Keep putting all you can into your 401(k)

The Ticker

July 29, 1998|By Julius Westheimer

HERE are money-savers and money-makers:

GO ALL OUT: Be sure to "max out" in your 401(k) plan, giving you the opportunity to save for retirement before taxes are withheld. And your 401(k) investments compound much faster than in a personal account because you pay no taxes until you withdraw money.

Business Week, Aug. 3, comments, "Oh, how we love our 401 (k)s! The average 401(k) account now tops $50,000, 19 percent more than in 1997 and 82 percent more than in 1994. Fidelity Investments says that 85 percent of its clients' eligible employees have one."

BIRD IN HAND: Although no one can control wildly fluctuating stock prices, Personal Finance newsletter recommends these stocks for "a high level of current income with preservation of wealth" as major concerns: Bell Atlantic Corp., Citizens Utilities Co., Dominion Resources Inc., Exxon Corp., Phelps Dodge Corp., Duke Energy Corp. and Texaco Inc.

Or, you can seek safety -- and a tax shelter -- in municipal bonds. "When buying municipals, don't go too far out -- seven to 10 years is enough," says Joe Deane, manager, Smith Barney Municipals Fund. "Also, don't compromise on credit ratings; you're not compensated enough for the added risk. Further, be sure to buy bonds of your own state; you'll get a double tax exemption on interest -- federal and state."

HARDER DECISION: Many people think they know when to buy a stock but few know when to sell. Suggestions from FMB Trust's newsletter: "Sell a stock when it reaches your objective; when a company's fundamentals deteriorate, making that objective unlikely; when the stock's price-earnings ratio exceeds twice the company's growth rate; when the stock has badly underperformed the S&P 500 average or when a more attractive opportunity shows up."

Pub Date: 7/29/98

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