Today we open the Ticker mailbag and answer your questions about investments, college education funds, low CD interest rates, etc. But first, a nostalgic letter:
Carroll Josselyn, Towson: "Inflation note: In 1984 I replaced seat coil springs for an outdoor furniture set for 25 cents each. (Stebbins Anderson price panel from their loose bag enclosed). Today I purchased more from a smaller neighborhood store for 85 cents each, and another size I needed in a package of 'two for $2.99,' or $1.50 each! Inflation? Merchandising? Both of the above?"
Mrs. M. F. T., Royal Oak: "We have money to invest and would like to know the best place to put it with the most return. We do not need the money right now. Our income is Social Security and it's just about adequate. My husband is 74 and I'm 67 but very active. You mentioned several weeks ago about a two-year Treasury note. What are they and where can I get them?"
Answer: Treasury notes are like Treasury bills and bonds, but in between, maturity-wise. The notes generally run from two to five years. (Bills are short-term, usually three or six months maturity, Treasury bonds run out to 30 years.) You may obtain new Treasury note issues from either the Baltimore Federal Reserve (301-576-3553) or from most bankers and brokers. They are usually issued the third week of every month. Two-year notes now yield about six percent, free of state and local taxes. They are an excellent investment.
William and Mollie K., Lewisberry, Pa.: "We are looking for investment ideas for our two-year-old daughter. We have $5,000 which we would like to invest in some type of safe, tax-free savings which would earn the best return. We want the money to be available when she is ready for college. We expect to have about $2,500 to add yearly.
Answer: I suggest you concentrate primarily on growth and not worry too much about the tax-free angle. Investigate good stock mutual funds, with strong three-five year performance records, and with part of your money check into zero-coupon Treasury bonds and/or zero-coupon municipal bonds. Your banker or broker can help you with your noble objective.
Edmond E. Walsh, Baltimore: "I read your Ticker columns regularly in The Evening Sun . . . I admire your cautious conservatism and also applaud and am grateful for your concern for the poor and destitute."
Answer: What a lovely, thoughtful letter. You have pepped up my morale. Thank you for taking the time to write.
Tillie G., in an Owings Mills retirement home, and dozens of other readers, ask, in effect: "With CD and Treasury bill rates declining so sharply, how can we keep our income up?
Answer: There's no use looking back, but I wish you had listened to my advice over the past few years. I said, many times, that with interest rates falling in this recession, people should lengthen their CD and Treasury maturities and also shop around for the highest federally insured CD yields, which we print frequently right here. Last time was Sept. 26.
OCTOBER DIARY: Tomorrow, Wall Street Week with Louis Rukeyser spotlights Japanese investments with panelists Deborah Allen, John Dessauer, William Waters . . . "Too Many Bonds Can Squeeze Retiree Income." (Wall Street Journal headline, Sept. 27, followed by a fine article urgently suggesting some stocks for inflation protection).