School daze

How a Gen-Xer seeks to maintain her portfolio while in grad school

given that stocks have outperformed bonds, mutual funds and other securities over this past century.

Felder has invested about $1,000 in the direct investment stock plans of electronics manufacturer Kopin (Nasdaq: KOPN), digital photofinisher Seattle Filmworks (Nasdaq: FOTO) and mortgage banker Fannie Mae (NYSE: FNM) as part of her personal portfolio. As a result, she has become an avid reader of financial publications. She, along with members of ISIS, use online research to explore investment opportunities. “It’s important for me to do the research myself [rather] than having to rely solely on a financial planner or broker,” Felder says. “[When considering stocks to invest in], I look at the history of the company, the types of products they are producing and management’s earnings expectations. With mutual funds, I thoroughly read the prospectus and look at which companies are in the fund’s portfolio, what management is doing and the returns for the past year, five years and 10 years.”

While the Gen-X investor is on the right road, she has been slightly sidetracked. This past fall, she decided to attend Baruch College in New York City to pursue a master’s degree in public administration. To pay for her education, she had to dip into her cash reserve for roughly $1,500, and reduce monthly contributions to her savings from $300 to $100. She has another $3,900 in two mutual funds, which invest in small caps and mid-size companies.

“I decided to pay outright for classes instead of taking out a student loan and being burdened with debt,” says Felder, who is debt-free with the exception of the $50 a month that goes toward paying off an undergraduate student loan. “I made sure I eliminated all of my credit card debt before I seriously began investing a few years ago, because I know that whenever you have credit card debt or loans, whatever [return] you are making on your investments is canceled out by the interest due on your account balances.”

Felder will complete the master’s degree program in the winter of 2000. Moreover, she hopes to purchase her first home within the next five years, borrowing money from her teacher’s tax-deferred annuity to make the down payment. She is currently contributing the maximum amount to the annuity — 25% of her salary — as part of her retirement plan. In addition, she has a traditional pension, one in which she will not become fully vested until she has taught for 30 years.

Financial Snapshot:
Kimberly Felder

Gross Income $37,320
Take-Home Salary $20,176
Income From
Part-Time Work $6,000

Household Expenses $15,096
School 4,000

Investment Portfolio $24,915
Tax-Deferred Annuity $19,500
Savings $1,500
(money market funds)
Mutual Funds $4,100
Stocks $1,000
Investment Club $315

Debt/Liabilities
(student loans) $600

Expert Advice
Financial expert: Baunita Greer, president of the New York-based investment firm Cromwell, Miller and Greer and an active participant of the NAIC.
Her Strategy: Rebuild Felder’s cash reserve and diversify her investments.
Greer’s recommendations:

  • Rebuild cash reserve. Felder has good cash flow and no debt, which is excellent. While the rule of thumb is to have six months’ worth of living expenses stashed away, she can get by with three months, or
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