Every Wednesday, Legg Mason Wood Walker financial adviser
Jonathan Murray answers e-mail on your investments. To be included
next time, send
your questions.
> From: Goldstein, Jon W.
Sent: Tuesday, May 7, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Hello, Jonathan,
Our first question today comes from a reader looking for an environmentally sound investment.
Here’s the question:
Can you recommend any “green” Mutual Funds? I currently own Dodge & Cox
Stock Fund, which has
been consistent.
Doug
From: Murray, Jonathan P.
Sent: Tuesday, May 7, 2002
To: Goldstein, Jon W.
Subject: RE: $
Dear Doug,
By “green,” I assume you mean a fund that uses environmental screens,
designed to prohibit the fund from investing in companies that are
harmful
to the environment. While there are a few funds out there (some from the
Calvert Funds and the Delaware Funds, among others) I can’t recommend any
specific ones to you without knowing more about your overall financial
picture, risk tolerance, etc. What’s more, you would have to read the
prospectuses on these funds before investing.
But let me give you and our readers the two schools of thought on this
subject of “responsible investing:”
One school says that even if it means giving up the potential for higher
returns, you should never invest in a company or fund that profits by
selling products or services that are morally or ethically in opposition
to
your own personal beliefs. Sometimes, I see folks avoid tobacco stocks
for
this reason, or gun manufacturers. They don’t want to “be a part of the
problem,” so they avoid these companies altogether.
The other school of thought separates its investing goals from its
charitable/ethical goals. This school maintains that if you want to
invest,
you invest to make money. Period. Why handcuff a fund manager by
precluding
her from investing in certain businesses and ruling out very profitable
companies? What you do on your own, through charitable giving, donations
to
environmental causes, etc. is another issue.
So, ask yourself which school of thought makes sense to you. If it’s the
former, an environmentally or socially responsible fund might be
appropriate for you.
> From: Goldstein, Jon W.
Sent: Tuesday, May 7, 2002
To: ‘Murray, Jonathan P.’
Subject: $
I am able to save $500 a week. I am 44 years old and I
would like to know how I can invest this amount. I am single and I’m
not in debt. I am renting because I don’t want to be involved with
repairs or maintenance. I make $85,000 a year. Thank you for any
suggestions.
Brian
From: Murray, Jonathan P.
Sent: Tuesday, May 7, 2002
To: Goldstein, Jon W.
Subject: RE: $
Dear Brian,
I’m not in the real estate business, but if you are making $85,000/year,
you
might want to consider buying a home, rather than renting. With mortgage
rates at historic lows, you might find a house that suits your purposes.
If not, invest each month into a balanced, diversified growth and income
fund … that way, you kill two birds with one stone: you get growth
potential, which you need since you are so young, but you also get some
downside protection, since you may need to tap some of these funds down
the
road.
> From: Goldstein, Jon W.
Sent: Tuesday, May 7, 2002
To: ‘Murray, Jonathan P.’
Subject: $
What is meant by trailing earnings?
Robert
From: Murray, Jonathan P.
Sent: Tuesday, May 7, 2002
To: Goldstein, Jon W.
Subject: RE: $
Dear Robert,
“Trailing earnings” are a stock’s earnings for the PAST fiscal year, as
opposed to “forward earnings,” which are forecasts of future earnings.
You
will see different P/E ratios (a stock’s current price divided by its
earnings per share) based on these different earnings numbers.
> From: Goldstein, Jon W.
Sent: Tuesday, May 7, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Thanks, Jonathan.
Talk to you next week.
