MANY PEOPLE ask, "What percent of my assets should be invested in stocks and/or stock mutual funds?"
It depends on your age and comfort level.
Regarding age, here's a rough guideline: Subtract your age from 120 and the figure should -- more or less -- equal the percent of your stocks and stock funds.
For example, if you're 30, I suggest 90 percent in stocks. If you're 50, about 70 percent. At age 70, scale stocks back to around half your total list.
Why the high percentage of stocks? Over the past 60 years, stocks -- measured by Standard & Poor's 500 stock index -- yielded an annual total return of about 10.5 percent, double that from bonds, CDs, etc.
ONWARD & UPWARD: "Be prepared to change jobs by keeping your skills honed and always developing new ones. You can't assume long-term stability with one employer anymore. But skills and knowledge are transferable.
"Keep up your education -- not only in your field, but in other areas. Assume you will change jobs repeatedly, plan accordingly." (Right Associates, a Los Angeles outplacement firm.)
WHEW! "The U.S. Embassy will now replace a lost or stolen passport. The cost is $65. A consul can issue a replacement, often within 24 hours." (Handbook of Consular Services, U.S. State Department.)
Regarding the above, always carry a photocopy of your passport in a separate place. The copy makes replacement simpler.
SEPTEMBER SONG: "Tax reminder: Because the third installment of estimated tax payments is due by the 16th of this month, project your expected earnings for the year.
"If they will be much higher than last year, increase your W-4 withholding or estimated tax payment to prevent underpayment penalties." (Tax Hotline.)
CAVEAT EMPTOR: "Before you hand a deposit check to a retirement community, insist that the facility give you a copy of its latest audited financial statement. It may feel like a ton of bricks, but the statement contains critical information about the facility's financial health." (Kiplinger's Magazine.)
Ticker Suggestion: If the "ton of bricks" smothers you, ask your accountant for help.
DON'T HIDE: "If you can't repay your student loan, contact your lender. Don't simply skip payments; that can ruin your credit rating. Lenders will often consider deferral or forbearance for a time if you're out of work, in graduate school or temporarily disabled." (Consumer Credit Counseling Service.)
NOTES & QUOTES: "The best bond buys are in the 10-year to 15-year range. Short-termers give up a lot of return while long-term buyers assume too much risk." (Fortune.)
"Regarding tax deduction of home office expenses, a key IRS question is whether the home office is your 'principal' place of business. If yes, you're entitled to deductions." (Black Enterprise, September.)
"To protect your assets in today's litigious society, make sure your homeowner's and auto insurance each has $300,000 liability coverage. About 80 percent of suits are settled for less than $300,000." (Moneypaper, August.)
ENDPAPERS: "Yank the credit card from your wallet that's charging 17 or 18 percent interest on unpaid balances. Pay it off from savings. That's equal to earning more than 18 percent on your money!" (Working Families, September.)
For a free booklet, "Eight Ways to Make $1 Million with Your 401 (k) Plan," send a self-addressed, stamped, business-size envelope to the National Association of 401(k) Investors, Box 410755K, Melbourne, Fla. 32941.
Pub Date: 9/04/96