was on a tight budget and a debt-repayment plan. She had realized that being a smart consumer is an important part of being a savvy investor. She continues to use a spreadsheet to track all of her monthly expenses.
“I have always been conservative in terms of spending. But the financial planner helped me to determine how I should invest my money.” She adds that “since the initial consultation, I have started educating myself about the market. I have been reading about and following [various] mutual funds and stocks. I am also looking at starting an investment club [over the next few months].”
Henry used the remaining $1,500 of her contest winnings to open a money market account. She is systematically investing in three mutual funds: Alliance Premier Growth, Alliance Growth and Income, and Alliance Technology. “I invest $75 a month (or $25 each) into the mutual funds through automatic withdrawals from my checking account, and a little more than $100 into the money market account,” says Henry.
She has also increased the contributions to her 403(b) retirement plan-the maximum amount allowed is 20% of her gross salary. She has $17,000 in her account-a variable annuity-and she recently adjusted asset allocation within the plan. “Before, I had 20% of my [holdings] in low-risk investments and 80% in riskier investments.” Now, she has 90% invested in aggressive-growth stock mutual funds.
April Winner: Sondra Helenese
There have been some major changes for Sondra Helenese. For one, the former legal assistant recently found work in marketing. In keeping with most people of her generation-she’s 23-Helenese is switching careers. Instead of a career in law, she is now pursuing a position in sal
es and marketing, and considering obtaining an M.B.A.
Experts always maintain that it’s not the size of your paycheck, but your assets minus your liabilities that determines your net worth-which is the key to DOFE principle No. 4: to measure [your] personal wealth by net worth, not income. Helenese is starting to embrace this valuable lesson. “Ever since the contest, I have been more engrossed in [reading] information on investing in the stock market,” she says. “I read books, go online, and subscribe to financial magazines. I keep abreast of what is going on nationally and internationally, [so that] I can make better-educated investment decisions.”
Because she was on her job for less than a year, Helenese wasn’t eligible to participate in her company’s 401(k) plan. Not having a full-time gig has thwarted her plans for establishing an emergency fund, as advised by Darwin Davis Jr., a financial advisor with AXA Advisors L.L.C., in White Plains, New York.
She did, however, manage to pay off all of her short-term debt: $1,100 in credit card balances. She is still paying on her student loans, a total of about $29,000. Although she still hasn’t invested her $2,000 contest winnings, Helenese intends to put $1,500 in mutual funds (including $500 in an IRA) and use $500 to buy shares of an individual stock. If she adheres to Davis’ advice, she’ll invest 50%