Tracking a growth fund, and whether it's right for you

Personal Finance editor HELEN HUNTLEY E-mail: Click here Archive

By HELEN HUNTLEY

© St. Petersburg Times, published June 4, 2000

Q. A few months ago my broker put $25,000 of my IRA money in the Marsico Cap Growth Fund B. I never received paperwork telling me what this fund involved. I have watched the newspaper's daily report on the fund. Each time I checked, it seemed to be paying a bit more than what I paid. However, in the monthly reporting from the brokerage firm, the value is always hundreds less than the original investment. Why is this? My broker is difficult to reach. I'm elderly and unworldly about my investment options.

A. The bad news is that your account statement probably is correct. Most growth funds are worth less than they were a few months ago because the stock market has gone down.

I can think of several reasons you might find a discrepancy between your statements and what you see in the paper. The first is that you may be looking up the wrong fund. I think you own the ASAF Marsico Capital Growth Fund, which is listed under American Skandia, not Marsico. It also is possible you are looking at the wrong day's price. Most likely the price you need to check is the one published the day after the last trading day of the month. Finally, you may be making a math error when you multiply the number of shares you own by the price you find in the newspaper.

The more serious issue is whether this fund is an appropriate investment for you. I hope your broker discussed your financial goals with you and explained the risks of investing in stock mutual funds. About 40 percent of the fund you own is invested in technology stocks. If you wanted a conservative investment, this isn't it. You also should have received a prospectus for this fund.

I think you need to discuss your concerns with your broker and, if you don't get satisfaction, with the branch manager. You need an adviser who will answer your questions.

Q. Was I dreaming, or did I read a few months ago about a minor Roth I could set up for a child with her parents as trustees, putting in a maximum of $3,000 a year, which she could use without penalty for education tuition, down payment on a first home or during her retirement? I've spoken about it to two banks without success.

A. You read part of that but apparently dreamed other parts, which is why the bankers didn't recognize what you were describing.

You can set up a Roth IRA for a minor but only if the minor has earned income. The limit is $2,000 per year or total earned income, whichever is less. Contributions can be withdrawn without tax or penalty, but certain conditions must be met to get the earnings out of the account tax-free. The account must be held at least five years and the person must be at least age 591/2, disabled or using the money for certain first-time home purchases. Roth IRA withdrawals can be used for education without penalty but not without income tax.

There is an education IRA that allows contributions of up to $500 per year and that's perhaps what you were thinking about.

If your goal is saving for college, a state college savings plan (http://www.collegesavings.org) probably is a better alternative. New York and New Hampshire are among the states offering plans available to residents of any state. Florida is working on a plan, the details of which should be forthcoming this year.

Q. Is consolidating federal student loans a good idea?

A. It's worth checking out, especially if you have multiple loans and would like the convenience of a single payment. Whether consolidation produces interest savings depends on what happens to interest rates and how long you stretch out payments.

If you are interested in consolidation, talk to your lender right away because rates are expected to go up July 1. If any of your loans is in default, you will have to make regular payments for at least three months to qualify for a consolidation.

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If you've been a victim of fraud perpetrated over the Internet, you have a new place to complain: the Internet Fraud Complaint Center (http://www.ifccfbi.gov), a partnership between the FBI and the National White Collar Crime Center.

-- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731, or to huntley@sptimes.com by e-mail.

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