Don't try to get rich on the cheap

The Ticker

July 01, 1998|By Julius Westheimer

WE CAN learn a lot about investing from magazines, books and newsletters. Here are some suggestions from current publications:

PICK PERFORMANCE: Are you worried about high mutual fund charges? "You should never pick a mutual fund simply because it claims the lowest annual expense ratio," says Black Enterprise, July. "As with any investment, make sure you also consider the fund's performance, size and objective -- along with your own investment goals, time horizon and risk tolerance."

BUY BONDS: If you're nervous about today's volatile stock market, Working Woman, June, says, "Now may be the time to lighten your stock portfolio and buy some bonds. Treasuries are the safest of all bonds, because you will always be repaid their face value when they mature. Until then, you'll receive a fixed payment twice a year. The stream of income can help even out the returns on a volatile stock portfolio. Also, interest is free of state and local taxes."

ENERGY BOOM: "If you want to cash in on the explosive worldwide demand for energy, consider this from Better Investing, May: "Oil companies worldwide increased exploration and production expenses 18 percent in 1997 to meet increasing demand. Schlumberger Ltd., this month's 'stock to consider,' is a worldwide leader in drilling services, responding with a gusher of growth as earnings increased 51 percent."

SMALL BEATS BIG: Should you buy blue chips or small cap stocks? "Small cap (less than $1 billion capitalization) stocks that look cheap, based on price-earnings and price-to-book ratios, have been long-term winners. Since 1968, small-cap value stocks are up 15.1 percent per year versus 11.1 percent for large-cap growth stocks. What's more, small-cap value stocks have held up better in down markets." (Fortune, May.)

STOP GUESSING: Do you wonder whether to buy short-, medium- or long-term bonds and certificates of deposit? In his new book, "Money Matters Made Easy," Steven Camp says, " 'Ladder,' or 'stagger,' maturities. This protects you against interest rate risk when buying fixed-income securities. Think of a bond that has various maturities as rungs of a ladder. By buying CDs or bonds that mature at set intervals, you have diversified in case interest rate changes. In addition, you can plan for income and reinvest principal at set intervals."

Pub Date: 7/01/98

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