consultation with Les Netter, a financial consultant with SolomonSmithBarney in Atlanta. “He broke it down for me that if I don’t [structure an aggressive stock and mutual fund portfolio], I won’t be able to retire [in 12 years].” Jones will need to save $4,000 a year to have at least a balance of $100,000 by 2011 (assuming a 12% rate of return, the Standard & Poor’s 500 average).
Since winning the contest, Jones has been reading about the stock market. She has also crafted a systematic investment strategy. She now invests on a regular basis. About $25 is automatically deducted from each paycheck and deposited into a money market account. Another $30 each pay period is designated for her 401(k) retirement plan, and $75 a month is invested in three mutual funds ($25 each), and an IRA account that Jones opened through American Express Financial Services.
The 44-year-old designer of data circuits at AT&T in Lithonia, Georgia, took advantage of stock options in AT&T Wireless (NYSE: TW). Employees could purchase a minimum of 100 shares (at $29 a share). She used $1,500 of the contest winnings (plus additional funds) to invest in the stock. She also owns 24 shares of AT&T Corp. (NYSE: T).
Following Netter’s advice, Jones readjusted the holdings within her retirement plan. She invests 20% of her portfolio in AT&T stock, 40% in a Fidelity growth fund, and 40% in a Janus growth fund.
Jones has paid off one credit card and is working diligently to pay more on two remaining cards. She hasn’t taken on any new debt since March and has made some major spending cutbacks, including taking her lunch to work. She recently enrolled in a real estate course. Eventually, “I want to invest in residential property. I want to buy homes, remodel them, and sell them,” Jones says.
The mother of two sons, ages 23 and 25, Jones is teaching them the lessons of wealth building: the earlier you start, the better it is. They are heeding mom’s advice. The Jones brothers now invest in mutual funds rather than plopping their hard-earned money into traditional bank savings accounts.
March Winner: Laurie A. Henry
Since winning our Financial Fitness Contest, Laurie A. Henry, a 33-year-old University of Pennsylvania employee, has been following DOFE principle No. 3: to be a disciplined and knowledgeable consumer. She has whittled down her liabilities, attacking her smallest debts first. Her situation improved after she received a promotion to a new position and a 10% salary increase.
Since March, “I have paid off two store credit cards and one Visa. I am tackling my credit cards one by one and paying more than the minimum amount due,” says Henry, who adds that her new car note is only $60 more than what she was paying 10 months ago. (She also purchased a new car using money from her savings plus $500 of her winnings toward the down payment.)
Even before sitting down with Lyndall C. Medearis Jr., a financial planner with AXA Advisors L.L.C. in Washington, D.C., Henry