Fort Worth Star-Telegram from Fort Worth, Texas • 138

Section Page 10 I Star-Telegram I Sunday November 16 1997 lay November 161997 11 the plan operates Pearson noted kt- 4 But the tax code makes an excep- i 7 Backlog for financial counseling or plan the in years or more older for workers who are 55 or r-t We re overwhelmed and who have participated 10 --74 ---r 1 So many of you have offered to participate in this series that it's going to take us a while to work our way down the list If you haven't heard 41 from us yet don't give up If you haven't written yet and you want to par- These workers have the right to 4 ticipate keep reading We will re-open the advice window again soon sell up to 25 percent of their stock WITAIMAINIP- tik: 1 i each year ESOP participants still 641'1 can't remove their money from Consider a recent study by Diversifying among asset -467 the plan but the company must z41 I 4 give them three investment 44 Morningstar a mutual fund classes effectively swinging sev- research firm The study chose eral yo-yos at once improves I options in addition to company I groups of mutual funds at ran- safety Diversified investors arrive stock I NV 4 dom then measured the gap at the head of the stairs concerned To do this participants must it41 4 o1 between the best performing about the average height of their -avow notify the company within 90 groups and the worst Adding strings rather than a single 14 days after the close of the plan's funds steadily narrowed the gap extreme fiscal year said Pearson who is between winners and losers mak- "You don't put all your eggs i an enrolled agent with the IRS as ing the results more consistent one basket" Pearson said "You well as a certified financial plan- a 4 4 and predictable until the groups don't put your future in one asset net- reached 17 in number class" 1 Congress carved out the break Pearson still wasn't done Workers who have a slug of the plan operates Pearson noted But the tax code makes an exception for workers who are 55 or older and who have participated in the plan for 10 years or more These workers have the right to sell up to 25 percent of their stock each year ESOP participants still can't remove their money from the plan but the company must give them three investment options in addition to company stock To do this participants must notify the company within 90 days after the close of the plan's fiscal year said Pearson who is an enrolled agent with the IRS as well as a certified financial planner Congress carved out the break Backlog for financial counseling We're overwhelmed So many of you have offered to participate in this series that it's going to take us a while to work our way down the list If you haven't heard from us yet don't give up If you haven't written yet and you want to participate keep reading We will re-open the advice window again soon Consider a recent study by Morningstar a mutual fund research firm The study chose groups of mutual funds at random then measured the gap between the best performing groups and the worst Adding funds steadily narrowed the gap between winners and losers making the results more consistent and predictable until the groups reached 17 in number Pearson still wasn't done Diversifying among asset classes effectively swinging several yo-yos at once improves safety Diversified investors arrive at the head of the stairs concerned about the average height of their strings rather than a single extreme "You don't put all your eggs in one basket" Pearson said "You don't put your future in one asset class" Workers who have a slug of Finances From Page 1 "It's not a problem if you plan on a lower return than you actually get" Pearson said "I've never heard a complaint about having too much money in retirement" O'Grady "really needs to plan on working until he is 65" the planner said He would need to sock away an additional $1338 a month to retire in 10 years without changing the family's lifestyle "We haven't been able to save a nickel since I was laid off" O'Grady answered "The more I mull over where I'm at the more I realize I'm going to have to keep working" The good news is that the O'Gradys can improve on their retirement lifestyle if their accumulated savings earn the stock market's historical average return of 10 percent a year So far O'Grady hasn't been doing that well O'Grady has $40000 in cash in the Tractor Supply plan that doesn't appear to be invested at all even in a money market account The company won't let former employees claim their money for five years "When I see the stock market everybody else is takjng advantage of it's hard to sit because older workers don't have time to recover if their employer falls on hard times "There are events that nobody could predict" Pearson said Union Carbide for example seemed like a safe stock until its disastrous chemical release in Bhopal India Pearson advised O'Grady to roll over his ESOP and 401(k) accounts into an Individual Retirement Account as soon as he gains access to his money The planner suggested that he reinvest the money in several mutual funds pursuing several different investment objectives Diversification is how planners minimize the role that luck plays in Star-Telegram KEVIN RINI company stock can follow that much of Pearson's advice even if they can't touch the stock Pearson counsels his clients to choose their other investments to complement the company stock and to balance the overall risk of their portfolio Diversification isn't painless Note that O'Grady would be poorer today had he followed that advice and had Tractor Supply allowed him to sell stock before its public offering Diversifying minimizes the role of luck in both directions Investors are less likely to strike out or to swat a home run The difference is that luck isn't much of a plan Star-Telegram KEVIN FUJI "We haven't been able to save a nickel since I was laid off The more I mull over where I'm at the more I realize I'm going to have to keep working" Tom O'Grady there and watch" O'Grady said Employee stock ownership plan or ESOP participants typically don't have much say in how $1785 billion in 797 stores Kmart's blunders included costly forays into other retail ventures such as Builders Square and Pace membership warehouse 5 1 i 1 i 0 utIMIUM GlitiMI3tEtWalunt ciattiva kmaz )1'" VITT: pj-11 11311 vb lb ft Save 500 OFF Anly Deem! es 10 aeto Oote od 90 tot tos coe tetls tot tio0 coo? coito pc Pts 14 eg11 ar or laiJ ericcu Lial get the next item of equal or lesser valc:) CI) LLF You can Mix and Match any items Here Are Some EXAMPLES of SAVINGS Buy a 15" Color Super VGA Monitor for SI 599-5 Buy a Laser Printer Starting at 99" And Get a 108GIG Hard Drive for $7491 And Get a 16 GIG Tape Back-Up for 49" Buy a VGA Color Monitor for $69n We Buy Memory Processors And Get a 16MB SIMM for $29" ALL TRADES WELCOME! Requires Purchase Of Item At Reg Price 50 Off Next Item of Equal Or Lesser Value tibri 17 1-11 10:00 "It's not a problem if you plan on a lower return than you actually get I've never heard a complaint about having too much money in retirement" Todd Pearson investing Owning a mutual fund is less risky than owning an individual stock Owning a dozen mutual funds is safer than owning one Kmart From Page 1 make their Texas debut this weekend including two in Tarrant County: at 915 Randol Mill Road in Arlington and 5800 Hu len St in Fort Worth Both are former Venture sites Kmart plans to convert its 19 other Fort Worth-Dallas area stores into Big Ks next year The stores are intended to appeal to the chain's targeted customers mothers ages 25 to 50 with larger assortments of women and children's apparel They also boast a selection of grocery items in an area dubbed The Pantry (However the Big Ks are not as large as the chain's 99 Super stores which carry a full line of groceries including produce) "We're emphasizing the businesses that bring them back into the stores again and again" said Don Keeble executive vice president of store operations during a tour of the new Arlington store last week "No matter what their income level these ladies are time-poor We're trying to create conveniences" Kmart is also trying to create higher margins Shoppers entering the new stores can look to their right to see the holiday sweater collection by Jaclyn Smith the actress best known for her role on the '70s TV show Charlie's Angels "We're bring back stores and matter their level ladies to Don Kmart vice of store He counseled O'Grady to choose funds that gave him a mix of US stocks foreign stocks bonds and inflation-resistant assets such as natural resources or real estate Historically these classes of assets move in different cycles Pearson asked O'Grady to imagine himself spinning a yo-yo as he climbs a flight of stairs The yo-yo represents the constant movement of the market The stairs represent the long-term historical trend of stocks "The yo-yo even if it's at the bottom of its string at the top of stairs is going to be higher than it was at the top of its string at the bottom" Pearson said Pizza and Ballpark franks Keeble said the partnership with well-known name brands helps the chain counter the public's image of discount store dining So far the Big concept looks like a hit Keeble reports that stores converted to Big Ks enjoy double-digit sales gains in the first year And even the older Big Ks where the concept was launched two years ago are still enjoying healthy sales gains Alas for Kmart many on Wall Street are not yet buying the Kmart "renaissance" that Hall is touting On Thursday Kmart reported that third-quarter earnings more than doubled as the chain moved ahead with stringent cost-cutting measures But the results were still below expectations Critics say the chain's management needs to boost sales which were up only 14 percent for the quarter ended Oct 29 to $732 billion from $721 bil lion Although the Martha Stewart collection and Muppets lines have helped bring double-digit sales gains in home and children's areas women's apparel remains a trouble spot In addition Kmart President Warren Flick a former Sears executive announced unexpectedly Thursday that he would leave the chain citing medical reasons "The departure of Warren Flick is another symptom of the unending problems at Kmart" Robert Buchanan of NatWest Securities said in a report that downgraded the stock to "sell" from "underperformer" Kmart shares hit a two-year high of $1525 a share in September but last week's news forced the price down It closed Friday at $12875 Only a decade ago Kmart was the nation's biggest discount retailer enjoying annual sales of $24 billion At the time Wal-Mart was a distant second with sales of $119 million while Target had $435 billion is sales Since then Wal-Mart has become the nation's largest retailer with sales of $1048 billion annually in 3350 Wal-Mart and Sam's Club stores Kmart is now a distant second with annual sales of $314 billion in 2122 stores followed by fast-growing Target which had 1996 sales or kiii (1 ss Vs 1 I f''' 1 1:: i i I 0 5 1 5' 4' i Zi 4 1 1 i 4 i i i I I i 1 i i 1 4 i 1 I 4 1 4 i 1 1 1 Ir i' I I 7 I 5 1 1 1 1 i I --F 1 emphasizing the businesses that them into the again again No what income these are time-poor We're trying create conveniences" Get All The Revvards Of A Bmkerage Account The chain suffered from inventory shortages and management miscues according to the chain's critics a group that included many shareholders at the time Aging stores and inexperienced sales clerks contributed to the chain's sagging image with shoppers In 1990 then-chief executive Joseph Antonini launched a $23 billion five-year remodeling plan It included the Super concept the 24-hour superstores with groceries But the changes didn't boost sales Antonini also promised to boost sales of women's apparel But the expansion was planned just as demand sank forcing the chain to make costly markdowns The result was 13 consecutive quarterly tosses from 1993 to 1996 and Antonini's departure When Hall came on board in June 1995 he quickly started shedding the chain's old management in favor of a new executive team including Flick Flick will be replaced by Andrew Giancamilli who has overseen the company's efforts to boost its business selling items for the home The turnaround hasn't been easy and in Wall Street's view isn't finished Last year a debt provision that would have forced the chain to pay off $550 million to bondholders which probably would have forced it into bankruptcy was averted at the last minute as management negotiated new credit lines and issued $1 billion in preferred stock Since then Kmart has worked to reduce operating costs by $1 billion a year enough to cover the $750 million needed to convert regular Kmarts to the Big format at a cost of $300000 to $600000 per store On Thursday Kmart announced it would offer early retirement to about 28500 hourly employees saving an estimated $80 million to $100 million over the next few years Still the chain faces hurdles not the least of which is the image problem Consider one woman who stopped last week at the new Kmart in Arlington looking for half-price cookware She said she had not been to a Kmart in years "I don't usually shop at discount stores unless it's Sam's" she said "Don't use my name I don't want atlyone to know I was at Kmart" Keeble executive president operations r- frone I NA I 1 1 I raj 11 atip Without Al The Risk Jewelry and cosmetics will be in front of the customers while Stewart's line of sheets and towels is to their left All are high-margin businesses that Kmart hopes will boost the chain's profits The Pantry section carries such common grocery items as milk priced at $249 a gallon and eggs at 69 cents comparable to what shoppers would find at most grocery stores While the consumables business doesn't bring high margins it does generate traffic Keeble said "The idea is when Mom goes shopping she can cut her list in half and get half the things she needs here and half at the grocery store" he said Believing that time-pressed moms and their little ones also need their fast-food fix Kmart is introducing Big Cafes which feature Little Caesar4 Ifir 1 Now you can play the market and still have the safety bf FDIC insurance Open our new Money Fund Index Account with just $10000 and you'll earn interest based ne it on the average performance of more than 500 top mutual Funds Very savvy Unlike brokerage investments your account is FDIC insured Very smart And your money's available to you 24 hours a day 7 days a week at thousands of ATMs nationwide Which makes earning higher interest even more rewarding TM 1 mu E9 BANK UNITED 1-800-298-9889 Your APY is based on BC's MONEY FUND REPORT AVER ACFS'iall taxable seven-day simple yield Rates accurate am of publication dam and are subject to change Ifvur balance falls below S10000 youll earn our standard money market rate currently 300443 A PY Fees may reduce earnings 01997 Brk United Ft BC Insured kb.