European Stars And Stripes (Newspaper) - April 27, 1985, Darmstadt, Hesse                                Page 8 the stars and stripes april Money matters an investment guide Good times or you can make Money by Joanne alter these stories Are reprinted by permission of the new York daily news Magazine what would you do if you suddenly found you had an extra or even even though you May not have hit the you probably do have More after tax take Home pay than youve had in a at least that what the government what to do with that extra Cash you probably have specific goals in you May want to save for a House or an extended to Send the kids to or for while hitting the lottery would be Odds Are that youre going to have to come up with More realistic ways to make your Money the following investment primer will help you do Fust regardless of whether those who predict continued Good times Are right or remember that theres always Money to be made in Good times and theres no reason with some of it cant wind up in your heres a rundown on investment opportunities that currently offer Good returns and relative these should be considered the foundation of any Well designed investment certificates of Deposit cd these Are the familiar Tim Deposit accounts offered by and now also by brokerage you lock up your Money for a fixed amount of usually up to five years or if you want in youll get about 9 to percent on your As of this since cd of up to Are insured by the Federal Deposit insurance corporation Odic or the Federal savings and loan insurance corporation there perfectly your Money will be there when you go to get the drawbacks cd Are subject to Earl with drawl usually at least 30 Days unless the cd is part of an individual retirement account Keogh account or in Trust for a youll be fully taxed on the if youre in a relatively Lowmax or if youre looking for a Way to save for a Childs cd Are an excellent Bank interest rates As do minimum investment re shop Treasury issues backed by Uncle these Are among the safest in vestments you can three and six month Treasury Bills Are paying Between 8 and 9 mini mum investment Treasury which can be bought in denominations of mature in less than 10 Treasury Bonds Are sold in units of and mature in More than 10 recent interest rates be tween percent and besides being perfectly Treasury issues Are exempt from state and local whats for those looking for steady the Bonds pay out interest twice a on the Down there is whats known As Market risk if you must sell them before they and interest rates have gone up in the your Bonds will be Worth so if you do plan to hold on to them until they Zero Coupon treasuries these Are relatively new offerings from Uncle and there very particularly for those with Ira or Keogh plans and those planning for their kids College what Are they there very much like the old trusty be you can buy Zero coupons at a fraction of their face when they you pick up your initial plus All the interest that has the reason that there so appealing for retirement accounts and for kids education is that each year there taxed As if you were receiving the even though you dont see a in an Ira taxes Are automatically deferred until so you pay nothing right if the Bonds Are Given in Trust to your there taxed according to the kids income presumably next to yields on Zero Coupon treasuries Are around 11 an example of a recent due May yielded percent to in other if you were to buy Worth of that particular youd Cash it in on the due Date and receive financial planning How a plan is developed 3 gather personal financial data d define personal objectives n Analyse current financial situation q develop alternatives q build specific plan around Best alternative q implement n review periodically objectives of a plan n minimizing personal risk n accumulating capital n managing investment and property d providing for retirement d reducing tax Burden now and in future n planning handling of estate Chicago Tribune graphic source Price waterhouse brokerage houses have their own versions of Zero Cou which Are also quite for Merrill Lynch offers what it Calls Treasury income growth re or tigers pronounced Merrill Lynch buys a huge chunk of Treasury Bonds and puts them in and then offers pieces of them to at the time of this there Are about 70 ranging up to the year theres no charge to buy if you must sell before Merrill Lynch maintains a secondary corporations and municipalities also offer Zero Coupon for maximum those issued by Uncle or based on the Purchase of Treasury cant be in for anyone with limited Cash and goals linked to specific future Zero Coupon Bonds May be one of the Best investments tax exempt Bonds everyone wants to decrease his tax so its Small wonder that Bonds offering interest with no in some state and taxes Are this is especially True when tax exempts Are paying extremely High rates of return 8 to 10 As appealing As they they Bonds Are not for who stands to gain those in a Federal tax bracket of at least 35 in a couple living in new York filing a joint return on income of Between and would need an investment before yielded percent to equal the return on a tax exempt Bond yielding Only 9 if that couple lived in new York City and was also subject to new York City that same 9 percent tax free Bond would be Worth a percent but what about safety there Are definitely some the first is the possibility that the issuing municipality or Agency could that Why anyone considering tax exempt Bonds should stick to those rated at least or preferably a or aaa the safest of by Standard poors or Moodys rating theres the possibility that a state or local govern ment could Call its Bonds before they in other after or sometimes 10 the government can buy Back its Bonds at face usually with a Small additional governments do that when interest rates have even though you get your Money you lose the High rate youve been then you have to try to find a similar yield which could be another Point to consider tax the current uncertainty Over tax Reform has put a Cloud Over tax exempt if some sort of modified Flat tax is approved by and the current top tax rate drops from 50 percent 30 or 35 the Appeal of tax exemption would on the other argue some if some types lose their tax exempt status under certain current others that retain it would become even More and therefore prices would go if All the what ifs make you you May want to hedge your bets by choosing one of the safer ways to get in on tax one Way is to buy shares in a uni investment this is a group of tax exempt Bonds put together in one with pieces of the total package sold to individual when you buy the your rate of return is locked the relative safety and diversity of uni investment trusts comes at the Price of a 4 to 5 percent commission up interest rates Are quite High for an initial investment of gets you a piece of Lebenthal Empire state municipal exempt As of this is paying a hefty free of state and City taxes to new York City to eliminate any Market if you buy shares of a plan to hold onto them until they advises Jim chairman of the company that bears his think of them As a Cash Hes fond of  just continue to give you still another Way to safely enjoy the benefits of tax exemption is to buy shares of a tax exempt Bond in a Bond the Bonds Are actively managed and traded for a management fee of percent to 1 yields can go up or Bond funds offer relative safety and All at tax free interest rates currently in the 7 to 9 percent tax deferred annuities these Are retirement accounts offered by insurance and there tailor made for people who can invest and forget about the Money until there ready to heres Why when you invest in an your interest until you retire or reach the age of if you withdraw it before you pay a 5 percent tax on any Money you take plus whatever income tax you to make matters some firms charge surrender fees of As much As 7 percent if More than 10 percent of an annuity is withdrawn at any what All of this Means is if you cant forget about the Money in your forget about annuities in if your income is High enough to cover living College payments and other foreseeable consider the two types of annuities the first is a fixed the insurance company guarantees a fixed amount of interest currently about 10 percent for a specific period of usually six months to five after the rate can the amount of Money you principal is and in the better theres an escape or bailout clause that allows you to take out All of your Money at no charge if interest rates fall More than 1 percent or 2 percent below what you were originally of is called a variable with this returns depending on How Well or the insurance have done investing in Bonds or Money Market you stand to make More Money with a variable annuity than with a fixed even after a 4 percent to 5 percent sales plus administrative costs that could amount to 1 percent plus per you could also lose the amount you put your principal is not