On The Road To Financial Fitness

By Carolyn M. Brown

doing consulting mostly on a volunteer basis, which may not help boost her coffers but it does fulfill her soul.

Events of Sept. 11 followed by an economic downturn and an unstable stock market made many investors jittery. August winner Daryll Griffin was no exception. Griffin and his twin sister, D’Angela, initially planned to invest the family’s inheritance of $70,000 in the stock market, but have since become more risk averse, leaving the money in a money market account earning about 1.5% interest. Griffin’s personal investment goals are now leaning more toward security and capital preservation rather than capital appreciation.

Griffin adheres to DOFE principle No. 2: To be a proactive and informed investor. Receiving a modest $1,000 salary raise, Griffin decided to increase his regular contributions to his 403(b) retirement plan at work–from 12% to 15% of his pretax annual salary of $50,500. He also reallocated his assets adding a bond fund and a money market fund to his existing mix of small-cap, large-cap, mid-cap, and international mutual funds. Another major change is Griffin reallocating 50% of the money applied to his 403(b) into fixed-income vehicles.

“By the end of this year I want to move about 25% of the money [in the 403(b)] into the bond fund,” says the 34-year-old staff associate for the U.S. Conference of Mayors in Washington, D.C. “The remaining 25% will go into my mutual funds.” Before June, Griffin’s 403(b) account was valued at $47,000, but it has since dropped to $44,000.

Given that the savvy investor had done such a great job at structuring long-term and intermediate investments, Pierre Dunagan, president of the
Dunagan Group, a financial advisory firm in Chicago, suggested that he focus on short-term instruments. Griffin, who describes the market as “freefall,” has set aside $12,000 (or six month’s worth of living expenses) by continuing to make regular, monthly contributions of $160 to his money market account. He also used his $2,000 tax refund, plus another $2,000 in repaid debt, to beef up his emergency funds.

Griffin put $1,750 of his contest winnings into his money market account, the remaining $250 was added to his taxable mutual funds, Oppenheimer Main Street & Growth Income A (MSIGX) and the T. Rowe Price European Stock (PRESX). He still owns shares of individual stocks. While Dell (Nasdaq: DELL) and General Motors (NYSE: GM) took at beating, positive returns from Marvel Enterprises (NYSE: MVL) helped keep Griffin’s stock portfolio level at about $4,000. He plans to leave his mutual funds, stock, and Roth IRA as they are. He will continue to invest in his mutual funds through dollar cost averaging, putting around $50 a month in one and $35 in the other. He intends to contribute the maximum allowed ($3,000 annually) to his Roth IRA, which is valued at $7,000.

Griffin is quick to point out that he paid off his $2,000 credit card debt and refinanced his mortgage a second time, saving about $60 a month in payments. “This enabled me to continue to save

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