Newspaper article The Florida Times Union

It's Time to Take Stock Market to Give Retirement Funds a Healthy Bump

Newspaper article The Florida Times Union

It's Time to Take Stock Market to Give Retirement Funds a Healthy Bump

Article excerpt

The Christmas tree has been put on the curb for pickup. The

college football bowl games, thankfully, are coming to a close.

Even the in-laws are packing up and heading home.

The holidays are almost over and that means it's time to

measure personal finances, especially retirement plans, and plot

a course for the new year.

More than likely most retirement accounts, including individual

401(k) plans and company-directed pension and profit-sharing

plans, performed well in 1997.

"We had a terrific year in the U.S.," said Ron Burns, president

of Jacksonville-based Augustine Asset Management.

For the year, the Dow Jones Industrial average climbed 22.6

percent and the broader S&P Index of 500 stocks jumped 31

percent. Bonds did well, too. The benchmark 30-year Treasury

bond advanced 14.3 percent, while bonds issued by corporations

gained about 10 percent.

But those returns aren't entirely relevant to many people

because their retirement money is invested in more a

conservative mix of stock and bonds. Most large pension funds,

for example, put about 60 percent of their money into stocks and

the balance into bonds, and, to a lesser extent, cash.

A better yardstick to gauge the performance of a pension plan

is the broad universe of balanced mutual funds. According to

Morningstar Inc., a Chicago firm that tracks mutual funds, these

balanced funds were up almost 18 percent for the year.

All in all, that's still a handsome return. Historically, the

annual average return for stocks is about 12 percent, compared

with 5 percent for government bonds.

By all accounts, making big profits in 1998 won't be as easy as

it was in 1997.

Forecasts call for a slower U.S. economy and lower corporate

earnings. Looming large in the background is the financial

unrest in Southeast Asia. …

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