When Willie and Darlene Brownlee were newlyweds 5 years ago, they had little--if any --knowledge of saving or investing. They even struggled to amass $1,000 in their savings account.
Two children and three homes later, they have prosperous careers and a portfolio of stocks, mutual funds, and retirement accounts that they are counting on to send their children, Darren, 13, and Tia, 10, to college while financing their own post-employment lifestyle.
With a little sacrifice and discipline and a lot of patience, the couple, who live in Boyds, Maryland, learned to limit luxuries, like dining out, expensive clothing, and vacations, while paying monthly bills in full, and focusing on amassing wealth. "The plan is in place, it's just a matter of feeding into the investment strategy," Willie says, noting that the couple's portfolio is composed of 70% in aggressive investments and 30% in conservative investments. "I don't have all the stocks that I want or all the mutual funds I want, but the ones I do have I am satisfied with," he says.
One technique that Darlene employs is investing in what she buys. For example, the couple spends-a lot of time at Home Depot (NYSE: HD). They also own shares of Disney (NYSE: DIS) and an array of growth-oriented mutual funds and unit investment trusts (U.I.T), such as Dent Demographics Trends Fund (Nasdaq: ADDAX), the Nuveen Senior Income Fund (NYSE: NSL), and the Oppenheimer Main Street Growth and Income Fund (Nasdaq: MIGCX). "My only concern is that I wish I had started earlier," he says.
Now, he and his wife, both 41 years old, are teaching their children to create a financially secure future before they even fill out their first resume. They have already established custodial accounts in such funds as the Aim Equity Blue Chip Fund (NASDAQ: ABCAX).
For their own portfolio, the Brownlees are focused on saving more and spending less. As the newly promoted chief of special operations for the Bureau of Alcohol, Tobacco and Firearms, Willie received a salary increase in July, bringing his annual compensation to more than $105,000. At the same time, Darlene, a registered nurse, graduated from the University of Maryland with a master's degree in science and is sitting for certification as a nurse practitioner.
He spent the last two years commuting between his Maryland home and his New York office, while maintaining a pricey, $1,200-a-month apartment in Jersey City. But, following his promotion, he was reassigned to Washington, D.C., which allows him to live at home, spending less money on expenses.
Financially, the couple will have more resources to meet their short and long-term goals. Darlene, who works at Shady Grove Hospital in Rockville, Maryland, spent the summer interviewing for a higher-paying position as a practitioner. They are positioning themselves to live off of one salary, while saving and investing the other.
RELATED ARTICLE: Expert Advice
Financial Advisor. Jerome Norwood, retirement specialist, assistant vice president, Janney Montgomery Scott L.L.C., Mount Laurel, New Jersey.
The couple should buy more growth-oriented funds and selectively buy out-of-favor blue chip stocks that can return profits that can be reinvested.
Systematic investing: The Brownlees currently use a direct deposit program by which they designate $75 to $100 a month from their checking account to the Aim Dent Fund and the Nuveen Peroni UIT account. Norwood recommends they increase that allocation to $250 a month, which would give them a firm financial cushion over the next 10 to 15 years leading to retirement.
Matching funds: To build a buffer against inflation, Norwood recommends the couple calculate what his monthly social security earnings would be during retirement, match that amount and begin investing and growing that money now in his pre-retirement years in a traditional IRA account.
Spousal IRA: Norwood recommends that Darlene open her own traditional IRA, contributing the $2,000 annual minimum. This will help the couple build additional retirement savings even though she may not be immediately eligible for a 401(k) plan in the, first year of her new job.
Financial Snapshot of Willie and Darlene Brownlee's Investment and savings portfolio
Household Income Combined annual gross income/Yr. $127,000 Investments Individual stocks: $28,000 Mutual funds/U.I.T.: $38,000 Money market accounts: $2,500 Custodial accounts: $5,000 Retirement Savings IRAs: $4,000 401(k): $100,000 Personal savings: $8,000
|Printer friendly Cite/link Email Feedback|
|Article Type:||Brief Article|
|Date:||Oct 1, 2000|
|Previous Article:||The power of compounding.|
|Next Article:||Be open to closed-end funds.|