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Financial hints whose value is timeless


WHATA CHEERFUL way to start the day!

"When you die," Herb Willoughby, Channel 11's veteran TelePrompter operator, said to me early one morning last week, "When you die, all of that valuable financial material you talk about on TV and in the paper will go 'down there' [pointing] with you."

Then he added, "You've got to write a book."

I told Herb I didn't have the patience to write a book, but instead I'd print in my first Sun columns some of what Evening Sun "Ticker" readers for 17 1/2 years considered my best advice, judging from their letters, curbstone comments, phone calls (during dinner), etc. Here goes:

START EARLY: If, when a baby is born, you put away $6,700 for him or her at 8 percent, and let it compound, the nest egg will grow to almost $1 million, without adjusting for taxes ($996,824 to be exact) by age 65. It's worth borrowing the money to do it.

Beginning at age 21, if you invest $2,000 a year (about $40 a week) for 10 years at 8 percent and then stop -- don't put another nickel in -- and let it compound, your $20,000 will grow to over $425,000 by age 65. But if you wait until age 41, you'll have only $76,000 by the time you're 65.

WHENEVER YOU START: "If you put just $25 a week into stocks or stock mutual funds that gain 10 percent annually (or just under the 10.2 percent average annual return for stocks over the past 70 years), your weekly investments will grow to more than $103,000 in 22 years." (Money magazine)

Over a 35-year span, $1,000 invested in Treasury bonds inched dTC up to about $5,300, but in an average of common stocks (no special selection), that $1,000 mushroomed to over $88,000, a ratio of stocks over bonds of 17 to one.

FUTURE SECURITY: "If from age 20 to age 65 you save $50 a month and get an annual average 8 percent return, at age 65 you can take out $1,658 every month until you reach age 100. While you would have put in a total of $27,000, you would withdraw a whopping $693,300. By comparison, to reach the same goal if you started saving at age 30, you would have to save $112 a month -- more than twice as much." (James Stowers, 20th Century Mutual Funds)

HERE'S A SURPRISE: Instead of making your mortgage payment once a month, make a half-payment every two weeks. That totals 26 payments a year, the equivalent of 13 monthly payments rather than 12 -- and that's the magic.

All of the extra payment is applied to the principal, so a 30-year loan is thereby reduced to 20 years, sharply cutting the interest. On a $100,000, 30-year loan, you would save a whopping $77,000 in interest.

TIMING TRAP: One of the truest of Wall Street maxims: "Invest money when you have it." Why? If you wait till fall, you'll probably never invest ("I certainly won't buy in this terrible market!"). If stocks move higher, you'll say, "I sure won't chase stocks at this high level." Result: You'll stay out.

And your indecision would be costly as major stock moves take place over very short time periods. Example: 50 percent of Wall Street's big surge in the last 10 years (from Dow Jones 1,255) took place in only four out of 120 months! (And you're going to pick those few months?)

HOPEFULLY HELPFUL: When buying mutual funds, ask for "B" shares, where there is no front-end load. Your broker has details.

Don't believe you have to live on a "fixed income." Instead, buy stocks that regularly raise your dividends. Example: Baltimore Gas & Electric upped payment nine of the last 10 years, Dun & Bradstreet every one of the last 43 years. Brokers have lists.

"Successful investing is correctly anticipating the anticipations of others." (1995 Stock Trader's Almanac).

"Let the other guy have the last 10 percent." (My father, a Baltimore stock broker many decades ago).

"More careers are ruined by loose talk than by anything else." (Success magazine).

"Eighty percent of success in life is showing up." (Woody Allen).

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