Cents and Sensibility


Saturday, August 11, 2001

Investment tips for
single parents

Question: I'm a 35-year-old single mother with a 6-year-old son. I'd like to start an investment plan but don't have a lot of money. Is there anything available for a person in my situation or do I need to wait until I can get started with a large amount of money?

Answer: One of the biggest investment mistakes made by single parents is delaying investing for their retirement and waiting for "the perfect time" to invest. This is usually some landmark event, such as paying off the car or home, changing jobs, or the children leaving home. The problem with this approach is that waiting to invest costs you money. If you wait until your son enters college to start investing $50 a month in an Individual Retirement Account earning 8 percent annually, you'll have accumulated less than $25,000 when you reach age 65.

If, however, you start investing now and invest $50 a month in an IRA earning 8 percent annually, you'll accumulate more than $73,000 by the time you reach age 65. That's $48,000 more than if you wait!

It's important to start an investment plan early and stick with it. Time and discipline are an investor's most valuable assets. Whether you're a single parent or part of a two-parent household, remember the best time to start investing is now. Begin reading about investing and seek the investment advice of a professional.

Question: "I've noticed that some investment professionals have letters after their name, such as CFP, CLU, and ChFC. What do those letters stand for?"

Answer: CFP stands for certified financial planner, CLU stands for chartered life underwriter and ChFC stands for chartered financial consultant. An individual with one or more of these certifications has successfully completed advanced study in the areas of investment, insurance, income tax, retirement and estate planning, among others. The "CFP" marks, in particular, have been cited by Business Week and Money magazine as the designation consumers should look for when selecting a financial planner.

Guy Steele is a financial planner and head
of the Pali Palms office of Edward Jones. Send
planning and investing questions to him at 970
N. Kalaheo Ave., Suite C-210, Kailua, HI, 96734,
or by email at:

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