(
low
455.
ymill ".4
40 percent tax bracket, and thus, so
will be the child." Hack, who is presi-
dent of the Hebrew Free Loan
Association, handles accounts worth
$400 million, with his minimum
account being $1 million. He sug=
gests that if you are in the stock mar-
ket, you should be there through
mutual funds, rather than trying to
pick individual stocks.
"A well-managed series of mutual
funds makes more sense. We suggest
people put their money into three or
four different accounts: large, small
and international. And the same is
true for investing for a grandchild,"
said Hack.
He suggests a maximum of four
different mutual funds. Only the
amount of money available to invest
dictates the number.
"It is just as easy to take $5,000
and split it into four funds as it is
$40,000," said Hack. But that's as
long as the premise is valid.
"Because the markets are not
always up, long-term investment
should be consistent with one's risk
tolerance," he said.
"People complicate the issue of
investing for their grandchildren's
education. But it isn't complicated. It
is relatively simple," he said.
Ronald and Murray Yolles of Yolles
Investment Management Inc., in
Southfield are a son-and-father team
who co-authored You're Retired, Now
What? Money Skills for a Comfortable
Retirement, published by John Wiley
& Sons in 1998.
Said Ronald Yolles, "A big part of
the research for our firm is focused on
issues relating to grandparents and their
financial-planning issues. And grand-
children are always a big part of it.
"Sometimes these grandparents
seem to like their grandchildren bet-
ter than their own children," quipped
Yolles.
"If there are two grandchildren,
one may be more academically
inclined, the other more interested in
artistic pursuits. The grandparents
want to encourage whatever career
outlet their grandchildren are inter-
ested in.
"What they don't want to do is
fund their grandchildren's non-educa-
tion. That's when they turn 18 and
decide to see the country from the
back of a motorcycle," he added.
The way to avoid that is to establish
a trust with clearly defined terms.
Those should include how both the
trust proceeds and income will be used.
But it should retain flexibility for the
grandchild to pursue any educational
path he or she is interested in.
However Murray Yolles cautioned
that grandparents, in providing for
the education of their grandchildren,
can't underestimate the role of the
parents.
He also said grandparents need to
take care of themselves and their
spouses first. This is especially true in
cases where the wife is younger than
the husband. There has to be enough
assets to support her before getting
involved with left-over bequests. It is
a balancing thing," said Yolles.
Ronald Yolles agreed with Hack
that stocks and mutual funds are the
investments having the best chance in
the long run to provide the most
appreciation in value.
"That's when you get into corn-
pounding, where you see your invest-
ment double two or three times from
the time the grandchild is born until
it is time to start college," said Yolles.
That's where the "Rule of 72"
comes into play. You take any rate of
return and divide it into 72. That's
how long it takes that amount of
money to double.
Thus, 10 percent into 72 doubles
every 7.2 years. And 12 percent dou-
bles every six years.
If grandparents each put $10,000
into a stock mutual fund for a new-
born grandchild, and that investment
earns 12 percent, then over six years
that $20,000 becomes $40,000.
After another six years, again at a
12 percent rate of return, it becomes
$80,000.
At the end of the third six-year
cycle, that $80,000 doubles yet again
to $160,000.
But again, that is totally predicat-
ed upon having that vital 18-year
period between the birth of the
grandchild and the beginning of his
or her college education.
Yolles quickly admits the example
of $180,000 may be an "optimistic
figure. But even if the investment
grows to $120,000, in this day and
age, that's still very helpful." fl
In any great recipe, there's always one special ingredient
that makes the dish memorable.At the Fleischman
Residence/Blumberg Plaza, that special ingredient is our
Jewish tradition. It's what sets Friday evenings aglow with
the warmth of Shabbat candles, softly spoken blessings, fresh
baked challah, and steaming bowls of kosher chicken soup
shared amongst friends.
Fleischman Residence...
our Licensed Home for Aged provides:
•Three Kosher Meals Daily
•Medication Administration
•Registered Nurse & Personal Care Assistance
•Health Clinic
•Transportation, Laundry, Housekeeping
•Cultural, Educational, and Spiritual Programs
•Daily, Shabbat, and Holiday Services in
our Synagogue
•Daytime and Evening Activities
•Around-the-Clock Security
•Nosh Nook, Gift Shop, Beauty/Barber Shop
•Respite and Guest Rooms Available
contact:
CQ3ES
Comentssion
on Jewish
Eldercare Services
Jawisr, rederarion moiropoiron peacir
Tracey Proghovnick, m.s.w.
jaisll Howl Director of Admissions
AGINGSERCES
(248) 661-2999
12/1
1999
£7