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MONEY SMALL INVESTOR INDEX: MUNI RECALL COULD COST INVESTORS $600M

 /ADVANCE/ NEW YORK, Dec. 27 /PRNewswire/ -- Individual investors will lose out on as much as $600 million in interest payments in 1993, after issuers redeem municipal bonds in January that pay yields as high as 12 percent, according to data gathered for Money magazine's Small Investor Index.
 During the first two weeks of January, roughly $10 billion of high- yielding tax-exempt bonds are likely to be paid off, according to the Public Securities Association. This will be the second big wave of redemptions in six months. Last July, issuers retired $14 billion in bonds.
 The munis most likely to be paid off were issued from 1980 to 1983 and carried yields ranging from 7.5 percent to 12 percent. Investors who hold them should brace themselves for sticker shock. When their bonds are redeemed, they will have to reinvest their money in tax- exempts now averaging 6 percent or switch to other investments.
 Brokerage officials estimate that 70 percent to 80 percent of the investors affected by last July's redemptions rolled their money over into other municipal bonds despite the lower yields. As a result of those purchases, prices on munis rose almost 6 percent in a month.
 The reason so many investors stuck with munis: For those in the 28 percent tax bracket or higher, a 6 percent yield on a top-rated 10-year issue is equivalent to an 8.3 percent payout on a taxable investment. "You can't do that well on a Treasury bond," says Joseph Salvatore, investment officer at PNC Financial in Philadelphia. "And many municipal bonds are extremely safe investments."
 Last week, the typical individual's portfolio, as tracked by the Index, rose $212 to a record $48,071. Stocks gained $156, while bonds returned $46. Certificates of deposit and money funds contributed $11.
 This Last Year % Change from a
 Week Week Ago Week Ago Year Ago
 107.80 107.32 100.00 +0.44% +7.80%
 Latest Changes for Each Asset
 % Change from a
 Category Index Week Ago Year Ago
 Stocks:
 NYSE 111.99 +1.12% +11.99%
 ASE/OTC 118.15 +0.36 +18.15
 Equity funds 110.73 +0.92 +10.73
 Bonds:
 Taxable bonds 107.87 +0.46 +7.87
 Municipals 108.97 +0.30 +8.97
 Bond funds 106.88 +0.39 +6.88
 Cash:
 CDs 104.15 +0.07 +4.15
 Money funds 103.25 +0.05 +3.25
 Other:
 Real estate 92.01 +0.92 -7.99
 Gold 84.50 -1.79 -15.50
 Dec. 27, 1991 equals 100
 Where Average Small Investors Have Their Money Now
 Current Year Ago Current Year Ago
 NYSE 21.91% 22.93% Bond funds 6.46% 5.18%
 ASE/OTC 6.92 7.24 CDs 14.63 17.44
 Equity funds 5.98 5.00 Money funds 24.94 22.38
 Taxable bonds 10.71 11.17 Real estate 0.61 0.77
 Municipals 7.35 7.34 Gold 0.48 0.55
 Sources: Bank Rate Monitor, the Federal Reserve, IBC/Donoghue's Money Fund Report, Investment Company Institute, Lehman Bros., Lipper Analytical Services, Merrill Lynch, Morgan Stanley Capital International, National Association of Real Estate Investment Trusts, Prudential Asset Management, Standard & Poor's, Robert Stanger & Co., World Gold Council.
 -0- 12/28/92
 /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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Date:Dec 23, 1992
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