Financial pledges for '93 make one safe, not sorry

Andrew Leckey

January 06, 1993|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Out with the old, in with the new.

The year 1993 offers opportunity to forget a difficult 1992 that was characterized by a weak economy, lost jobs and embattled world financial markets.

With signs of long-overdue economic improvement now at hand, and a new president headed for Washington, change is under way.

There is cause for optimism, as evidenced by improved holiday retail sales, but it's a cautious optimism due to the depth of recent economic woes.

Here are New Year's financial resolutions worth considering by all Americans who'd rather be safe than sorry in 1993:

* I will pay off my credit card debt, because bank card rates remain higher than 18 percent despite record low returns on savings. There's no way to make up the difference in that mismatch.

* I will put money aside for a rainy day, because job cuts and economic uncertainty will continue throughout 1993. There's no substitute for a regular savings and investment program.

* I will look into stocks and stock funds of small growth companies, for they tend to do better under Democrats than big-company stocks do.

* I will keep my investments diversified among stocks, bonds and bank investments, because economic and market uncertainty will probably continue.

* I will be a smart shopper, for American business fully expects me to be one. Retailers and car dealers must continue to offer bargains if they're to attract consumers still wary about the future.

* I will contribute to company 401(k) retirement plans or Keogh plans for the self-employed so that my retirement years will be less of a worry.

* I will put my financial house in order by making a will and being sure family members are generally aware of family investments. You owe it to all of them, especially your spouse.

* I will make a point to help my children understand the concept of money and saving. Helping youngsters open a small account in which they can put allowance money and explaining costs whenever you go to the store are good beginnings.

* I will give new President Bill Clinton a break. Whether you're Democrat or Republican, Clinton deserves support as 1993 unfolds and he walks the economic tightrope between stimulating the job market and cutting the deficit. If all goes well, perhaps fewer tax increases will be needed.

"The year 1993 will be one in which a great deal of investor patience will be required, because the economy will be sluggish in the beginning," says John Rogers, president of Ariel Capital Management, which manages money and runs Calvert-Ariel Growth Fund and Calvert-Ariel Appreciation Fund. "Keep a stiff upper lip because, in the long run, there's cause for optimism."

Small growth company stocks should prosper, he's convinced.

"Big companies such as IBM and General Motors have already fumbled, making this a good time to think small," advises Rogers.

"In general, I've found Wall Street's attitude to be quite positive since Bill Clinton's election, with the only concern being that perhaps the market has already gone too far too fast."

Remain somewhat cautious.

"Investors should resolve to diversify investments in 1993 and not try to be too cute or aggressive," warns Robert Dederick, chief economist with Northern Trust Co., who points out that stocks are overpriced and bonds open to rate fluctuations. "You'd have to be lucky or incredibly smart to prosper by banking everything on one particular type of investment or philosophy in a year with so many loose ends."

The year 1993 should be one of economic growth, Dederick predicts. While not dramatic, it should outstrip 1992.

He expects little in the way of increases in inflation or interest rates.

L Get deals while American business is still recession-minded.

"I'd resolve to buy or lease a car in 1993, if you need one," says Diane Swonk, senior regional economist with First National Bank of Chicago. "With dealer inventories so large, it's a particularly good time to lease a car because so many good deals are being offered in order to move all those cars."

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