European Stars And Stripes (Newspaper) - February 18, 1986, Darmstadt, Hesse                                Page 14 the stars and stripes tuesday individual retirement account he Yuppie tax break has come of age. Since Congress authorized individual retirement accounts in 1982, nearly 40 million americans have pumped $200 billion into tax sheltered savings. By 1990 the Ira Kitty is expected to top $550 billion a swelling Pool of Money that analysts predict will bolster the Stock Market hold Down interest rates and keep the financial Community in hot Pursuit of your Ira Dollar. For those who have somehow escaped hearing the Ira hype the economic recovery tax act of 1981 authorized anyone earning a wage to contribute up to $2,000 a year those with non working spouses can add another $250 and deduct that amount off the top of their income when figuring their taxes. Interest and dividends earned from iras Are also untaxed until you Start drawing the Money out after age 59v,. Money allowed to grow with compound interest and without the ravages of Federal tax will do so at a staggering rate. Take the example of a 20-year-old who makes the maximum $2,000 contribution for the next 40 years until age 60. Thanks to tax deferred growth his $80,000 investment would have grown to a Cool $ 1.2 million if he managed to get 11 percent interest Over the years. If the interest were 17 percent his investment would  to nearly $7.5 million a sizable nest egg even after you deduct inflation s bite. There Are Only a handful of rules governing the retirement accounts. One of the most important though is the penalty for Early withdrawal. Pull out Ira Money before that magic age of 59w and you face a stiff 10 percent penalty plus the full bite of Federal taxes. There Are also limits on where you can invest your Ira contribution but not Many. Only life insurance. And hard assets like Gold gemstones or Art and other collectibles Are verboten plus the few investments that involve borrowing such As stocks bought on margin or mortgaged property. Otherwise you re free to Park your retirement Money where you will. Ira investment options Are already numerous but the future should hold still More As some retirement accounts reach the $10,000 level Banks brokers and Bond merchants Are suddenly taking notice. Zero Coupon Bonds the rage in Ira investing for the last few years have Given Way to a confusing array of investment plans that include everything from Utility company stocks and Stock futures to limited partnerships in real estate. And almost All brokerage houses now offer self directed iras giving investors full control of where and How their Money grows. About half of current Ira accounts though Are still in certificates of Deposit earning a fixed rate of interest. One reason is that Back in 1982, when iras became available to All workers cd were about the Only investments around and in the Long run they turned out to be one of the Best. At the time inflation was slowing and Banks were offering three year cd that paid interest rates of 14 or 15 percent. Rates have dropped a third or More since then though and certificates May not necessarily be the smartest place to put your Ira dollars. One financial consultant said he is steering the bulk of his clients away from cd this year and into aggressive Mutual funds that invest in everything from contract penal institutions America s new private alls to telecommunications and firms entering the burgeoning service Industry. So what to do with that tax deferred Kitty again the choices Are Many and thanks to payroll deduction and the sometimes speedy malls being stationed overseas does t have to limit your options. Here s a Quick look at what s available credit unions. Easy to set up and manage opening an account can be As simple As tilling out a single form credit Union iras offer Little risk but consequently lower interest rates. Credit unions serving serve remembers overseas Are now offering Between 7% and 10 percent interest on share accounts and Between 8 and 9 percent 90 variable term certificates. I Mutual funds. About 5 percent of an Ira Jno Neyl in Mutual but expect that figure to climb dramatic Aby As savvy investors Cash in their maturing certificates i look around for higher yields. I. ,. Some of the Best for Ira investment Are Mutual wit a family of funds giving investors the option of divesting into everything from International Bonds to Treasury Bills. Rates on Mutual last year varied anywhere from 6 to 38 percent while a few fast i Rode the Stock Market to 70 percent returns. Most of the 2,000 or so Mutual funds in America gov. Prompt service by mall. Ads and coupons in financial magazines and business newspapers offer addresses and occasionally toll free or collect phone numbers i ordering Ira starter kits. T " Banks. Many stateside Banks Are offering flex Del Ira accounts and certificates of Deposit. American express military Banks overseas offer cd they v averaged a 7.7 percent return last year plus Mutual fund accounts they posted 21.2 percent gains in 19 through a pair of american express subsidiaries. Brokerage Bouse. Investors with a Little time and at least a Matching amount of expertise 3 can a manage their own retirement Money through so directed iras that open up investment in precious m funds real estate deals Bonds and of course the St Market. Or just about anything else that s allowed $ confused Here Are a few Basic tips from fun Andoli consultants operating in Europe and the states 4 invest As Early As you can. Investors who put $2,000 into their Ira each Jan. 1 earn 16� months interest More than those who wait until just before t time mid april of the following year. A with a 10 percent interest rate a 35-year-old w who makes his contribution on Jan. .1 the first possible contribution Day will hav accumulated coming to terms with your opt tax time looms Ever nearer and you May be won Derlong where to stash your latest Ira contribution. But How does one Wade through All the hype Are reits really right or is it strips that earn their stripes and just who is this girl named Al Nile Mae we Hope the following glossary and investing guide provides at least some of the answers. Mutual funds Mutual funds Are professionally managed portfolios of stocks Bonds Cash Loans and other Securi ties As an investor you share in the funds profits but also its expenses and losses. Mutual funds usually pay Quarter ? by dividends and will Post capital gains if the Price. Per share value of the fund increases. Both Are Rou finely invested in new shares of tha fund for you. No Load funds Deal directly with the investor you can Call or write the Hind companies for an order form. Loaded or Load Mutual funds Are sold by Bro kers and financial planners and carry a safes charge or commission of 9 percent usually. Among the plethora of funds available maximum capital gains funds these invest in Small rapidly growing firms with the idea of increasing your capital. Long term growth funds similar to maximum capital gains funds these strive to increase your Cap ital by investments in Large stable companies. Though less aggressive they offer More Protection when the Stock Market is weak. Growth and income funds have your cake and eat it too Mutual. The managers of these funds try to invest in companies that not Only pay High dividends but Promise capital gains through growth. Income funds usually entirely invested in High yielding stocks or Bonds or a mix of the two. Certificates of Deposit when you buy a certificate of de posit you agree to leave Money on Deposit for a specified period of time in Exchange for receiving a fixed interest rate. The attraction is that you la know exactly what your investment will be Worth when it matures. And since the certificates Are usually set up with Banks or credit unions your Money is federally insured for up to $100,000 per account. One of the drawbacks is that if interest rates shoot up your Money is stuck earning the agreed upon certificate rate. And there Are Stern penalties for withdrawing your Money before the agreed upon Date. Annuities essentially an annuity is a savings account sponsored by a life insurance company. They re readily available through financial planners and Consul Tants brokers and insurance agents. Annuities Are available in two forms fixed Ard variable. The fixed variety is similar to a Bank certificate of Deposit for Ira investment you d open the account with say $50 and contribute during the year up to the $2,000 limit the insurance company will pay you a fixed rate of interest which usually changes each year. Variable annuities Are More like Mutual funds the rate your Money earns depends on the Type of investment the insurance company has made Tor you. Most firms require an initial investment of around $500 for these. Cashing in your annuity is where the dec Slon Malna really begins. You can take your Money in a Lump sum and pay taxes accordingly or you can elect to annul time that is take regular payments for Jim i your life. How much you receive in payments Dap on How much you be contributed How old you Are i of which sex. J the amount will also vary with the payment of you be selected a decision that once made keeps. Variable annuities invested in the Stock Market \ much As 18 percent last year. Money Market account Money Market funds Are by brokerages and Mutual a companies they lend Money on a Short term Banks corporations and Thi Ern ment Money Market Deposit i Are similar but Are operated by Banks an _ and loan institutions. This Type allows you to checks and offers $100,000-per account insurance. Both varieties Are paying around 4 the inflation rate. Itoh. When you buy a Bond you loan. The Borrower the jct. That issues the Bond agrees., regular interest and to repay to in full when the Bond specified Date. That Date Bond is said to mature few months or 30 years or More in the future you can buy Bonds from full service and brokers and some others usually insurance certified Public accountants who Are registered National association of securities dealers. Corporate Bonds usually sell for a face value