$1.2 million by age 65 isn't so hard

The Ticker

November 25, 1998|By Julius Westheimer

Why should you start investing early? "Albert Einstein called compound interest the greatest invention of mankind, and the younger you start, the better," says Investor's Business Daily. "If you start investing $4,000 annually (the maximum contribution for married couples) in a Roth IRA at age 30, you'll have $1.2 million by age 65, assuming a 10 percent return. If you wait till age 40, that nest egg shrinks to $436,727. And you can withdraw that money tax-free in retirement!"

Want to buy Internet stocks without picking individual issues, many of which appear overpriced? Consider diversified mutual funds that hold issues such as Cisco Systems Inc., Lucent Technologies Inc. and Yahoo! Inc. Be sure to read the prospectus before buying.

Want stability? "Electric utilities have proved excellent defensive investments," says Moneypaper. "Recently, utilities rose 5 percent while the S&P fell 15 percent. One advantage is, they're not greatly affected by foreign turmoil."

People often ask, "Exactly what is the Dow Jones industrial average?" It is a point-based average of stock prices of 30 major American companies. The Dow is computed by adding the total share values and dividing by a divisor that accounts for splits, mergers, etc.

MARKET WATCH: "Can a new bull market rise from ashes of the recent unpleasantness? Although the market can do anything, the odds of a major rise are about one in 100. Whatever you do, do it with caution!" (Crawford Perspectives in this week's Barron's.)

"We're headed to Dow Jones 11,000. No pre-presidential election year has lost ground in 60 years." (1999 Stock Trader's Almanac.)

Bad Guess: "Wall Street won't rebound quickly from its 20 percent correction." (Allen Sinai.)

Pub Date: 11/25/98

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