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| Investing in Your Child's Future (Part 1) |
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Looking Ahead at Internet Trends and Your Money Opportunities |
| Investing in Your Child's Future (Part 1) You recently received an inheritance or gift of $30,000. Should you buy that boat you always wanted? How about the RV? The convertible? Or maybe you should invest the money in your child's future, specifically, your children's educational needs. I won't bore you with the numbers. Everyone knows that 10 or 15 years from now the cost of a university or college education will be much higher than it is today. What people may not appreciate however, is the reduction in government spending in higher education and that, with advances in technology, the university or college of the future will be much different than today. Your child may have an opportunity to attend an outstanding, but expensive, college or university without having to physically go there. Long distance education through the internet is already here. It won't be free in the future. In fact, the technology your child may need (computer hardware and software, etc.) may be exorbitant (although probably much less than the actual tuition, books and residence costs). What to do? Well take 10% of the $30,000 and do something fun (a trip or other equivalent purchase). Then take the remaining funds, visit a few financial planners and hear what they pitch you (ask for some ideas re: stock purchases and mutual funds, or both). After listening carefully, plan a portfolio (assuming 10 or more years to your child's university or college admission) along these lines: 45% large cap [growth (35%) and value (10%)] mutual funds; international mutual funds (if you are American, 7.5%; if Canadian 15%); sector funds (high tech-17.5%; life science/health/medical-12.5%) and the remainder (5-10%) in bonds or guaranteed certificates. As your children approach the age of admission, act cautiously by gradually increasing the % sitting in bonds or guaranteed certificates such that, by the time your child is 2 years away from admission, 80% of the monies are invested with minimal risk. If you prefer stocks, open an on-line trading account with a discount broker and pick a minimum of 10 stocks as any less will not provide you with the diversification (i.e., risk management) you require. Be careful about the make up of your portfolio and I would again recommend an allocation similar to what I outlined in respect to mutual funds. In Part 2 of this series I will look at a specific stock portfolio. Charles von Ryan for FUTURECents.com Back Home |
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Part 1 |
| Global
Threats and Rewards With the Y2K fears mostly ancient history (hard to imagine the billions spent in precaution of a collapse), investors can now turn their attentions to the true events unfolding world-wide. These global issues will determine the boom or bust of the markets generally and the future direction of many specific stocks. Although impossible to list all such global events (or the many resulting possibilities), here's a handful with a short commentary relative to each: 1) Syria/Israel With the death of Syria's long time ruler comes new opportunities and new dangers. These countries have been at war for decades. Is a peace agreement finally close? If so, watch for a further explosion in Israeli high tech companies. If the Israelis can spend less on defense and more on industrial high tech production, "Silicon Mid-East" will really take off. The converse is also true. If war erupts, there will be increased instability with resulting economic uncertainty. Click Here for another viewpoint. 2) North & South Korea Unification Remember what happened when the Germany's unified. There are still problems, both economic and political. People's ideologies cannot change overnight. On the other hand, Koreans are very industrious and successful. This tiger could escape from its cage. 3) The Splitting of Microsoft Isn't the idea of every business to corner the market and beat out your competition? If the company is ordered to be split, it sends a strange message to business. High tech companies trade at high valuations partly due to their exclusivity in the market. Send a scare in the market and watch the sell off. 4) Interest rates The Feds must be careful not to tame the US economy by destroying the economies of the rest of the world. Every time the Fed raises rates, money from other countries pours into the US. In order to retain their own cash, these other economies have to raise their key interest rates. If these other economies were performing as well as the US it would not be a problem, however, this is not the case. If rates continue to rise, these other economies could sink into recession. 5) The European Union The Euro is wonderful as is the idea of a peaceful and organized Europe. However, the Euro continues to fall against the US dollar. This makes exports to Europe more expensive and makes European goods more attractive. Also, look for admission of Greece. When will Turkey (the neighbors don't get along) want in? Will they be able to co-exist? 6) India & Pakistan No greater a threat exists in the world today than a nuclear war between these 2 countries. Both have large populations that are just beginning to enjoy the benefits of economic development. Borders are sensitive and the politics are complicated. 7) China & Taiwan Are they sparring partners or possible future business partners. Hard to know. Mainland China seems to need to flex its muscle from time to time. If China invades Taiwan what is the US to do? I don't like thinking about it. On the other hand, can you imagine the ingenuity of the Taiwanese coupled with the strength in numbers of China. A wicked combination. Charles von Ryan for FUTURECents.com |