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, July 2, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Hello, Jonathan,
With the markets in a tailspin, many investors are looking to real estate as a safer bet. Could a Real Estate Investment Trust (REIT) be a smart choice?
Here’s our first question:
Can you tell me about REITs? The yield seems so
high … they seem too sweet to be true. What are the risks? How do I go about choosing the right one?
India
From: Murray, Jonathan P.
Sent: Tuesday, July 2, 2002
To: Goldstein, Jon W.
Subject: RE: $
Dear India,
In today’s low-interest-rate environment, high dividends are valued.
Historically, REITs have offered above-average dividends, similar to electric utilities.
With recent changes in the electric utility industry, many of those
companies have trimmed, or in some cases eliminated, their dividends.
Income-oriented investors have gravitated to REITs to replace the
dividend income. Even pension funds and institutional investors have
been
investing in REITs.
As a result of this increased demand for relatively safe, stable income,
REIT
prices have increased substantially. So be careful, as they are not as
cheap
as they were two years ago. I would look for a diversified,
professionally
managed portfolio of REIT stocks, rather than attempting to pick the best
one or two.
> From: Goldstein, Jon W.
Sent: Tuesday, July 2, 2002
To: ‘Murray, Jonathan P.’
Subject: $
I have a 3-year-old daughter and have been putting
$500 a month into a 529 plan for a little more than a year. I have been
advised that if I continue to do so, I will have enough for her for
college when she reaches age 18. But I have been told that if I were
to put this money into a retirement fund, I may be able to qualify
for financial aid because retirement funds are not considered when
qualifying for aid. So what is the best way to save?
Mark
From: Murray, Jonathan P.
Sent: Tuesday, July 2, 2002
To: Goldstein, Jon W.
Subject: RE: $
Dear Mark,
This is not only a financial issue, it is an ethical one. Many parents
look
for ways to sidestep the financial-aid system, trying to conceal assets or
make it appear as if they are unable to pay for their children’s
education.
Therefore, I tend to focus my education funding into education accounts
(529s, college savings, IRAs etc.) and my retirement funding into
retirement
accounts (401(k), Roths, etc.)
In my opinion, there is no better vehicle to pay for a college education
than
a 529 plan. As a disciplined, caring parent, you are doing exactly the
right
thing for your child. Let financial aid be used by people who truly need
it
and cannot afford a college education.
> From: Goldstein, Jon W.
Sent: Tuesday, July 2, 2002
To: ‘Murray, Jonathan P.’
Subject: $
I have owned Sylvan Learning Systems Inc. from their all-time
high of $34 through their low of $5 and up to the most recent
high of $29. … They’re headed down again. Any thoughts?
Thanks!
Mike
From: Murray, Jonathan P.
Sent: Tuesday, July 2, 2002
To: Goldstein, Jon W.
Subject: RE: $
Dear Mike,
Sylvan Learning Systems is a wonderful company, but its stock may or may
not be appropriate for you. As a growth stock with no real dividend to
speak of, it is suitable for long-term, growth-oriented investors.
When buying individual stocks, make sure that you don’t put too many eggs
in
one basket and that you spread your exposure across a multitude of
indices,
sectors and companies. If your portfolio is in need of an exciting
growth
company in the education sector, Sylvan might suit your needs.
> From: Goldstein, Jon W.
Sent: Tuesday, July 2, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Thanks, Jonathan.
Talk to you next week.
