lender already knows you.

Foolish Trivia

Name that company

I trace my roots back to 1965 and my first store, in Bridgeport, Conn. Today I'm the world's largest fast-food chain, with more than 35,000 locations in more than 90 countries. I began franchising in 1974, which helped me grow. Some 8,000-plus stores are in unconventional locations, such as museums, riverboats and construction sites. I've recently started offering breakfast fare. My flagship sandwich, introduced in 1975, is named for the Brooklyn-Manhattan Transit system. I reportedly rake in more than $15 billion annually. Because I'm privately held, you can't buy stock in me. Who am I?

Last week's answer

I was founded in 1986, opening my first store in Brighton, Mass. Today I'm the world's biggest office-products company, with annual sales of $25 billion. (I'm the world's second-largest online retailer, too, after, and I rake in more than $5 billion online annually.) I employ 90,000 people in more than 26 nations, and operate more than 1,800 stores in North America, offering copying, printing and shipping services. I've won awards for my recycling and environmental efforts. The Grammy Awards and Los Angeles Lakers games occur under my name. I make things "easy." Who am I? (Answer: Staples)