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Show TheSalt Lake Tribune BUSINESS Sunday, April 27, 1997 all kidding aside, I am indebted to certified financial planner James Murphy of Cincinnati for the excellent point he makes. My statement, “Pick one from amongthosethat fit your goals,” was meant for people whotell me they want to startinvesting in mutual funds but agonize endlessly over which one to choose. You have no way of knowing which oneis “the best,” so rather than be paralyzed and do nothing, makea shortlist of those thatfit A Sharp Pencil your goals and just chooseone, I Will Hone Investments But I did not mean to imply that one fund makes for a complete portfolio, and thank Murphy for the opportunity to clarify that point, You don't need dozens of funds either, but you would do A few readers have been waiting patiently to soundoff. “Tam in a state of shock after you respondedto a reader's question on how to pick the “best” mutual fund by advising: ‘Pick one from among those that fit your goals. “The basic foundation of any investment portfolio is diversification. Diversification requires a mutual-fund portfolio that uses different types of investments, thatis, domestic vs. international equities, and different types of manageinent style, such as growth vs. value. Your advice in this instance wasa disservice to the millions of readers whouse yourcolumn to plan their financial lives.”” Comment: I will take 10 lashes with a dry noodlefor that one but, said How hardis this? All the skills you need are taught by the fifth grade, says Carol Newman, a years starting at age 25 and has a million dollars by age 65, does a disservice. I can’t help but think The most powerful and sophisti- mathematics specialist for the that mostpeople will automatical- Broward County, Fla., school sys- ly think of that million dollars in goodif you don’t grasp some basic concepts of how money grows over time because of the power of compoundedinterest. I am talking about concepts tem. terms of today’s spending power. But I left out any mention of computer programs on purpose. cated software in the world is no such as: @ You will have more money in the future than you have today, even if you don’t save anything, if you invest the money you have and make a profit. @The longer you invest your inflation, who supposedly use my column to plan their financial lives, I hope they are paying attention every When you start spending your nest egg in retirement, you don't spend all your money at once (you would be in real trouble if you did). The part you do not spend math about determining how long the money you have accumulated will last. But you missed a good opportunity to mention that these calculations can be provided by computer programs.” Comment: No one person can claim credit for this question because dozens of you wrote or that is easily understood.” you can continuetoinvest. PLUTOONEALAS So if you know how much you have, how much you plan to spend each year and what kind of return you can make on the money you don’t spend, you can calculate how muchyouwill have at the end of each year. All you need to dois first subtract what you spend each year from what you have, then figure out a percentage return for your unspent money. 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The programis [FLEXIBLE with a Internet a Robotech's Inter rao ale efor Kem ta -3 capital F, whether you're seeking a eee Technology. an[MBA ORA B.SJin Business. Award Winning Cobra Computer Special) Offer +166. CPU paca eenUy Baaliretana $7, Paid 44 BeaROR eares 9 Perea eecnr Berened) eeeCuamer Rete Cee cs be prtng Sale Ws oe igan Ave., Suite 1400, Chicago, IL 60611. Send e-mail messages to: HCruz5040@aol.com. \iaaCeo On HIATT AACNAAG With Purchase Of 1 Yearinternet Service naing space to mm, Wednesday, April 30 if you are very successful in getting your readers to amassa siz- able retirement fund.” Humberto Cruz lives in Coral Springs, Fla. Write him c/o Tribune Media Services, 435 N. Mich- aoaAC as : FREE 33.6K Fax Modem Spritand sabiig ran are avaiable upon fina requcttforutManagement the Divaon Fusities Constructionand we expect to be in a lower tax bracket when we withdraw our IRA funds. That maynot be true “Although I applaud your encouragement of savings with IRAs, the exampleof the power of compounding, in which a person puts away $2,000 a year for 10 you will need more money in the future for the same things your money buys now. their own conclusions no matter IRAs,stated so many times by you and otherfinancialwriters,is that need uncomplicated information Unless we don’t have any more that invest abroad. As to the “millions of readers” me. “Yourrecent columnonretirementplanning presented a lot of hem, Pa., told me recently, “We turn you get, the more money you well to include different invest- what anybody says — including your column? “Another expectation with bit. But as a reader from Bethle- that conventional wisdom. But mostof us should beable to manage the withdrawals to at least stay within the same tax bracket. As to inflation, of course it needs to be addressed. will have. ment styles in the stock portion of your portfolio, including funds time I say they need to arrive at Shouldn't this be addressed in AmI oversimplifying things? A Comment: Stated so many times by me? I too question seriously money,and the higherrate of reOf course, you will have even more moneyif you also save and invest the money you save. STATE OF UTAH ADVERTISEMENT FOR SPACE NS Th Oe faxedtosay the samething. so Astronauts landon moon. 1g99: You landa big raise or a better job, thanks schedule. After which, we send ] opportunities and paychecks w to your newdegree you off to enjoy the bigger that await our graduates. All coreclasses are offered every semester. Shootfor the moon. Phone!488-4200! today. (Smailclass sizes promise meaningful interaction andpersonal attention.) Your previous work experience may be worth credit toward your B.S. 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