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, Aug. 6, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Hello Jonathan,
F. Scott Fitzgerald said that there are “no second acts in American lives.” But what about in American investing? Our first questioner would like a second chance:
I am just now getting interested in the stock market. Two years ago, I made a HUGE mistake by cashing in a
$20,000 IRA to pay off college loans. Now, I understand the gravity of my mistake and would like to start investing to build something again. I want to invest on my own without a broker. Where should I begin?
Thanks,
Lisa
From: Murray, Jonathan P.
Sent: Tuesday, Aug. 6, 2002
To: Goldstein, Jon W.
Subject: RE: $
Dear Lisa,
I’m tempted to tease you that, most likely, if you were working with a financial adviser two years ago, she would not have let you make the mistake that you made, so it surprises me that you want to continue going it alone. Why is that? Especially if you are a novice investor?
Is it because an adviser would charge you for his advice? If so, I am a believer that “you get what you pay for,” and the small fee that you pay a good adviser will be worth every penny.
Use your adviser to help you learn about the markets — the important lessons of diversification, compounding, analyzing companies — and more. A good
adviser can help you avoid costly mistakes, and can help you achieve your financial goals.
Enough of my sermon! If you still are determined to invest on your own, you can always go online to any number of discount “do-it-yourself” trading platforms. You’ll be able to buy nearly anything you want for a very low commission, if that’s all you want.
> From: Goldstein, Jon W.
Sent: Tuesday, Aug. 6, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Where can I get information on income-based investments, tax-free preferably?
Selwin
From: Murray, Jonathan P.
Sent: Tuesday, Aug. 6, 2002
To: Goldstein, Jon W.
Subject: RE: $
Dear Selwin,
There are almost as many income-oriented investments as there are growth-oriented investments. Some of these provide tax-free income, such as municipal bonds, which are offered by state, city or local
municipalities. They provide investors with tax-free interest, usually on a semiannual basis.
Make sure you examine the bond rating, its maturity, yield, and any call provisions that apply.
Lastly, check with your tax adviser to ensure that tax-free income is suitable, given your tax bracket.
> From: Goldstein, Jon W.
Sent: Tuesday, Aug. 6, 2002
To: ‘Murray, Jonathan P.’
Subject: $
What will it take to turn the market around?
From: Murray, Jonathan P.
Sent: Tuesday, Aug. 6, 2002
To: Goldstein, Jon W.
Subject: RE: $
One never knows what the catalyst will be ahead of time, but often, markets turn on unexpected, unforeseen events. Ultimately, the stock market will behave in line with the economy, and corporate profits. So, as the economy improves and lifts profits higher, the backdrop improves for equity markets.
It’s almost like a forest fire: The environment has to be right, and the right spark can ignite it.
> From: Goldstein, Jon W.
Sent: Tuesday, Aug. 6, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Thanks Jonathan.
Talk to you next week.
