Masonry Magazine September 2002 Page. 42
Finance Management
are phenomenal opportunities for you to reposition into some of these fund groups now. But you do want to look at all the funds in each family. Once you are in, you may need the flexibility to move from one fund to another inside the fund group, usually a free transfer.
Those who are familiar with the Internet can gather information from Morningstar.com on different fund groups. The key thing is to be buying into funds that have consistent long-term performance over a 10-to 20-year period, perhaps 12 to 15 percent, year after year except for exceptional years. In addition, it is important that these fund groups have a couple of dozen choices in different investment sectors, so that when a bad year comes along you can move your investment sideways within the fund group with no penalty.
Now mutual funds offer A, B, C, D and E shares. Generally the "C" shares get you 100 percent of your dollar invested today and don't charge any fee at all except for a 12(b)1 fee unless you sell out of the fund in the first seven years or so.
While there are some funds that only offer A and B shares, which will charge an upfront sales fee, studies have shown little correlation between non-sales charge and upfront sales charge funds. Therefore, making a decision on something because it has a sales charge or not is probably not valid.
Key indicators of success are a long-term management team and consistent year in, year out returns that are beating the sector indexes in the target sector. We need to be looking at positioning a portfolio right now, into the following areas: Large Cap Growth, Large Cap Value, Mid Cap Value, Balanced Growth and Income, High Yield Bond and Small Cap. The percentage of your money you want to put into any one sector will to some extent depend on your own perception of what will happen next in the economy, the political landscape and company earnings.
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Key indicators of success are a long-term management team and consistent year in, year out returns.
Consider this: 2002 is the first year in a very long time that the economy has had very low interest rates (1.75 point Federal Funds Rate), a tax cut (did you get a check?), and increased government spending (returning to deficit again). The dollar, due to our low interest rates and the market crash, has been declining against foreign currencies, making it more attractive to sell things made in the USA to foreign countries. According to Treasury Department statistics, the economy actually grew by four percent during the first six months of 2002. In short we are already technically in recovery.
In short, my advice is: If you have put your money in a money market or savings account for shelter while the market went down, get back in now! Choose from the selected mutual fund groups above or call a financial planner to assist you. This may be the best single buying opportunity to get into selected sectors in the past 20 years.
Among funds I have been suggesting-State Street Research Aurora, Berger Small Cap, Eaton Vance Worldwide Health Sciences, Davis Financial and others may be consistent opportunities for positive growth.
My overall reaction to Tom Brokaw's "Take the Money and Run" is that you may want to take it as far away from Brokaw as possible and run back into the market, carefully, in order to participate in the next big bull market.
Some people believe that Allen Greenspan will retire in 2004 and is going to hold down interest rates to make sure the economy is booming as his legacy to the future. Using "60 percent dollars" to buy in now, you should have 200 percent of your investment in your retirement accounts by 2004 if the impact of fundamental economics maintains the usual result 24 to 36 months after government action of this type.
This figure is derived in the following way: Your investment-in other www.masonryshowcase.com