European Stars and Stripes (Newspaper) - January 30, 1991, Darmstadt, Hesse Money amp taxes investment strategies for times of gloom and doom by Randy Mcclain financial writer picking investments during the 1980s seemed like a can t miss proposition. It was easy to make Money in the midst of the longest peacetime expansion in . History. The Stock Market was booming and overseas service members went along for the ride by making monthly investments in a wide array of Mutual funds. Sure the Stock Market crash of october 1987 Hurt with an unexpected 508-Point drop in a single Day. But that catastrophe was soon forgotten when the Market recouped its losses in a matter of weeks and hit new Heights. Today s economic situation could t be farther \ from that Rosy picture. Jitters Over How Long War will last in the persian Gulf and fears of a Steep economic downturn in the United states have made americans More cautious about spending their Money and leery of investing it unwisely. Recession in the states and the War have Quot worked a Little bit Quot said John Bartocci a financial planner in Augsburg Germany who advises dozens of american clients. Quot people Are a Little More concerned Quot agreed David Smith president of interest International a financial planning firm with offices in Germany Spain Italy and the United states. Quot they re holding Back Money because they re unsure about what s going to despite such uncertainty though most investment Counselor in Europe continue to believe that. Service members abroad can build nest eggs. Their investment advice for the next six months to one year emphasizes Long term economic trends and tends to discount doom and gloom predictions about the immediate future. A Quot War in the Middle East won t be of Long duration Quot said. Barry Swanson a financial planner in Heidelberg Germany. He sees a Quot Quick decisive Quot Victory. Quot i Don t think the recession in the United states will be a Long lasting one Quot added Smith. Quot it will be Short six months to a among hot Mutual fund picks being touted by financial planners Are offerings laced with companies from Europe and Asia where economies Are expected to perform better than in the United states and firms in biotechnology health care and the environment. Most advisers suggest caution Over the Short haul. With an emphasis for the next few months on increasing emergency funds in the Bank or in Money Barry Swanson Don Womack Market accounts. But very few suggest abandoning individual stocks or Stock based Mutual funds entirely. A that View prevails despite the conventional Wisdom that share prices on world Stock exchanges still might move lower if the . In the first few Days of the War the new vol Stock Exchange zoomed 145 Points higher on Hopes for a Quick Victory. After that initial euphoria though the Stock Market has edged a bit lower. Swanson said investors should t be. Preoccupied with daily peaks and a of Aln Atic dip in the Market will be Only temporary Quot he said. What follows Are thumbnail sketches of investment advice by financial planners who Cater to the military Market in Europe. A majority of the consultants continue to Pul Faith in Mutual fund investing generally under a steady plan of monthly contributions to one or More funds that invest in the stocks of american and foreign based firms. A. A however Paul Filkil of Baum older Germany was More cautious. Quot what if the . Recession in t just a mild downturn in the Economy and what if the Middle East in t a Quick Little War Quot he asked. Quot Don t try to be a hero. Err on the Side of for Many clients Filkil has been recommending switching Stock based Mutual fund holdings into . Government securities municipal Bonds or tax a exempt Money Market funds until the recession s depth is in sharper focus and the confrontation with Iraq is at an end. He said service members who have been making monthly contributions to Stock based Mutual fund several years can continue with those programs. But he said anyone not in the Stock Market already should stay out. Here s More Paul Filkil Baum older Germany for All except the most aggressive investors Filkil thinks it a makes sense to wait until the Stock Market appears to have hit Bottom due to the War before venturing Back into individual company stocks or Stock Mutual funds. When the time looks right to buy though he suggests global or International funds As a smart place to Park Cash. Another possibility is Putnam health sciences a Stock Mutual fund that turned in a 1 38 percent total return for the five year period ending june 30,1990. The aging of America increased demand for health care and the possibility of breakthroughs in cancer or aids research makes this fund a Likely Winner he thinks unlike most other investment advisers in Europe Filkil does t mind touting individual Stock picks. And he thinks some defense Industry issues might end up being excellent selections. With momentum building to pull american troops out of Europe he feels there la be a greater need to verify arms control treaties with the soviet Union via increased electronic surveillance including space based technology. A systems inc. Of Dallas and Loral corp. Of new York City Are two firms that Excel in that area he said Loral also dabbles in computer simulation another area Likely to grow due to cutbacks in live military training. One pick for recessionary times in the United states is Cash America investments no. Of fort Worth Texas. The firm owns and operates a Chain of Pawn shops primarily in the South. Quot if we go into a recession Pawn shops Are big business with High profit margins a Filkil said. Filkil thinks too Many financial planners in Europe Peter Knapp steer service members to Mutual funds with Steep a sales charges and big commission s for the financial planner rather than Selling clients what is right for. Them. Compare fees on various Mutual funds before. Parting with any Cash he said. Peter Knapp Kitsch Germany Knapp sees a. Need to keep More Cash in an easily tapped emergency fund in a recession and he encourages military families in particular to save More Money than they usually do. Quot a lot of people in the military tend to spend every. Penny they get their hands on Quot he said. Quot military people in general Aren t very concerned about the future until just a couple of years before retirement and then they Start getting real Knapp said he prefers Mutual funds Over individual stocks primarily because it spreads an investor s risk Over More companies. These Days he likes global and International Mutual funds that invest to a Large extent outside the United states. Among his picks Are the Templeton foreign fund Oppenheimer global fund and Putnam International equities. A have shown solid returns Over the past five years. / Don Womack Frankfurt Germany Womack considers himself staunchly conservative when it comes to financial matters arguing that anyone making Between $25,000 and $100,000 per year should set up a monthly plan of investing in Stock Mutual funds As a major ingredient in their total financial favors Mutual fund families that Are consistent and Quot that Don t change fun managers every couple of ,. Among those he currently likes Are Templeton growth the new perspective fund part of the american funds group and Templeton foreign. All three were above average performers for the past five years according to a recent analysis of 1,500 top Mutual funds by changing times Magazine. Barry Swanson integrated financial planning services Heidelberg Germany Swanson likes several categories of Mutual funds in the 1990s. Unlike some other financial planners interviewed Swanson does t shy away from sector funds. Two of his picks Are biotechnology and environmental Tuncle. Swanson predicts a Quot greening effect Quot in the next decade As defense budgets Are shaved around the world and a stronger financial commitment is made. To environmental Protection. Thus he suggests shares in the Oppenheimer global environment fund. A Large percentage o toe fund s assets Are invested in the Stock of waste management companies and pollution Contro arms. Swanson sees the Bio tech Industry making exciting advances in health care genetic engineering and life saving drug research. Quot in the next generation Vve to see revolutionary gains Akin to those made by the. Computer Industry Over the past 20 years he a his Mutual fund pick in this category new Oppenheimer global Bio tech fund. / is the relatively there is no bad time to Start investing by Randy Mcclain financial writer a t he United states is in a recession War is raging in the persian Gulf and american interest rates Are falling but investment advisers in Europe still Are whistling a Happy tune. Their message now is As Good a time As any to Start investing for retirement a child s College education or any other purpose. my clients to think in terms of five and 10 years Quot said Don Womack a financial Frankfurt Germany. He encourages clients to invest a set amount every month. Stock Mutual funds should play a big part in anyone s investment plan he said adding that clients should t worry too much about whether the Stock Market is going up or Down at any Given moment. Others also urge service members to invest without. Being Overly concerned about economic conditions. The average go family can put $200-$300 each paycheck into Mutual funds and that beats jumping in and out of the Stock Market said John Bartocci a reservists1 loan Relief program stirs interest by Randy Mcclain financial writer when or. It. Col Robert d. Jones Learned last month that his Salt Lake Gity army Reserve unit was being called to Active duty his banker was one of the first people who telephoned. A the Lender wanted or nes to know there would be no problem arranging lower monthly payments on a his $27,000 loan for medical equipment. It s not that Jones banker is necessarily a bigger. Patriot than anyone else. He was just living up to the letter of the soldiers and sailors Relief act of 1940, which requires that reservists called to Active duty get a break on the interest on business Loans mortgages and even credit card debt. The 50-year-old Law which has gained notoriety. Lately because of the huge number of Reserve units activated for operation desert shield requires lenders to slash interest charges on virtually All Loans to no More than a 6 percent annual rate. In the Case of reservists the Law applies Only to those debts on the books when Active duty begins. Loans made after the fact stay at Market rates. In Jones Case the statute has been a life Saver helping compensate for a 60 percent Cut in pay that he had to absorb when he left civilian life to join fellow reservists at the army regional medical Center in Frankfurt Germany. Jones figures he s saving More than $1,500 a month in Bank payments on a variety of Loans including a $110,000 Home mortgage a $65,000 office loan and a $4,500 debt consolidation loan. His former interest rates ranged from 10 percent to 1 7 percent a year. Quot without this Benefit to be financially ruined Quot financial Counselor in Augsburg. Germany. Quot i Don t like to try to out guess the Market. There s no real perfect Guesser Quot he said. Financial advisers said the biggest hurdle when working with military clients particularly Young service members is convincing them to percent of the people out there just Don t build up any assets whatsoever Quot said Womack. To advises Only now beginning to be serious about their futures to do the following. Fifty percent of a client s Money should go into. Mutual funds that invest in . And foreign stocks and the other half into such investment vehicles As Money Market funds interest bearing savings accounts certificates of Deposit and a government Bonds he said. A Quot you always need base Quot Womack said. Quot from there build a foundation ant do it Over a number of a. Quot there in t anybody in the military who can t afford to save a Little something Quot said George Nigro an investment adviser near ram Stem Germany. Quot the military person is the first person to stand in line to get shot at for America. They ought to be Able to put some Money aside for Jones said. Quot As it is i m eking by.�?�. Audiologist maj Brent Fox w to left behind a medical practice in Lehi Utah when his Salt Lake a City army Reserve unit was called up last month said he has requested 6 percent loan rates from several lenders As Well. The move should mean Quot several Hundred dollars Quot a month in savings he said. Fox needs the help. Quot i m losing $2,000 a month in income at a minimum in the reserves Quot he said. Mathew Street associate general counsel with the american Bankers association said he has no idea How Many people pressed into service by the persian Gulf crisis have sought Breaks on Loans. But he said Calls to Banks around the country began picking up around thanksgiving As Reserve units were activated on a grand scale by president Bush. Mary Beth Butler a spokesman with bankcard holders of America a Consumers group based in. Herndon va., said she has heard of no complaints about How lenders Are complying with the Law. Quot when soldiers Are brought onto Active duty status briefed and Are told thoroughly what to do Quot she said. Quot basically they Send a form letter to creditors Quot invoking the Law. Quot i be not heard of one Bank that is giving is amps l. Emmett Lewis or. Audiologist maj Brent Fox George Nigro Consumers trouble Quot she said adding that it would generate a lot of bad publicity if financial institutions tried to Dodge the statute. Street said financial institutions were caught Olf guard by the Law at first primarily because the Stabile has t been used As extensively since world War ii. Quot we re at a Point now where there s general agreement that the interest rate gets knocked Down the Day a reservist goes into the military Quot the Aba lawyer said. In a handful of cases financial institutions Are even going beyond the Basic a requirements of the Law to accept interest Only payments or make other special arrangements with. customers he said however a few problems have Arisen. In some instances a single phone Call from a reservist or their spouse has resulted in an interest. Rale Cut Street said. In other cases Hawks have required a copy of a reservist s orders or other Whiten. Documentation showing that a customer has been called to Active duty one reservist in Germany said his Bank asked for proof of income loss. Quot i be talked to hundreds of Bankers and All ire trying to conscientiously comply with the Law Quot Street said. Quot no one is doing this the Aba attorney said the Soldier and sailors Relief act allows a Lender reducing a Borrower s interest rate if there s proof that the customer s. Financial condition has t been Hurt. A Quot someone who leaves a High paying civilian Job to enter the reserves can experience a real hardship a Street said Quot but there Are cases where someone who s not making a lot As a civilian might a it tally see his pay go up in the . In those cases lenders can ask a court to set aside the 6 percent interest rate Rule he said. But the Aba. Lawyer added that he has t heard of any Bank / making such a move. Quot i Don anyone wants to be put in position of not supporting their customers on this Quot he said. Quot no Bank is going to beat on its customers under the current . The Law also Ocial pro location to a Servit members who find themselves taught us it in Force Losure pro it coding while away pm military duty. Generally the act allows court delays until a a Servi eem her returns Home Street said. 8 a a is amps financial planning guide wednesday january 30, 1991 wednesday january 30, 1991 a amps financial planning guide a a a
