New York --How do the First Couple manage their personal money? Like all too many affluent people of their age, they run it disjointedly and without a plan.
Given their youth and the size of their assets, the Clintons should be aggressively committed to growth. That means a heavy dose of diversified stocks or stock mutual funds, held for years.
Instead, they overload on "safe" bank accounts and bonds, without realizing how risky it is to invest for no growth -- the risk being that your savings lose value after taxes and inflation. For capital gains, they plunge into the investment equivalent of lotteries: limited partnerships, a major stake in a single stock and a private investment fund that's managed aggressively for growth. They're either idling in neutral or shoving the gas pedal to the floor.
It's beside the point that some of these gambles have paid off,says financial planner Harold Evensky of Coral Gables, Fla. They might just as easily have failed -- as in fact one land deal did.
Here's a brief summary of the Clintons' personal 1992 portfolio, compiled from public sources by Little Rock financial planner Larry Root:
FIXED INCOME: $339,000. Cash ($142,000), government bond funds, municipal bonds.
GROWTH: $197,000. Common stock (mostly Wal-Mart), private growth fund, $4,000 in a Pacific-area mutual fund.
PENSION: $155,000. His IRA and deferred compensation from his governor's salary, her law-firm profit-sharing plan (part of which may be managed for growth).
UNSPECIFIED: $150,000. Includes Mrs. Clinton's investment plunges, such as a movie limited partnership.
REAL ESTATE: $90,000. Half interest in her mother's condominium.
The division of assets between Bill and Hillary reflects their basic Team Clinton approach. He tends to U.S. Government bond funds. She's the family wealth builder -- choosing stocks, tax-exempt municipals and private deals often brought to her by pals. She reportedly made a killing in a partnership that bid on a cellular phone contract, running a $2,000 investment up to $48,000. On the other hand, the couple apparently lost most of the $68,000 they sank into an Ozark land deal.
Mrs. Clinton's commitment to Wal-Mart (where she once sat on the board) also creates some extra risk. A great stock doesn't always stay that way, and lately Wal-Mart has been stumbling.
Most of the planners who studied the portfolio find it too conservative for a couple so young. They recommend anywhere from 55 percent to 85 percent in stock mutual funds.
Chelsea's money needs even more attention than her parents'. She owns some $45,000, received under the Uniform Gifts to Minors Act. But most of it snoozes in a money-market fund at around 2.5 percent, at a time when college costs are rising by upward of 7 percent.
Because she's pretty close to entering college, Chelsea shouldn't be taking much investment risk. Still, Evensky would put a third of her money into stock funds and diversify most of the other two-thirds into funds that buy short- or intermediate-term bonds.