                Will You Retire a Millionaire or a Pauper?

                Guiding Your Golden Years into the Black
                    Instead of Drifting into the Red

                      Stephen Rea, Maristream, Inc.
              2015 Franklin; NLR, AR  72114  (501) 758-7482


30% represents:

    The amount of your income you would have to contribute EVERY year for
    40 years into your savings account earning 5% to retire on an equivalent
    to what you were making at age 25 (assuming yearly inflation, raises,
    and retirement cost of living adjustments are all 3.59%, purchasing a
    20-year annuity earning 6% at retirement at age 65).

    The return that you would have made investing in the average stock
    market mutual fund in 1995.


50% represents:

    The amount of your income at age 25 invested in ONE lump sum into a
    stock market mutual fund averaging 13% return that would allow you to
    retire at that equivalent salary at age 65.  (Hindsight is 20/20!)


Social Security payments amounts to only 27% of the average retired person's
income after retirement.  (Social Security Admin., Mutual Funds, 3/96)


What is stock?

    Ownership of a company.  If a stock goes down, that means that someone
    could purchase that company for a lower price by buying the stock at
    that lower value.  Some stock also has dividends, which is money given
    out to the shareholders and derived from the profits of the company.


What is a mutual fund?

    Collection of a category of stocks emphasizing a certain aspect of the
    market which is owned by a group of investors and managed by a fund
    manager, who selects and buys the stock in that category for the group
    using the group's money.


What is the Dow?

    The Dow Jones Industrial Average, which is a collection of 30 large
    industrial companies with stock on the New York Stock Exchange (NYSE),
    selected by the Dow Jones News Service, including companies such as
    IBM, 3M, DuPont, Texaco, and J.P. Morgan.


What are stock exchanges?

    A stock is usually registered with one, and only one, stock exchange,
    such as the New York Stock Exchange (NYSE), the American Stock Exchange
    (AMEX), and the National Association of Security Dealers Exchange
    (NASDAQ).  These exchanges act as clearinghouses for trading in and
    purchasing stocks, as well as regulating the initial creation and
    offering of stock by companies registered with the exchange (IPO -
    initial public offering).


What is a Bull Market?

    The market prices are rising for a long period of time.


What is a Bear Market?

    The market prices are dropping for a long period of time.


Isn't everyone buying in a bull market and selling in a bear market?

    No.  There must be a seller for those buying, and there must be a buyer
    for those selling.  The trick is to buy low and sell high!  Sometimes,
    dealers will purchase stock without having a buyer, assuming that they
    will be able to find a buyer for that stock.


Who invests in mutual funds?

    1/3 of American households have money in mutual funds.  (Crossfire
    (CNN), 3/8/96).

    $10 billion per month pouring into mutual funds.  (Money, 2/96)

    Mutual fund investments are rising at a rate of 10 times every 15 years
    (Forbes, 2/12/96).  That is about 18% more invested every year.


How much stock is out there?

    Barra's list of all US publicly traded common stocks had a market value
    of $6,732.2 billion in mid January of 1996.  (Forbes, 2/12/96)

    The US stocks account for only 35% of the world's wealth, the non-US
    markets amount to 65% of the world's wealth.  (Mutual Funds, 3/96)

    Money's listing of funds in February of 1996 showed 1,643 stock funds,
    955 bond funds, and 649 state municipal bond funds.


What are the returns?

    Since August, 1982, the average domestic fund is up 728% (30% in 1995),
    and the average international fund is up 607% (8% in 1995).  (Mutual
    Funds, 3/96)

    Historically, the average stock mutual fund earns around 12% per year
    over the long run.


What are the losses?

    The biggest daily point drops of the Dow Industrials are:

        508 points on 10/19/87
        190 points on 10/13/89
        171 points on 03/08/96  (~3% of the market)
        156 points on 10/26/87

    The biggest daily percentage drops of the Dow Industrials are:

        22.8% on 10/19/87
        12.8% on 10/28/29
        11.7% on 10/29/29
         9.9% on 11/06/29              (Moneyline (CNN), 3/8/96)


How should I react?  In most cases, hang on and stick it out:

                               Total Loss      Gain 1 Year   Resulting
    Bear Market     Months     During Bear     After Turn     Rebound
    12/68-06/70       19         -29.3%          +41.9%        +12.6%
    01/73-09/74       21         -42.6%          +38.1%         -4.5%
    01/77-02/78       14         -14.1%          +16.6%         +2.5%
    12/80-07/82       20         -16.9%          +59.4%        +42.5%
    09/87-11/87        3         -29.5%          +23.2%         -6.3%
    07/90-10/90        4         -14.1%          +33.5%        +19.4%
    Average          13.5        -24.4%          +35.45%       +11.05%

    (Sanford C. Bernstein & Co., Ibbotson Assoc.; Business Week, 3/25/96)


    06/30/83-07/31/84  -10%   Made up by end of 1984
    08/31/87-11/30/87  -30%   Followed by 57% rise thru 1989
    05/31/90-10/31/90  -16%   Made up by mid 1991, with 103% rise thru 1995

                                                        (Forbes, 2/12/96)

    Average decline in a Bear Market:     38% (Skewed by those before 1943)
    Average duration of Bear Markets:     1.5 Years
    Average time to break even:           5.2 Years (Skewed by 1929 Crash)
    Average occurrence of a Bear Market:  Twice every ten years

    Average gain in a Bull Market:        117%
    Average duration of Bull Markets:     3.75 Years

    (Keys To Investing In Your 401 (K); Warren Boroson; Barron's)


    "For stocks invested in the S&P for one year, you have a 27% chance of
    losing money.  That drops to 10% when you stay invested for five years
    and 4% with a 10-year time period.  After 12 years, your chances of
    suffering a loss falls to zero."  (Ibbotson Assoc.)


    Orange County, California, declared bankruptcy in 1995, losing $1.7
    billion.   If they had stuck it out for one year, they would have
    MADE $300 million.  (Forbes, 2/12/96)


In what should I invest?

    One rule of thumb is to subtract your age from 100, which will give you
    the percent of your retirement funds which should be in stock funds,
    with the rest in fixed-interest accounts.  Be careful about how much
    risk you are willing to take, especially if you are within 5 years til
    your retirement.

    Diversify - Divide your stock fund contributions between several mutual
    funds emphasizing different aspects of the market, such as US common
    stock funds, international funds, growth funds, income funds, index
    funds, balanced funds, and, possibly, the more speculative sector funds
    and contrarian funds.

    Read the prospectus, which tells how the fund invests and gives its
    historical returns, as well as reviews of funds in such magazines as
    Mutual Funds, Money, and Forbes.  Note the Morningstar ratings, which
    shows the fund's risk-adjusted performance ratings relative to other
    funds in its class.


What about 401 (K)'s?

    Current maximum 401 (K) contribution is $9,500/year.

    10% penalty if withdrawn before age 59 1/2.

    50% penalty on under-distribution after age 70 1/2.

    Tax deferred until you start withdrawing.


How do I find out what I will retire on?

    Gold'N Years Retirement Funds Analysis software gives projections
    for up to 6 funds and gives you 5 payout methods to estimate your
    retirement income.

    Retirement is figured using your:

        1) Current and retirement ages,
        2) Current salary base,
        3) Yearly contribution percent,
        4) Estimated yearly cost of living adjustments, including raises,
        5) Estimated inflation rate, and,
        6) Information on up to 6 funds, including:
           a) Fund name,
           b) Initial balance in the fund,
           c) Percent of the contribution going to the fund, and,
           d) Historical annual percent return of the fund.

    Yearly payout amounts are shown, and compared to base year, for:

        1) Historical fund earnings only.
        2) Earnings and principal at the historical return over N years.
        3) Earnings and principal at a specified return over N years.
        4) Year-by-year earnings and principal at a specified return
           adjusted yearly for inflation over N years.
        5) Year-by-year earnings and principal at the historical return
           adjusted yearly for inflation over N years.

    For MS-DOS, minimum of 470K of base memory needed to run it ($10.99,
    plus $2.50 shipping and handling for 3.5" diskette when ordered from
    Maristream).
