Show f The Herald Journal Logan Utah Sunday July 4 1999 — Page 9 Ideal asset allocation in retirement — not all bonds By Frank Jones Scripps Howard News Service “I need this money to live on How much can I take from my investments and still not run out of money?” This question arises as mutual fund investors retire and pass from the stage of regularly adding to their investments and enter the stage of regularly withdrawing funds Usually this occurs when an investor retires and no longer receives a regular salary More and more I also hear the same question from executives who want to leave positions and need additional funds to supplement their retirement Many investors will immediately think they have to change their investment portfolio to l(X) percent high-inco- high-pressu- re bonds for more income and to have the assurance that their investments will not be wiped out by a stock market downturn Other investors may think they better invest 100 percent in stocks to have higher total returns and assure themselves enough growth so that they will not run out of money Asset allocation is a critical decision for investors who are beginning to make withdrawals from their investment portfolios The asset allocation between equity and bond funds has a substantial effect on what percentage can be withdrawn and still nut run out of money A recent study by three finance professors at Trinity University in San Antonio showed some interesting conclusions from different asset allocations and their effect on withdrawal rales and Ihiw many yean a portfolio could sustain a wiiluliawal rate The study compared five portfolio allocations: 1) 100 percent stocks 2) 75 percent stocks 25 percent bonds 3) 50 percent stocks 50 percent bonds 4) 25 percent stocks 75 percent bonds and 5) 100 percent bonds Contrary to what you might believe neither the 100 percent stock nor the 100 percent bond allocations were the best allocations for sustaining regular withdrawals Two other allocations did better than the or portfolio They are the 75 percent stock 25 percent bond portfolio and the 50 percent Mock 50 percent bond portfolio The best choice of these two depends on llic w ithdrawal rale and your personal lime horizon Why didn't the portfolio perform best? all-sto- all-bo- all-sto- When an investor needs regular withdrawals from an portfolio he or she occasionally muM sell shares when the stock market experiences one of its downturns and share prices are depressed When the market recovers those shares that were sold to distribute income to the investor are no longer there to increase the value of the portfolio However if a portion of the portfolio is invested in bond funds the investor has a source for the withdrawal without selling shares of the stock funds The art of asset allocation is to determine when and how much to set aside in bond funds so that the portfolio will sustain a nuukel downturn and allow the investor to rest easy The study examined fxir payout periods from 15 to 30 years and covered withdrawal rales from 3 percent per year to 12 peicrnl per year all-sto- ck Where there’s no will Utah jobless rate remains steady in June there’s probate court David Flaum Scripps Howard Nawa Service By V H Q: My wife and I married in 1989 We were widow and wid- ower We made out prcnuptual agreements We are proposing to buy a condominium each paying half We are adding a statement that permits the living spouse upon the death of one of us to occupy the condominium until the death of the other spouse: buy out the interest of the deceased spouse or sell it How do you treat the condominium when probating the will? — L T Ben-salc- m Pa A: If each of you has a will then half of the value of the condominium will be included in each of your estates for probate purposes said Cecil Smith a Memphis lawyer A contract spelling out who pays the maintenance upkeep insurance and taxes after one spouse dies is also a good idea Smith said The pact should include a clause requiring the executor of your wills to honor that agreement he said Setting up such an agreement creates a potential federal and state gift tax liability however Smith said John hock lor a Memphis lawyer who deals with elder care issues “It's not an easy or inexpensive procedure” Fockler said To you need a lawyer to file an application for conservatorship and a doctor's affidavit that your mother needs a conservator he said The petition and affidavit are filed with the court with a request that the court appoint a guardian ad litem — another lawyer to investigate the case as a court representative he said The court will appoint that second lawyer and set a hearing date Your mother and the hospital or nursing home she is in will apply have to be served with legal SAIT IAKI-- : I’ll Y (Ah — I 'lah'fc jnblrsv rale fur June mnaiiH'd sloady al 3 3 pciccnt About 361)00 I Mali were unemployed in June 49(H) fewer than in June 1998 when the rale was 39 percent 'Tor the past several months Utah's labor market has been expanding moJestly There have been no notable disruptions in the form of layoffs so the unemployment rale has been stable" said Ken Jensen chief economist for the Utah Department of Workforce Services Nationally unemployment at 43 peroent h for June is up of a point from the May figures One year ago the rate was 45 and this statistic has been al or below 45 percent since April 1998 Non-farjobs in the country are at 22 percent for June a rate that has been essentially unchanged for the past eight months But the current level reflects a modest slowing from 26 percent in the summer of 1998 meaning 35IX) new jobs even tlmugli those in the "eating and drinking places" category added only 1 0 percent or less Tlie manufacturing industry produced just 200 jobs a growth rate of 01 percent held down by the loss of MX) jobs in the steel and copper industries Those losses were offset by increases in the lumber furniture stone and glassware manufacturing sector and the fabricated metal manufacturing m m The finance insurance and real estate industry generated 2900 new jobs for 52 percent growth The transportation communications and public utilities division grew by 1900 jobs or 33 percent The electrical natural gas and sanitary services industry and the mining industry each lost 500 jobs in the past year Railroad employment slipped by 1(X) jobs Give us a call At the hearing the probate judge decides if a conservator is needed and who it will be You may ask to be the conservator Fockler said Either the conservator must be from Tennessee or a resident must be Reading l than li New York Stock Exchange listing you don't sas hars that you want Mad let Th Herald Journal know by catting 752-212-1 If the stocks Common footnotes Stock apSt or stock dividend amounting to 25 percent or more in the pan 52 weeks n New issue in peat 52 weeks elndteates a dividend wes declared In preoedng 12 monte but tel lent a regular OMoenaras Extra dividend or extras in addHkxi to regular dMdend named - If a conservator is appointed the court decides how much of your mother's money can be spent each month and for what When one person dies the survivor loses a certain amount of control over his or her half of the condominium he explained vator to be named and the Under federal law if you put guardian ad litem When no problems arise the such restrictions on property the ' surviving spouse is considered to process will take at least two have given the present value of months and cost $2000 to the future interest in the property $3000 In the meantime you should to his or her heirs Smith said The value is based on the surnotify your mother's creditors vivor’s life expectancy — on how that you have filed for a consermuch the interest in the condo vatorship and that funds should will be worth in today's dollars at be released to pay the bills when the process is completed that time With no will and no surviving The annual gift tax exclusion of husband doesn't $10000 per person your mother's estate apply will be divided equally among to that gift he said You may owe state gift taxes as her children after all claims are well as federal tax Smith said paid Fockler said In the case of although federal law allows you children who have died their to reduce your unified estate and share will go to their children he gift tax exemption by the amount said That too must be handled by of the gift The exemption is the this die who for probate court and the petition $650000 people do that may be filed by a famito to That $675000 up goes year next year ly member or a creditor Depending on how much time Q: My mother suffered a stroke is involved and how much money and is in the hospital in a coma She does not have a will She is involved the estate could be didn’t give anyone her power of advertised a few days to a couple attorney What are our options? of weeks after the filing Four months after drat the estate may —R L Memphis A: While your mother is in a be dosed as long as the bills are coma if you need to handle her paid and no claims are affairs the only course of action you can take legally is to go to David Flaum it a financial reporter for the probate court and apply for a The Commercial Appeal in Memphis conservator to be appointed said percent Retail jobs grew al 18 pcrccnl non-far- onc-lcnl- papers and the guardian ad litem will have to visit her Fockler said The conservator has to get court approval for specific spending and make reports to the court Part of her money will go toward fees for the lawyer for the person who asks for the conser- I 'lull's increase in the number of jobs a primary indiculor of current labor market conditions was 26 pcrccnl in June This is down somewhat from the 30 level it had been steady at for the past 10 months Between June 1998 and June 1999 about 27IXX) non-farjobs were created including 24700 in the private sector where there was 29 pcrccnl growth Aficr job growth in the construction industry slowed briefly in the spring of 1998 it has surged forward and continues to lead all industries for the past 10 months The industry has generated 5400 new jobs in lire past year a rate of 76 percent Present and future construction should maintain that growth through the end of 2000 The services division generated 1 1000 new jobs since last June an increase of 39 percent The trade industry produced 3700 new jobs in the past year a growth rate of just 15 ConAgr 33ifl 26im ConrPr 19i2 9 83m 32 Comal 62w 48M 1J0d53M ten 10i HaraM Journal New York Stock Exchange weekly ’ xceih' AESCp A — m- - 4 mw -MVaW (S Afuc mw saw MM ATSTl NVS46W tana tlW w WU ttwftcl 2W MW 1 SI Ml MW w jotrewaM Jl JS 7EWMW M VaM Va 1 W 4SW-1- -- Va W MM SOW 14W 47WMW 12 W M 17WW MOWMta USoTTW -- W MW MW JO MW -- W 40W 20 7V 4tmtW Alcan Ato M 17 W 44 W MW 1SVW 47W WWW MOD Meat AM Inc Act Mbalai 42W14W 10 20 W -- 1 W 721 SI Va -- W JO 22W-- JlaMW MW CMgipi 51 W C4zUM 11WIW ClaylnHi CtooCi WW 76 Ckraa 132V M 41 WMW 10 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