Every Wednesday, Legg Mason Wood Walker Inc. financial adviser
Jonathan Murray answers e-mail on your investments. To be included
next time, send
your questions.
> From: Beamon, Todd
Sent: Monday, Oct. 7, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Hello, Jonathan:
I have about $5,000 I would like to invest. But the stock market has been on a roller-coster lately, and I would really like to sleep at night knowing that I haven’t lost it all.
How should I go about developing a conservative
investment plan that still will give me an OK return?
Tricia
From: Murray, Jonathan P.
Sent: Tuesday, Oct. 8, 2002
To: Beamon, Todd
Subject: RE: $
Dear Tricia:
Well, consider yourself either smart or lucky to have not invested your $5,000 into the stock market within the past few years. If you had, chances are good that your $5,000 would be worth less — possibly a lot less,
depending on what you had invested in.
Now, however, you have another chance to look smart or lucky, if you invest at a market bottom. The problem is, we won’t know when that is until after that’s happened, with the benefit of hindsight.
Tricia, I would need to know a lot more about you before I could make an appropriate recommendation: I’d need to ask you such questions as, “How old are
you?” “What are you saving for?” “What do you mean by ‘sleeping at night’ — could you withstand any losses or volatility?” “Where are your other assets?”
Other questions include, for instance, “What is your adjusted gross income?” “Liabilities?” “Expenses?” “Credit-card balances?” “Tax picture?” “Do you have children you need to invest for — or is it for your retirement?”
You can see that your specific answers to these questions will determine the kind of advice you will need. You should sit down with a financial adviser first, clarify these issues — then determine what to do with the $5,000.
Good luck!
> From: Beamon, Todd
Sent: Monday, Oct. 7, 2002
To: ‘Murray, Jonathan P.’
Subject: $
I have left my job after 12 years and have a pretty nice thrift savings plan account. I have not yet found new employment, and I am wondering what to do with my
retirement funds.
Should I leave it with my old employer? Or, do I transfer it over to a money market, put it in stocks or what?
I also wanted to borrow some money from the account to go back to school and not be penalized. Your advice would be appreciated.
Kay
From: Murray, Jonathan P.
Sent: Tuesday, Oct. 8, 2002
To: Beamon, Todd
Subject: RE: $
Dear Kay:
I assume that you’re referring to the retirement plan for the U.S. government. What funds do you have it in? Make sure that you don’t have too much in any one
fund.
As you are aware, the plan has rather limited options, so you might want to consider rolling it over to an IRA that you can control, with virtually unlimited investment options.
However, you might want to keep it there, if you’re allowed to take out a loan for your education. (I rather doubt they will, if you are no longer employed there.)
But just don’t cash it in, and have them send you a check directly. That will result in paying ordinary income taxes on the distribution, plus a 10 percent penalty, if taken before you turn 59 1/2 years old.
If you now are working at a new job, ask them if they have a loan provision on their retirement plan. That may be your best shot.
> From: Beamon, Todd
Sent: Monday, Oct. 7, 2002
To: ‘Murray, Jonathan P.’
Subject: $
How can I determine what will be the average per-year cost for a state college in 2011? What would the average percentage increase work out to be?
What kind of savings plan would I need to develop to meet those costs for my child, who is now 9 years old?
Mike
From: Murray, Jonathan P.
Sent: Tuesday, Sept. 30, 2002
To: Goldstein, Jon W.
Subject: RE: $
Hi, Mike:
One of the most helpful college planning sites I’ve seen is www.savingforcollege.com. It lists all of the various state 529 College Savings Plans, and has links to college cost calculators.
Be forewarned, however: The rising cost of college tuition is alarming (especially at private institutions, where I paid $4,000 per year for mine;
now, it’s $33,000.) Our nation needs to do something about this, or college will be unaffordable to all of our children.
But the good news is that if you start saving immediately, thanks to the power of compounding, you can make good progress toward your goal.
And, I think it’s worth it — next to love, the
best thing you can give your child is a great education!
> From: Beamon, Todd
Sent: Tuesday, Oct. 8, 2002
To: ‘Murray, Jonathan P.’
Subject: $
Thanks, Jonathan.
Talk to you next week.
