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ADVANCED
TRAINING Interested in a Guarantee on your investments? FIT Tip # 5 is a very simple way to guarantee principal and still participate in growth markets. The strategy is this: Use a portion of your funds to purchase strip (zero coupon) bonds, and invest the balance in a high quality growth Mutual Fund. Here is how it works: On June 23, 2003, you could purchase a Newfoundland & Labrador Hydro Electric strip bond maturing June 6, 2013, for $60.973. This leaves $39.03 out of each $100 you have to invest for a growth Mutual Fund, for instance, the Trimark Fund. Historically, over a ten year period, the Trimark Fund has returned 11.4% (see Globefund for details). So what is the result? At the end of 10 years, your investment has grown to $214.80, or 11.4% annual simple interest. If there is no growth in the market, and Trimark Fund is reduced to zero, then you still have $100.00. This strategy might require the advice of your investment professional. If you do not understand bonds, and bond yields, do not attempt this strategy. |
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Discover Financial Management
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