European Stars And Stripes (Newspaper) - February 18, 1986, Darmstadt, Hesse                                Tuesday february 18, 19b6 the stars and stripes Page 17 Ira investing in the Stock Market can you Bear to be bullish Orvet about covered Call options and Selling Short the first pm tall you re Likely to lace in investing your Ira in the Stock Market is finding a broker who la \ touch your account. If you be invested the maximum$2,000 in an individual retirement account each year since 1982, your 1986 contribution should tip you Over the $10,000 Mark. But that May not be enough to get the attention of Many full service Stock brokers according to John Jackson a broker with Dean Witter Reynolds in Germany. The reason brokers work for commissions and those generated by an account Worth $10,000 or less Are usually too Small to bother with. Jackson for example is turning Down people with less than $25,000. I find unfortunately that the Small accounts take up too much time. People with a couple thousand dollars will get on the phone and talk my head of. I end up not having the time to give to my larger accounts the people with several Hundred thousand dollars or More to invest. People Mth a few thousand dollars read about the Stock Market and sure it s exciting it s exotic but it s just not manageable with that amount of Money. Here s an example the median Price per share on the new York Stock Exchange is $37.20, and stocks Are traded normally in what Are called round lots of 100 shares. Right there with commissions you re looking at around $3,800 to buy 100 shares. Someone starting out with an Ira has just $2,000. You see the  it is possible to invest in cheaper shares but you d still face having All your Money invested in a single Stock. So your in the Market but without diversification. It s a risky position and hardly the kind of thing you should be betting your retirement dollars on Jackson said. The intention of the government was that iras be a supplement to retirement plans and social Security and i have not found a lot of people who actually use it that Way. Your Ira should be your Safe Money. You can speculate but you re always going to be limited. If you blow All your Money you re not allowed to put More in past the maximum contribution for that  Jackson thinks iras Are Good investments for most workers but especially for younger people in the lower tax brackets. Obviously these people Are not going to get the same kinds of tax benefits As those in say the 40 percent bracket but i think an Ira is Good for people who have difficulty saving. Once you be put the $2,000 in it can t be touched without first paying the 10 percent penalty and then the taxes. That s a pretty Good incentive to leave the Money  people who really can t afford the $2,000 investment though should not bother with an Ira no one should use their Ira As just a tax break especially if its with Money you May later need. If your $2,000 contribution was invested at 10 percent and that s a pretty fair rate of return it would take 7v4 years before your Money would have earned enough to pay the penalty and taxes and leave you at the break even  Small investors who do make Ira contributions Aie probably better off in managed funds he said especially Mutual funds that Are investing heavily in the Stock Market. With the Stock Market doing what it did last year there arc a lot of Good opportunities and these will probably continue this year. Our company s opinion is that Well still see a 1700 Dow Jones Index this  and that record setting Market is bound to lure some Small investors. Although there s not much Chance of getting Jackson to handle your account there Are brokers who will gladly take accounts under $10,000. Funds do and they fire traded entirely on the open Market. You have to go to a Stock broker to get one. Some of them Are doing really Well and they Are great for people who like real estate and like the Mutual fund concept. For younger people they Are a Good Way to get into real estate without the hassles of buying  annual pm. Savings or Mutual fund accounts sponsored by insurance companies. Just about the least glamorous product there is but these Are extremely Good Ira vehicles for older people those Over say 46, because you will not lose your Money. The Only risk Here is inflation. Essentially you go through two phases in  first stage is trying to create Money the second stage is trying to hang on to what you be created. Some people never get to no. 2. Annuities Are essentially for the second stage they re a very conservative  Carter s views on poor Ira investment vehicles in the coming year municipal Bond. There s a big debate about whether municipal Bonds Are Good Ira vehicles because they re already not taxed so Why would you use them in a tax deferred Ira that s a pretty Good  junk Bond. These Are what some Mutual Are calling High yield Bonds but they re essentially Low Grade discounted Bonds that sometimes Post flashy rates of return. You have to remember that the deeper the discount the better the Chance of default. The Best Bonds sell very close to Par or face value and some sell for greater than face value because of their expected High rate of  Zero Coupon Bond. I Don t think they re a very Good vehicle for military people because 99 out of 100 people won t understand them and won t be Able to make intelligent decisions Between  and Selling Zero Coupon and other discount Bonds what s known As the after Market can be a problem Carter warns. Generally the after Market in discount Bonds has never been very Good because there Are new issues All the time. That s one of the Good things about Mutual funds they will redeem themselves. An annuity too has a surrender value. It will redeem itself. With Bonds you have to go out and sell to someone. It s not that they re unsaleable everything can be sold for a Price. It s whether the Price you get is close to what you  certificate of Deposit and old a fixed investments. Any fixed investment is prone to Money rate risk inflation going up while you Are locked into a fixed rate of return. A lot of people put their iras into cd and they re going to experience what is called cd sticker Shock drastic reductions in renewal rates. About $30 billion is coming due this year. To be fair to the Banks though it s a lot better to have your Money in a cd earning a modest rate of return than to have no investments at  Jackson s advice to those thinking about investing in stocks o find full Murvic broker who will handle a Small account. There Are plenty of what Are called discount brokers around who will sell you Odd lots of Stock say so shares or whatever and that makes them attractive to the Small investor. But they Are usually More expensive than a full service broker because they have minimum fees. A full service broker works strictly on commission and for Small transactions that can amount to very  a prepared to do most of the work. You should make sure you have the time to follow your investment because you re not going to be Able to Trust your broker to play with your stocks if you have a $2,000 account. You have to realize you won t get the same service As if you were a big customer with say $100,000. Don t 11 your broker talk you into a lot of trading. Stock brokers make their Money from the commissions charged each time you buy or sell a Stock or make other transactions and commissions can quickly eat up a Small account especially h the Stock is not a Good performer. Jackson suggests picking and staying with venerable performers that pay Good dividends. But again the Small investor has to remember that the big gains in the Stock Market Are made with big Money. Without big Money you can t take advantage o the minute swings in the Market.". 8ly by from Penny stocks Low Cost shares that Are attractive to investors with Only a Little Money because 100-share round lots can Cost $25 or less. Sure you could make some fantastic gains but the reality is that nine out of every 10 Penny stocks lose Money. And losing Money is not what you want to do with an  Ira game at a glance anyone under the age of 70vz who has income from a Job or Alimony can contribute to an Ira. You can contribute up to $2,000 a year $4,000 for dual income House holds or $2,250 for wage earners with non working spouses. Contributions can be made any time after Jan. 1 and before the april 15 tax deadline the following year. You Don t have to contribute the Max and there is no requirement to con tribute every year. The amount of your contribution can be deducted off the top of your earnings before figuring your income tax. Your contributions grow tax free. You can withdraw your Money at any time. Withdraw before age 591/2, though and you pay a 10 percent penalty