Business
12 MONTH
CERTIFICATE
525
,0
•
Long-Haulers Seal
Chance Of Making Money
5.35 , ,
INTEREST RATE
A.P.Y./*
ERIC D. BAUM SPECIAL TO THE JEWISH NEWS
I
f I am able to impart one mes-
sage throughout my columns,
it would be that creating
wealth is really a simple busi-
ness.
The most successful investors
amass substantial fortunes
through discipline, habit, and a
game plan. Navigating myriad
investment choices becomes easy
with a little focus.
Think of wealth creation as
a pyramid whose sides include
time, rates of return and con-
sistency. Without enough time
to let solid investments grow
undisturbed, no plan will suc-
ceed. Shorten any leg of the tri-
angle and the structure
collapses.
In deciding a strategy, first
differentiate between savings
and investments. Savings are
generally slated for use within
three years or less. Storing two
to three months of living ex-
penses in a liquid account pro-
60 MONTH
CERTIFICATE
E%
OA)
561
•
INTEREST RATE
A.P.Y./*
These are fixed rate certificates of deposit that are insured by Federal Deposit
Insurance Corporation (FDIC). A minimum opening deposit and balance of $500.00
is required to obtain the stated Annual Percentage Yield.
Formerly
filansfror Bank
I
FIRST SECURITy
SAVINgS BANK
"First in Service"
CALL (810)338-7700 or (810)352-7700
Main Office 2600 Telegraph Rd. Bloomfield Hills, Mi 48302
*Annual percentage yield when compounded quarterly. Rate is accurate as of 1/26/96. Penalty for early withdrawal from certificate accounts may be assessed.
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gressive or conservative an in-
vestor is.
An asset allocation system be-
comes the nerve center of the en-
tire operation.
Here's how it works, based on
a hypothetical model involving
an aggressive investor:
Even a person without a lot of
money who seeks to build wealth
Beginning this
month, we will devote
this space each month
to helping you make
Eric D. Baum
better decisions about
could position 50 percent in
your money. Eric D. Baum,
stocks; 25 percent in
a registered
stocks; 10 per-
Editor's foreign
representative
cent in bonds; 10 per-
in foreign bonds;
for John
Note: cent
5 percent in cash; and
Hancock
nothing in real estate. The
Investment Services, will
stock or fund holdings, as
explore a variety of subjects, well as holdings in other cat-
egories, should comprise
like stocks and bonds,
various investments, as long
401Ks and annuities, and
as their sum equals at least
financial considerations for half of the total pie.
Over the last 15 years,
working people.
from
investments
tects
short-term cash flow emergen-
cies.
Investments can be classified
in six categories: Cash, bonds,
world bonds, stocks, foreign
stocks and real estate. While one
cannot predict the investments'
yield, I can consider the average
risks and returns associated with
each peer group. Indices such as
Standard and Poor's 500 index
reflect how an average stock-
holder fared during a given time
frame dating back to 1926.
Over time, the average per-
formance of stocks varies from
that of bonds, real estate or in-
ternational stocks. While a di-
versified portfolio should include
some of each, the amount in
question determines how ag-
that allocation earned 14.35
percent as an average, with
a standard deviation, or risk fac-
tor, of 12.73 percent. A single in-
vestment of $10,000 with no
subsequent deposits swelled to
$74,691, and a $100 per month .
investment with nothing down
amounted to over $54,000 in this
scenario.
This asset allocation scheme
will not deliver an identical re-
sult over the next 15 years, but
it will provide a general indica-
tion of the risks and rewards as-
sociated with certain
combinations of assets. The art
is in determining which kind of
allocation fits a person's invest-
ment goals.
The strategy is at issue, not
the dollar amount. Asset alloca-
tion works with $1,000 or $1 mil-
lion.
.