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INVESTMENTS
Rules of Investing
“Investing is no walk on the beach.”
Think portfolio balance first and individual investments second. Diversify among sectors and individual investments. Look at the Enron collapse to see the perils of “all my eggs in one basket”.
“You can’t buy yesterday’s returns.”
Be careful of jumping on bandwagons. Stocks don’t increase in value forever. Make sure your entry isn’t too late.
“Know your tolerance for risk.”
Remember that market trends (bulls and bears) exist and be aware of your investment objectives and these trends. Try to take gains during later stages of bull markets and perhaps look more to bonds. For example, during 2001, there was a bear market for many stocks but bonds performed well e.g., slowing economic growth.
“Never underestimate the investment cost.”
Always know the cost of your investments. There are always costs, and the greater the costs, the less your return. Review your statements for questionnable activity. For mutual funds, visit www.morningstar.com or at Money Magazine, www.money.com/money/fundcenter.
“Avoid ‘get-even itis’.”
We love taking gains (selling of increased value stocks/funds) but hate taking losses (selling a looser). You must work on an attitude of preservation of capital e.g., 50 cents is better than zero. Do some research and consider your overall portfolio when acting on losses. As Enron stock fell from $80 to $1, losses taken at $50 look real good right now, e.g., “a bird in the hand is worth two in a bush.”
“Filter out the noise.”
There are vast amounts of information available to assist with your investments, especially via the internet. Knowing the real strength of your investments can help you during periods of extreme pessimism and optimism e.g., herd instincts. Be aware of the economic cycle, your risk tolerance, and your overall portfolio balance. Remember it’s your money that’s at issue.
“Time for a reality check.”
From 1995 through 1999, the S&P 500 racked up annualized gains of about 26%. Many assumed this type performance would last 10 years. The problem with such unfounded expectations is that it can lead to excessively risky investments. Many experts are predicting market gains around 10% in the several years ahead. Very importantly, make sure you use realistic return expectations in your financial planning and investment choices.
Conservative vs. Aggressive Portfolios
The chart below was provided by the Wall Street Journal (Sunday, January 13, 2002) to provide you a tool for assessing the risk in your investment portfolio. Depending on your desired level of risk, comparing your portfolio with this model could prompt you to make some changes.
Investment Type Conservative Aggressive
Large U.S. Stocks 22% 44%
Small U.S. Stocks 6% 12%
REITS 2% 4%
Foreign Stocks 10% 20%
Short-term Bonds 35% 10%
Inflation-indexed Bonds 20% 5%
Money Market Fund 5% 5%
IRA Funding (2001-2002)
If you are 50 or older, you can contribute up to $3,500 this year (2002) to your IRAs. Under 50, you can contribute a maximum of $3,000.
If you did not contribute to your IRA in 2001, you can contribute a maximum of $2,000 until April 15, 2002.
Whether contributions are tax deductible depends on your income level(s). Check with your Tax Professional for your particular situation.
HEALTH AND WELLNESS
Custom-Fit Vitamins
“Are you good about using sunscreen?”
Ultraviolet radiation in sunlight can interfere with your Vitamin-D factory. In a 1998 study, it was found that 41% of persons tested over age 50 were deficient in Vitamin-D. Vitamin-D deficiency has been linked to bone and muscle weakness and an increased risk of prostate and colon cancer. Ensure you get 400 IUs of vitamin-D daily, and 600 IUs if over age 70.
“Are you getting the basics?”
Recent studies point to the importance of B-vitamins, including Folic Acid, in protecting against cardiovascular disease and strokes. While the evidence appears less clear for Vitamin-E, many experts still suggest 200 to 400 IUs of Vitamin-E per day. Consider a daily multivitamin with at least B-6, B-12, 400 mcg. of Folic Acid, and 200 to 400 IUs of Vitamin-E.
“Selenium and cancer.”
In a 1998 study, men with high levels of selenium had half the risk of developing prostate cancer. Biochemists point out that there’s no risk taking 200 mcg of Selenium and there could well be benefits.
“Do you walk for exercise?”
Fortunately, if you’ve developed weak bones, calcium supplements (with Vitamin-D) can prevent further loss and may protect against fractures. The need
for calcium is greater among women than for men. It’s suggested that people over 50 need 1200 mg. of daily calcium. Assuming 600 mg. Daily calcium intake via diet, women need an additional 600 mg. via supplement, and men over 50 need an additional 400 mg.
Note: Prudence dictates that one should not make changes in their diet and nutrition without first checking with their physician.
See a doctor right away …
Or get to an emergency room immediately if you have any of following symptoms:
1. a feeling of pressure or squeezing in your chest;
2. severe pain, especially in the head, chest or radiating down one arm;
3. blurred vision;
4. trouble talking or swallowing;
5. weakness or paralysis on one side;
6. dizziness and confusion;
7. blood in your urine or stool;
8. unrelieved depression;
9. shortness of breath, fever and/or a cough with a yellow-green discharge.
Recent research has shown that the even effects of a stroke can be considerably decreased if treated immediately. Get to an emergency room ASAP!
PERSONAL FINANCE
Reverse Mortgages
Reverse mortgages are designed to produce income for seniors by converting home equity into spendable cash. There are a range of related terms and conditions that must be carefully understood before closing any reverse mortgage transaction.
Per Kenneth Harney’s Nation Housing column, there have been some recent and serious abuses of reverse mortgages. If you (or a loved one) are considering a reverse mortgage, don’t take any final action without carefully consulting your accountant, estate planner, financial planner and loved ones. Make sure that all parties understand the details of the reverse mortgage you’re considering.
Financial and Estate Planning
Most of us need to be reminded of the importance and benefits of financial and estate planning. Visit our site, www.about-retirement.com. The Retirement Planning section contains details of these programs including advice and the expected benefits. The State Income Tax Savings section contains information on how to achieve monthly savings on your state income taxes.
College Tuition Savings (529s)
Beginning in 2002, an individual may contribute up to $55,000 (a couple may contribute up to $110,000) into a Section 529 College Plan. The monies will accumulate tax deferred until the child withdraws it tax free for higher education. This is a great vehicle for funding the education of your children, or grandchildren! Consult your investment advisor for suggested plans.
New Drug Assistance
Pfizer Company is now offering its’ own prescription drugs to uninsured, low income Medicare beneficiaries for a flat fee of $15.00 for each 30 day supply. Any Medicare beneficiary without other drug insurance and where income is less than $18,000 a year ($24,000 for a couple) is eligible for this program. Call (800) 717-6005, or www.pfizerforliving.com for more information and applications.
RETIREMENT LIVING
Retirement Location Research
There’s a lot to consider when it comes to relocating upon retirement. The key factors are satisfaction with present location, finances, and proximity to family. Once you’ve decided to relocate, your research for your choice location should be organized. The following approach is suggested:
1. List the attributes (requirements) for the place you would like to live.
2. Make an initial fact-finding trip to the region of your interest.
3. Create a checklist of data that you want from each community e.g., cost of living, low taxes, medical care, etc.
4. For each community, gather the information per your checklist e.g., tourism office, Chamber of Commerce, hospitals, etc.
5. Rate your true feelings about living in the communities; be honest. This is the time for real honesty!
6. Narrow your choices and return to the favorite places, and stay at least a week.
7. Take time to make the correct decision. Relocation is too important to rush.
WEBSITE REVIEWS
Visit these jewels and see for yourself.
www.grababargain.com
Save 50 - 90% on books, music, movies and more. Best new online flea market for buying and selling many in demand items. The hottest online bazaar!
www.pillbid.com
Best new drugstore – a reverse auction site for prescription drugs. You offer a price and get quotes from a dozen participating online pharmacies including CVS, Eckerd, and Drug Emporium. Don’t wait for the government to save your prescription money – do it yourself!
www.ellisisland.org
An estimated 100 million Americans have ancestors who passed through Ellis Island, the main immigration processing center located in the New York City harbor. Enter desired relative name and find very interesting details of their journey to America e.g., dates, port of departure, name of vessel, etc. It feels like a visit with your ancestors.
www.ediets.com
Visit here for comprehensive dieting and wellness information including a personal support system, health and wellness products, recipes, e-mail newsletters, etc.
www.insweb.com and www.insuremarket.com
Visit these sites to compare the costs of automobile insurance. Obtain the annual costs of your current insurance and compare with the quotes from these sites. We owe it to ourselves to minimize all our costs, including auto insurance!
www.ama-assn.org/
Begin your web search for health related information at the American Medical Association site.
www.memory.loc.gov
The American Memory project features 100 historical collections from the Library of Congress. You’ll find multi-media artifacts about everything from baseball cards to African-American sheet music.
www.frugal-moms.com
Pledged to helping families “live better for less”, this site offers volumes of advice for moms about cooking, crafts, decorating, gardening, and entertainment.
QUOTES AND RELFLECTIONS
“Wisdom is the power that enables us to use knowledge for the benefit of ourselves and others.”
Thomas J. Watson
“I buy women shoes, and they use them to walk away from me.”
Mickey Rooney
“We can lick gravity, but sometimes the paperwork is overwhelming.”
Werner Von Braan
“It is your work in life that is the ultimate seduction.”
Pablo Picasso
“I don’t have anything against work. I just figure, why deprive someone who really enjoys it.”
Dobie Gillis
“Condoms aren’t completely safe. A friend of mine was wearing one and got hit by a bus.”
Bob Rubin
HODGE-PODGE
Life expectancy …
in the United States has reached an all time high of nearly 77 years. While the related gender gap has narrowed, women continue to live considerable longer than men, i.e., 79.5 years versus 74.1 years. Sound nutrition, exercises and good habits will help us participate in these advances!
Ronald Reagan: Longest Living President
Ronald Reagan has now lived longer than any U.S. President – 33,120 days – eclipsing the record held by John Adams. Mr. Reagan, 90, was born February 6, 1911.
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