                                  T H E

                               Z E P H Y R

                      __     M A G A Z I N E
                     {__]++++++++++++++++++++++++++[]
                     Issue #21                7-11-86

                A weekly electronic magazine for users of
                            THE ZEPHYR II BBS
                        (Mesa, AZ - 602-894-6526)
                    owned and operated by T. H. Smith

                        Editor - Gene B. Williams

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                                (c) 1986

    THIS ISSUE:

       We have another guest author this week - Bob Eastman. The
    topic is something that most people don't care to think about,
    until it's too late. Financial planning for the future.
       After all, it's so much easier to run out and get that new
    stereo today than to worry about a few loaves of bread 10 years
    from now, right? Problem is, when you *need* those loaves of
    bread, having the luscious stereo isn't going to do much good.
    It doesn't even bake well and is a bit difficult to digest.
       Then there's the excuse that you are too young to worry about
    it - or the one about barely having enough to pay the rent and
    bills that you have. Think about either for just a few minutes
    and you'll soon come to realize just how appropriate this week's
    issue is to you. If you can't spare a couple of dollars now, while
    you're young and in your prime, what will you do when you're
    old and crochety (like me?). And if you're not earning enough
    to pay the bills now, how about in 30 years when you not only
    will be out of work, but will also have no prospects of earning
    a living?
       Seriously! Don't pass up this week's issue. In fact, I urge
    that you download it and keep it for future reference. For that
    matter, there couldn't be a better week to spread the word about
    The Zephyr Magazine among all your friends.

                           FINANCIAL PLANNING:
                               An Overview
                                   By
                             Robert Eastman

    WHAT IS PERSONAL FINANCIAL PLANNING?

       Personal financial planning is the development and implementa-
    tion of total, coordinated plans for the achievement of one's
    overall financial objectives.

       Everyone's financial objectives are different depending upon
    his or her individual circumstances, goals, attitudes, and needs.
    However, the major objectives of most people can be categorized
    as follows:

    1. Protection against the personal risks of
       a. Premature death
       b. Loss of income due to disability
       c. Medical care expenses
       d. Property and liability losses
       e. Unemployment
    2. Capital accumulation for
       a. Establishing an emergency fund
       b. Family purposes
       c. Building a general investment portfolio
    3. Provision for income after retirement
    4. Reduction of tax burden
       a. During one's lifetime
       b. After one's death
    5. Estate planning (planning for your heirs)
    6. Investment/property management

    WHO SHOULD PLAN?

       Consider this. In the U.S. today about 95% of retirees
    have under $250 in savings at the time of retirement. If
    these people had started on course of financial planning 30
    or 40 years ago I doubt that they would be in the shape their
    in now, relying on Social Security, living from check to
    check.

       You know the things you want. What you wish to accomplish.
    Now is the time to start building what is known as a capital
    base to achieve them. The old tradition " work hard and save
    your money" just doesn't work anymore. You can't put your
    savings in the bank earning 5 to 6 percent and expect to get
    where you want to go.

       The past few years have seen an increased desire by many
    Americans to participate in the investment process. They have
    learned that putting today's money to work helps build
    tomorrow's secure financial base. And a great feeling it is
    too.

       But investing wisely isn't easy. Not in today's economy.
    Not with:

    1. Inflation - creating artificial increases in income with
       losses n purchasing power.
    2. Middle-income Americans are being pushed into higher tax
       brackets.
    3. The increasing complexity of tax laws.
    4. The difficulty of saving for retirement.
    5. An economy that gets more complex. So complex that even
       the so-called experts can't agree as to what direction it
       will take.

    DEFINING THE NEED

       For many of us, the inflationary spiral of recent decades
    has undermined not only our hopes for a secure retirement but
    also our ability to make ends meet, accumulate savings, reduce
    taxes, send our children to school or expand our businesses.

       Whatever your goals are, the big question is: What can a
    person depend on?

           Not just Social Security.
           Not just pension plans.
           Not just life insurance.
           Not just investments.

       Enter financial planning - a comprehensive study and
    analysis of your current financial situation, with an eye to
    building the future that you want.

       Financial planning involves the whole picture. Money
    matters such as cash flow (how much is coming in and going
    out each month), budget, net worth, investments, savings,
    taxes, insurance, retirement and estate planning to name a
    few.

       Consider this: Do you have a will? Are you over or under
    insured? Is kind of insurance you have appropriate? If your
    out of work due to sickness or injury do you have adequate
    disability coverage? Are the things you own properly
    protected? Do you spend more than you earn (or come close to
    it?) Due you have enough money to set aside for investment
    purposes? Is it enough?

       List the things that you want to accomplish. You know what
    you want. How much will it cost to achieve your objectives?
    Development of a financial plan can turn your wants and
    desires into specific objectives that can be measured in
    dollars and sense.

       By now you're probably thinking about how much it's going
    to cost you to achieve your goals. Think about the following:

    1. What do you need to do at present to generate cash flow
       that will make investing possible? With tax planning,
       careful budgeting, and saying "NO" to those urges to
       spend, you will find it possible.

    2. To maintain your present lifestyle after retirement, how
       much retirement income will you need? For most of us,
       Social Security won't be enough.

    3. What will it cost to send your children to school?
       Financial planning can help determine how much you'll need
       and when you'll need it. You will know how much to set
       aside to account for inflation and rising costs.

    4. For most of us, financing a home is the first major
       investment decision. If you already own a home, you may
       want a larger one (especially those of you with growing
       families).  For some people it would mean significant tax
       savings as well as building a capital base through the
       buildup of equity in the home.

    5. Your personal estate. You want your assets secure so you
       can pass them down to your descendents and provide for
       your beneficiaries. Financial planning can show you how.

       For you readers with annual incomes of at least $25,000. I
    would recommend a visit with a good financial planner. I'm
    sure you'll find it very worthwhile and will soon be on the
    road to achieving your goals whatever they may be. Fees
    charged by financial planners very but I think it is safe to
    say most people can look to a fee of from $200 to $500. Those
    readers who are just starting out in life, whether just
    completing college or starting a family, I will be writing a
    series of articles which will explain in detail the concepts
    above.

    YOU'RE NOT TO YOUNG TO START NOW

       Even though most of you are probably just out of high
    school or still in college, if you start now to get a handle
    on your financial goals you will be that much further along
    in the years to come. It doesn't take a lot of money to begin
    saving for the future. There are several ways someone earning
    even minimum wages can earn higher rates of interest than a
    passbook savings account in a bank.

       One form of investment that pays higher rates of interest
    is United States Savings Bonds. They can be purchased for as
    little as $25 (for a $50 bond). The holder is quaranteed a
    minimum of 7.5% interest if the bond is held for 5 years.
    Not bad considering most big bank certificates of deposit
    ($500 - $1000) minimum are currently earning little more
    interest than that.

       Another way you can invest in a small way is by purchasing
    shares in a mutual fund. A mutual fund is a investment fund
    operated by an investment company. The investment company
    buys stock in many different companies on the stock exchange
    with the money it takes in from it's investors. The wonderful
    thing about mutual funds is that most funds don't charge a
    sales fee. These are called "no-load" funds. There are a lot
    of funds where you can open an account for as little as $50.
    There is even a mutual fund (the Wade Fund) that you can open
    for $1.00! If you would like to learn more about mutual funds
    I highly recommend the William Donaque "No-Load Mutual Fund
    Guide". It can be found in B. Dalton or Waldenbook stores for
    about $5. I have my IRA in a mutual fund and in 1985 the fund
    earned a 25% return. Try getting that at your local bank.

       For those of you who would like further information on
    investing and financial planning in general I highly
    recommend Money magazine and Sylvia Porter's Personal
    Financial Planning magazine. Both have a lot of helpful
    information for the small investor and young people just
    getting started in life.

       My next article will focus on budgeting. Creating a budget
    is the first step towards getting where you would like to be
    financially.

       In conclusion I would like to leave you with something my
    grandfather told me when I was a kid.  During the early
    1920's my grandfather had a job in which he earned one dollar
    per week. When his father asked him a couple of days later
    how much he had left, my grandfather replied, "5 cents." His
    father then told him, "That 5 cents you have left is what you
    earned."

       From that time on my grandfather has saved 10% of
    everything he earned. He retired at the age of 55 has always
    paid cash whenever he buys anything, even his home.

    UNTIL NEXT TIME

       Ahhhh, that's what I needed. A quickie run-through to
    correct a couple of typos, but no other work on my part
    required other than the opening and ending (and posting). I
    think Bob did a fine job for us this week. And those of you
    who agree, take a moment to let him know that his efforts
    have been appreciated.
       If you have any questions, drop Bob a message on the
    magazine board here, or in E-Mail.

       Next time around? Well, it will probably be as much a
    surprise to me as it will be to you. I have 3 issues written
    ahead at this point, and another in mind to slam together
    this next week.

Zephyr Magazine is © Gene Williams. All rights reserved.