Clinton's in, so keep investing in orderly way

The Ticker

November 05, 1992|By Julius Westheimer

On the first post-election day the Dow Jones average fell 29 1/2 points and closed at 3,223.04. Most observers thought yesterday's decline was not significant because Wall Street had anticipated Tuesday's results.

If the past is any guide, many people will now ask, "With Bill Clinton headed for the White House, what will happen to the stock market, business conditions, interest rates and -- more important -- what changes should I make in my investment program?"

Because no one knows the answers -- not yet, anyhow -- I recommend "staying the course" and proceeding in an orderly fashion. Since time-tested, conservative investment practices have proven successful through most administrations, it would be a mistake to vary from them.

Here are some principles and ideas that I suggest everyone follow:

1. To get the highest insured CD and money market yields, don't keep your money where it's always been by habit. Shop for the highest rates just as you shop for food, gasoline, tires, etc. We often print top local rates from "100 Highest Yields."

2. Pay yourself first! Do it regularly, not waiting till the middle of the month to decide. As each month begins, write a check for $25, $50, or any amount, and invest it. Pretend you got a bill. Some mutual funds will bill you.

3. Start young! If, starting at age 21, you put away $2,000 a year at 8 percent interest for 10 years and then stop -- don't put another nickel in -- your money will grow to $450,000 by age 65.

4. EE Savings Bonds make sense now. Although the interest rate has dropped this week to 5.04 percent for the next six months, that's still higher than savings accounts and short CDs. And if you hold the bond at least five years, there's a guaranteed 6 percent floor. You may start with $25 and your money doubles in about 11 years.

5. For lowest credit-card rates, write the non-profit Bankcard Holders of America, Herndon, Va. 22070 or phone 703-481-1110. Fees are small.

6. For lowest mortgage rates, phone H.S.H. Associates, 1-800-UPDATES, or write the firm at 1200 Route 23, Butler, N.J. 07405. This is a for-profit business organization. Ask about charges.

7. This is an ideal time to refinance your mortgage. Consider refinancing if you save two percentage points and avoid high closing costs. Have your accountant review the figures.

8. Pay off your mortgage if you have savings. If you get only 3 percent in savings, pay off that 8 or 9 percent loan and put money in your pocket. Forget the tax deduction; it's a small saving.

9. Buy stocks and mutual funds for gains but, more important, rising income. If you had bought BG&E 10 years ago you would have tripled your money and you would now receive 20 percent return on your money.

10. Start early to prepare for spiraling college costs. Use a package of zero-coupon bonds, EE savings bonds (income is tax free if used for college fees; income limits apply) and growth stock mutual funds.

11. Put every dollar you can in a 401(k) tax-deferred plan because tax-deferred money grows much faster than taxable investments. If your firm doesn't offer a 401(k), press your boss to install one.

12. Don't be tempted by misleading magazine covers. One magazine blares, "10 Great Ways to Get a 10% Return," but risks are involved. Read the fine print. Remember Old Court.

13. Regarding reading, I like Kiplinger's magazine, Money, Forbes, Business Week, Barron's and Working Woman. Use your library more.

14. Reshop your home, car and other insurance policies. You don't have to leave insurance where it's always been.

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