Spring checkup for your money


Every May, when I was little, Mother would go through an annual ritual in our Pikesville home called "spring cleaning."

Grim-faced and determined, she compulsively emptied and dusted the kitchen closets, scrubbed the dishes, took down the heavy winter drapes, "slip-covered" the couch and chairs for summer, beat the dirt from the carpets and hung out all of my heavy wool suits and coats to air. ("Son, have you bathed recently?")

Recalling that ancient rite of spring, Ticker presents, 65 years later, a 1992 spring checkup -- this one for your money:

(1) Shop for the highest insured interest rates for your savings, as you would shop for the best prices for meat, potatoes, etc. Currently, according to "100 Highest Yields," the top money market and CD rates locally are at Eastern Savings, Custom Savings, Maryland National Bank and Loyola Federal. Check them out.

(2) Have a "staggered" maturity pattern of CDs, bonds, etc., so you're protected whichever way interest rates go. No matter what your age, don't be afraid of some long maturities. (Don't we wish we had bought the 20-year 14 1/4 percent Treasury bonds back in 1982!)

(3) Check your stock portfolio. If you're young or middle-aged, have at least 50 percent (maybe more) of high quality stocks in your list. Over 35 years, the S&P; 500 stock average outperformed government bonds by 17 to 1. (No misprint.)

(4) Make sure that no stock in your list represents over 25 percent of your total. If one does, cut back promptly, pay the capital gains tax (if any) and move on. As I've often said, never worry about capital gains taxes; worry about losses.

(5) If you're in the 28 percent (or over) tax bracket, switch some money from CDs, government bonds, etc., to high quality tax-free municipal bonds. The tax-free arithmetic will generally work in your favor. Be sure to check bond call provisions.

(6) When selecting a stockbroker or adviser, interview several. Ask to see audited investment results. If results are poor after two years, warn your broker. If results continue bad, switch brokers. It's your money, and nobody cares as much about it as you should.

(7) Regarding your career, decide to put every nickel you can into pension plans, 401(k) programs, IRA rollovers, etc. Reason: money in retirement plans grows almost twice as rapidly as in your personal account because no taxes bite into growth and income.

(8) If you have sufficient savings, pay down your mortgage, home equity loan and especially non-deductible consumer and auto loans. Why keep money working at, say, 4 percent when you owe money at 9 or 10? And disregard the tax-deductibility feature of home loans.

(9) If you're a worrier, carry insurance on your safe deposit box contents.

(10) Check to see if your homeowner's insurance limits are high enough.

(11) Concerning insurance, check your catastrophe "umbrella" policy for limits. I'm not trying to frighten you, but courts' awards are high these days and you don't want to pay millions of dollars if, for example, your auto brakes fail at a crowded intersection and injuries or fatalities result.

(12) Review your will with your attorney. Make sure you're leaving money, etc., to people you really want to leave money, etc., to.

(l3) Before buying Treasury notes, bonds, etc., call the Baltimore Federal Reserve branch (539-6553) for schedules of new issues. You may often buy Treasury securities at the Fed without paying brokers' fees. Some issues can be bought with low minimum amounts.

Checkup Quickies: The Enoch Pratt Free Library is very helpful with financial information. Call 396-5430 . . . Before it's too late, sign up for fall college financial courses; most local institutions give them . . . Resolve to "invest money when you have it," rather than try to pick market bottoms; it's almost impossible . . . Keep a 10 percent buying reserve for a "bad" market or unexpected personal expenses.

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