As the bull turns 14 years old, look to your 401(k) and IRAs

The Ticker

August 14, 1996|By Julius Westheimer

HAPPY ANNIVERSARY! The long Wall Street bull market began 14 years ago this week -- Aug. 12, 1982 -- with the Dow Jones industrial average at 776.92 (that's no misprint.)

This morning, with the Dow index perched at 5,647.28, the blue-chip indicator stands 4,870.36 points -- 626 percent -- above its level of 14 years ago.

Speaking of stocks, here are excerpts from Fortune's Aug. 19 "Future of Retirement" cover story:

"Maximize 401(k) contributions -- and after that, sock some more into an IRA. Invest aggressively; your nest egg may need to last another 20 years or more.

"You'll need minimum of 70 percent of your current income to retire comfortably. Every 24 years at 3 percent inflation, value of your dollar is halved. If you don't plan early, you invite trouble later."

EARLY START: Speaking of planning early: In a tax-deferred retirement program -- IRA, 401(k), etc. -- if you invest $2,000 a year from age 25 to 35 at 12 percent (the S&P 500 index's annual return over 50 years) -- then stop -- your money grows to $1.26 million by age 65.

COMPARE YOURS: "The typical 401(k) plan offers participants 6.2 fund options, allows maximum pre-tax employee contributions of 15 percent of pay and provides employer match of 50 percent of contributions up to 6 percent of pay." (Buck Consultants survey of 503 plans, reported in Harry B. Gorfine & Co.'s August Tax Report.)

SURPRISED? "Polls tend to find the public favors reducing the deficit over cutting taxes. Typical is the Aug. 3-4 New York Times/CBS News Poll: 51 percent preferred reducing the federal deficit and 43 percent favored cutting taxes." (New York Times op-ed article by Whit Ayres, president of a Republican polling firm.)

HOW TO DO IT: "To pick stocks successfully, be knowledgeable about the industry and company you're investing in Study financial pages for earnings and dividends. Annual reports are your best friend, although they generally paint a rosy picture -- but the numbers tell the truth.

"You want a company with manageable long-term debt Also, be sure sales, earnings and dividends rise continuously. Footnotes are important; they clarify the company's financial aspects." (Black Enterprise, August.)

MOVING ON: "Is it time for a new city, new job, new life?" asks Glamour, August, answering "yes" with these suggestions:

"Recognize the downside: The stress and cost of moving Temporarily giving up your identity. Feeling you're 'invisible' in a new city. Romantic upheaval if you relocate with a partner.

"But moving may re-energize you. The new setting gives freedom to shake off your reputation as so-so-performer. If you move, research jobs before you get there. Also set up a bank account and sign with an answering service so people can contact you."

BIG BUCKS: Here, from Working Woman, July-August, are "Top-Dollar Jobs: Highest-Ranking Jobs in the Top-Earning Category," from the cover story, "The 25 Hot Careers for Women: "

Executive search consultant, $300,000 to $500,000 a year; financial products salesperson, $300,000 to $500,000; animator ("computer graphic staffer"), $200,000 to $300,000; Obstetrician-gynecologist, $200,000-$250,000; Health lawyer, $160,000-$240,000.

SUMMER SNIPPETS: "Presidents who run for another term usually make it, particularly if they're Democrats. Of the 16 incumbents who sought re-election in this century, only five (Taft, Hoover, Ford, Carter and Bush) lost." (Barron's, Aug. 12, on newsstands this week.)

"To save money, go visiting. In society pages, when the rich travel it's often 'The DeBeers are staying with the Rothschilds for the season.' No wonder they stay rich. Why not do the same?" (The Cheap Report, August.)

"Don't overreach for yields. Higher-yielding stocks often reflect too much of earnings paid out or impending dividend cuts." (Dick Davis Digest.)

"Don't be afraid to go out on a limb. That's where the fruit is." ("Words of Wisdom from H. Jackson Brown's Mom," $5.95.)

"Many high-quality tax-free bonds with AAA or AA ratings offer better after-tax yields today than Treasury bonds." (Lynch Municipal Bond Advisory.)

"If you're 'downsized,' request empty office space with a computer and a phone. (Money, Aug.)

"The IRS says when you entertain, you need not keep receipts for items that cost under $75." (Tax Hotline.)

Pub Date: 8/14/96

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