Investment

SPRING IS here, your stock portfolio is still under water, interest rates are at historic lows and homeowners across the country are emerging from their winter cocoons with vacation property dreams dancing through their heads. New statistical research indicates that second-home investments are on the upswing, especially among homeowners who see them as a higher-yielding bet than mutual funds or certificates of deposit at 2 percent. Second-home purchases aimed primarily at investment - rather than the more traditional seasonal getaway uses - have nearly doubled in the past three years, according to a new study by the National Association of Realtors in collaboration with EscapeHomes.

Our modern world suffers from short attention spans when money is involved. People wait in line for hours and hours to buy Apple's iPhone or the book Harry Potter and the Deathly Hallows. Hype and anticipation are overwhelming and contagious - for a short period. Once that purchase is consummated, whether the result is a hit or a miss, it is on to the next big thing. Their minds cleared of one nagging consideration, people feel the urge to fixate on something new and exciting. Remember the Segway, which after much fanfare was unveiled as a battery-powered two-wheeled scooter that wouldn't tip over?

How long does it take for an investment to double in value? You can get a pretty good idea by using the "Rule of 72."Divide 72 by the total return your investment is earning. For example, if you invest $1,000 in a certificate of deposit earning 5 percent, you would have $2,000 in 14.4 years. (72 divided by 5 equals 14.4.)Warning: This rule works only if the annualized return remains stable for the life of your investment and you reinvest your earnings.Investors can use this rule when setting financial goals.

CONTINUED TERROR threats, a coming election, long-dormant inflation knocking on the door: It's enough to send even the steadiest investors running for cover. Trouble is, the old havens aren't what they used to be. Gold has already experienced a huge run-up. Utilities that once were the domain of widows and orphans have deregulated and many still are favoring growth rather than plowing cash into shareholder dividends. And in a rising-rate environment, loading up on bonds can spell disaster.

In a 1995 mid-year report to shareholders, managers at Coca-Cola Co. compared their company to a global mutual fund. "The more uncertain the times, the more you hear the old saying, `Don't put all your eggs in one basket,'" started the message from the late Coke Chairman Roberto C. Goizueta. "Your company not only has an abundance of `eggs,' but an abundance of `baskets.'" The point was that the company was a participant in more than 200 markets around the world, a geographic diversification that was designed to weather downturns in any region.

William Matthews thought he had found the perfect way to invest some of his retirement money when he paid $25,000 for a California automaker's bonds in September. The bonds promised to pay 13 percent interest and MTD Inc., the company that sold them, insisted they were risk-free.But for the retired recreation maintenance supervisor from Catonsville, MTD was not what it said it was. In fact, the state of Nevada had revoked the company's charter after its check, written to pay the corporate filing fee, bounced.

DO YOU WISH you had a long-term investment strategy? Black Enterprise, July, lists these suggestions from legendary stock picker Peter Lynch: "Find publicly traded companies that provide goods and services we use regularly. ... Know everything about a company before buying its stock. ... After buying the stock, follow its `story' so you will know if the company's earnings are growing, slowing or stagnant. ... Don't sell the stock if the fundamentals are still good, no matter whether the market is up or down."

Faced with growing numbers of retirees, pension plans are pouring billions into hedge funds, the secretive and lightly regulated investment partnerships that once managed money only for wealthy individuals and elite institutions. The plans and other large institutions are expected to invest as much as $300 billion in hedge funds by 2008, up from just $5 billion a decade ago, according to a study by the Bank of New York and Casey Quirk & Associates, a consulting firm. Pension funds account for about 40 percent of all institutional money.

Farmland is becoming a hot investment property in most regions of the country.The popularity of farmland as a potential investment has grown dramatically among pension funds and other institutional investors during the past two years, according to Murray R. Wise, president of Westchester Group, Inc., a farmland marketing consulting and management organization."

Q. I am not sure the economy will turn around fast enough for me to recoup my investment in Caterpillar Inc. What do you think fTC I should do with these shares?A. Don't worry. The earth eventually will move for this giantcompany.Hold your shares of Caterpillar Inc. (around $43 a share, New York Stock Exchange), maker of construction, farm and mining equipment, because there's little risk involved, said Steve Colbert, analyst with Prudential Securities.The company and its stock have taken their lumps, based on a sales slump and loss in earnings.