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MONEY SMALL INVESTOR INDEX: AMERICANS SLASH CONTRIBUTIONS TO IRAS

 /ADVANCE/ NEW YORK, April 11 /PRNewswire/ -- Over the past 12 months, Americans have invested only around half as much in tax- advantaged Individual Retirement Accounts as they did in the previous 12 months, according to data gathered for Money magazine's Small Investor Index. The numbers: $39 billion vs. $72 billion.
 Analysts say that many individuals have lost interest in IRAs because they no longer harbor hopes that Congress will liberalize the rules to allow penalty-free withdrawals to pay for college and medical bills. Today, if people younger than 59-1/2 make such withdrawals, they are socked with a 10 percent tax penalty as well as regular income taxes on the sums they take.
 This IRA trend is disturbing news. Economists and pension experts have been saying for years that Americans are not saving enough to support the nation's growth, nor to provide for their own retirements.
 Currently, Americans have accumulated about $725 billion in IRAs, according to the Investment Company Institute, a mutual fund trade group. By contrast, they hold $2.7 trillion in CDs, and checking and savings accounts outside of IRAs.
 An estimated 44 percent of the IRA money is in stocks and stock mutual funds, up from 39 percent last year. "Investors are flocking to growth stocks because they understand that they have to take more risk to accumulate sizable retirement nest eggs," says Jennifer Martin, editor of the IRA Reporter in Brainerd, Minn.
 Most of the stock money has come from money-market mutual funds and money-market deposit accounts at banks, which now account for 40 percent of IRA assets, down from 46 percent in 1992.
 Last week, the Index, which tracks the typical portfolio's value, fell $319 to $47,125. Stocks lost $363, and bonds gained $36. CDs and money funds contributed $10.
 This Last Year % Change from a
 Week Week Ago Week Ago Year Ago
 101.91 102.60 93.68 -0.67% +8.79%
 Latest Changes for Each Asset
 % Change from a
 Category Index Week Ago Year Ago
 Stocks:
 NYSE 102.11 -1.87% +13.51%
 ASE/OTC 98.43 -2.96 +13.56
 Equity funds 101.81 -1.61 +10.80
 Bonds:
 Taxable bonds 104.51 +0.62 +11.99
 Municipals 103.43 -0.03 +10.87
 Bond funds 104.32 +0.29 +10.31
 Cash:
 CDs 100.97 +0.07 +3.91
 Money funds 100.68 +0.05 +2.86
 Other:
 Real estate 100.81 -0.48 -6.47
 Gold 118.09 0.00 +9.34
 Jan. 1, 1993 equals 100
 Where Average Small Investors Have Their Money Now
 Current Year Ago Current Year Ago
 NYSE 23.45% 22.38% Bond funds 6.84% 5.60%
 ASE/OTC 7.41 7.07 CDs 13.58 16.75
 Equity funds 6.72 5.42 Money funds 23.87 24.09
 Taxable bonds 9.50 10.03 Real estate 0.80 0.77
 Municipals 7.30 7.39 Gold 0.53 0.51
 Sources: Bank Rate Monitor, the Federal Reserve, Investment Company Institute, Lehman Bros., Lipper Analytical Services, Merrill Lynch, Money Fund Report, Morgan Stanley Capital International, National Association of Real Estate Investment Trusts, Prudential Asset Management, Standard & Poor's, Robert Stanger & Co., World Gold Council.
 -0- 4/12/93
 /NOTE TO EDITORS: This material is also available in printable form from AP GraphicsNet and Access services for graphics and tables (under the file name MoneyIndex) and from PR Newswire for full text./
 /CONTACT: Jordan Goodman of MONEY, 212-522-3618, or Patti Straus of MONEY public relations, 212-522-2695/


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GK -- NY012 -- 4574 04/09/93 14:55 EDT
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