From Reggae music to raking in profits.

John Forte stands up for his financial rights

For John R. Forte, 40, music and investing haven't always gone hand in hand, but they've both been major influences in his adult life. In 1980, much to his father's dismay, Forte abandoned his business studies at the University of California, Berkeley, one year shy of graduation. The reason was simple. "I saw Bob Marley perform on campus and I was transformed," he recalls in awe. "It was a spiritually enriching experience for me and I knew then that I had to develop my music."

Relocating to Los Angeles, he assembled Transparent People, a five-member band, playing R&B and funk rock. Forte supported his musical aspirations by working as a teller at Family Savings & Loan in 1983, a job he got through his uncle, William Blodgett, then chief financial officer at the S&L.

But the band folded in 1986 and Forte turned his thoughts full-time to business. He honed his business acumen with stints at other banks in different positions, working at Investors Mortgage Co. Inc. as a loan officer from 1985 to 1987, then as an account executive at California Federal Savings and Loan (CFSL) from 1987 to 1991.

While working at CFSL, Forte invested $40,000 in company stock when its shares were depressed. When the bank was acquired by First Nationwide Bank, he reaped an $18,000 profit, Forte used his stock profits to put down payments on his own home and a two-family house he purchased as a real-estate investment. He eventually sold the two-family home, now rents the one-family home he formerly lived in and resides in a condominium.

As an investor, Forte has been aggressive. Initially, 80% of his portfolio consisted of high-flying growth stocks such as America Online (NYSE: AOL) and Intel (Nasdaq: INTC), and 20% was in pharmaceuticals, such as Pfizer (NYSE: PFE) and Merck (NYSE: MRK). As of October 1999, Forte's portfolio is worth $50,000 overall. And with his $50,000 credit card debt slashed to $20,000--he began to cut it back in 1997--Forte now has more discretionary income to invest in his portfolio.

Presently, Forte works for William Gregory Mortgage Inc. in Los Angeles. He also helped found Loud Sunday, a music production company, with Samuel Domingo, a music impresario who has worked with percussionist Sheila E, officially launching the firm in 1997. Making his first contribution to his SEP/IRA in 1997, Forte is considering investing $500 in an education fund for his son, Etienne, 2, and another $2,000 in a trust fund, so Etienne can have "a good future"

Now that his portfolio is healthier, Forte travels to Bob Marley's homeland, Jamaica, scouting around for business opportunities in between visits with his sister, Vernita. Striking a balance between real estate, music and fatherhood, life, for Forte, has come full circle.

Family Snapshot:

John R. Forte

Gross income:                $110,000
Household Expenses:      $1,200/month
Business Expenses:        $37,200/yr.
Child Support:             $800/month
Investment portfolio:         $50,000
SEP/IRA                    $5,000/yr.
Life Insurance               $750,000
Disability Coverage      $3,900/month

Debts/Liabilities:
Credit Card                   $25,000
Net worth:                   $200,000

Expert Advice

FINANCIAL EXPERT: Anita D'Aguilar, assistant vp/financial consultant, Merrill Lynch & Co., Century City, California.

Her strategy: With Forte's asset allocation consisting of 90% stocks and 10% mutual funds, D'Aguilar recommends he diversify his portfolio slightly.

D'Aguilar's Recommendations:

* First, he should invest in more than one mutual fund: an aggressive growth portfolio and a growth and income fund to which Forte should contribute once a year.

* D'Aguilar also believes that Forte, while riding high on the profits from his past savvy investments, should diversify his portfolio by investing in defensive stocks like those of healthcare, biotech and international companies.

* She also suggests he place 10% of his investment capital in a money market fund, this money to serve, essentially, as a rainy-day fund. But she discourages his investing in bonds because they tend to generate smaller returns compared to stocks.

* Having invested his first sum toward a SEP/IRA, Forte should contribute the maximum $25,000, or 15% of his earned income, whichever is higher. At the same time, he should prepare for Etienne's future by establishing an education IRA and a custodial trust fund. Since the government allows families to contribute $500, tax-deferred, toward a child's education, Forte should take advantage of this provision.--C.L.B.