40s, early 50s called pivotal years for building an adequate nest egg

The Ticker

October 24, 1997|By Julius Westheimer

"WHAT STYLE do you use in your 401(k) plan?" asks 401(k) Dimensions. The article describes three mutual fund categories: growth, income and "blended." It says:

Most growth funds' returns come from capital gains -- stocks sold at a profit. Over five years, their average annual return is 15.5 percent. A danger signal: Over short periods, these funds can fluctuate widely, and you can suffer severe losses.

Most returns on income funds come from interest payments. These funds, which invest mostly in bonds, showed a five-year average 5.7 percent annual return. Typically, income funds do not generate growth.

A "blended" fund combines growth and income, producing a mix of capital gains, dividends and interest. They are middle-of-the-road investments, popular with conservative fund holders.

Over five years, "blended" funds gained an 11.7 percent average annual return.

BEST FOR BOOMERS: Stressing tax-deferred 401(k)s, Black Enterprise, November, says, "Your 40s and early 50s are pivotal years for nest-egg building. Take full advantage of tax-deferred products. You've stashed away cash; now is the time to review your goals. If you're making up for lost time, be an aggressive growth investor." The detailed article, "Advice for Baby Boomers," is worth studying.

RIGHT TRACKS: Want to make and invest more money? U.S. News & World Report's current cover story, "Best Jobs For the Future: 1998 Annual Guide," lists 20 top opportunities. They include corporate valuation accountant; entertainment animator; financial planner; communications specialist; math teacher; computer engineer; pollution fighter; physician's assistant; personnel training specialist; Internet executive; legal business expert; logistics manager; cosmetic dentist; personnel organizer; corrections officer; electronics salespeople; grief therapist; wireless technician; truck driver; and tour guide. The issue carries helpful details.

INSIDE STORY: Many "insiders" have switched from selling their company's stock to buying it. "Insiders buy their companies' shares when the stock is cheap," says Investors' Intelligence, adding, "They are often very early, but usually right. Such 'insider' switches took place recently in Connecticut Energy, Hercules, Central & Southwest, Sunglass Hut, Ryland Group, Washington REIT and Archer Daniels Midland."

QUICKIES: Micros Systems of Beltsville is listed among "The 200 Best Small Companies in America," in Forbes, Nov. 3.

"Only a fool tests the depth of the water with both feet." (African proverb.)

Pub Date: 10/24/97

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