Yes, bond funds do go down, and remember to feed that IRA

The Ticker

February 16, 1996|By Julius Westheimer

MID-MONTH suggestions about your money and career:

WATCH YOUR MONEY: "One-third of people interviewed believed it's impossible to lose money in bond funds, although prospectus clearly states you may suffer loss." (John Hancock survey)

"Credit history will be part of your job application, especially if you're to handle money, approve purchases, etc. Some slow pay won't hurt, but don't be buried under debt." (Good Housekeeping, March)

DO IT NOW: "Your IRA works harder if you contribute in January or February rather than wait till April 15 the following year. Because of tax-free compounding, same monies grow an extra 10 percent over 20 years, not costing you one extra dollar.

"Example: Contribute $2,000 a year on Jan. 1 of the tax year, with total return (gain plus income) at 8 percent, and your $40,000 grows to $110,982 vs. only $100,454 if you wait till April 15 the next year." (Pioneer Fund mailer.)

Ticker Note: Figures only slightly less impressive for late-February contributions.

COLLEGE COPING: "These days it costs the average family $334,000 to raise a child from cradle through college." (Neale Godfrey, author, on CNN News)

Suggestion: To start, put $25 a week in stocks that gain 10 percent a year -- just under 10.2 percent annual average -- and you'll have $103,000 in 22 years.

And get this: Invest $45 a week at 10 percent from age 25 to 36 -- then stop -- and you'll have $700,000 (!) by age 65.

Also, instead of friends bringing baby shower gifts, suggest they buy growth mutual funds for the new arrival.

TAKE LUMP SUM: "Take your pension in lump sum rather than in monthly checks. Annuity checks make sense only if you're a poor money manager or fail to seek professional help." (Anthony Gallea, portfolio manager)

DON'T 'TIME' IT: "Don't try to 'time' the stock market by trading stocks or mutual funds through 401(k) retirement accounts. Most profits come from rapid, short-term 'up' moves in Wall Street." (Jonathan Pond, financial planner)

BIG DIFFERENCE: Regarding the above, I figured that $100 invested in the stock market from 1963 to 1993 grew to about $2,300 -- but being out of stocks on the 90 best days in that period -- only 1.2 percent of the time -- reduced your gain to only $110.

WORK THAT CARD: "Automatic teller fees will soon rise dramatically. To lower costs, make fewer ATM trips, use your card for purchases (many supermarkets, gas stations, etc., take them), ask your bank to retain present fees, especially if you're a loyal customer." (Smart Money, Feb.)

TAX TIPS: If you're eligible to make a deductible IRA contribution for 1995, you can do so as late as April 15, this year. If you paid a household worker $1,000 or more during the year, you must file a new IRS form (1040H) with your 1995 return.

"If you sold a home during the year, file IRS form 2119, to defer your gain on the sale even if you haven't yet acquired a replacement residence." (Tax Hotline, Feb.)

QUICKIES: "Before buying a home in a new development, find out developer's plans for later stages. Lower-priced housing built later reduces your home's value." ("106 Mistakes Homebuyers Make" by Gary Eldred, $17.50.)

Tonight, "Wall Street Week With Louis Rukeyser" examines biotechnology stocks.

"Washington Savings, Md., 800-848-5990," is listed under "Top-Yielding 5-Year Certificates of Deposit" in Kiplinger's Personal Finance Magazine, March.

"If you own oil stocks or deal in oil in any way, get ready for a price drop." (Steve Hanke, Johns Hopkins professor, in Forbes, Feb. 26.)

Baltimore-based "low risk" Adams Express appears under "Open Season on Closed-End Funds" in Business Week, Feb. 19.

"Women are motivated most, in order, by accomplishment, recognition, money, career advancement, employee benefits, friendship." (Nationwide Insurance survey)

D8 Coming next Wednesday: Ticker's 19th Birthday Party.

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