Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, May 17, 1993 TAG: 9305170243
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: JANE BRYANT QUINN WASHINGTON POST WRITERS GROUP
DATELINE: LENGTH: Medium
Like all too many affluent people of their age, the Clintons run it disjointedly and without a plan.
Given their youth and the size of their assets, the William Jefferson Clinton and Hillary Rodham Clinton should be aggressively committed to growth. That means a heavy dose of diversified stocks or stock mutual funds, added to faithfully and held for years.
Instead, they overload on "safe" bank accounts and bonds, without realizing how risky it is to invest for no growth - the risk being that your savings lose value after taxes and inflation. For capital gains, they plunge into the investment equivalent of lotteries: limited partnerships, a major stake in a single stock and a private investment fund that's managed aggressively for growth. They're either idling in neutral or shoving the gas pedal to the floor.
It's beside the point that some of these gambles have paid off, says financial planner Harold Evensky of Evensky & Brown in Coral Gables, Fla. They might just as easily have failed - as in fact one land deal did.
Here's a brief summary of the Clintons' personal 1992 portfolio, compiled from public sources by Little Rock financial planner Larry Root of IDS Financial Services. It's only a best guess as to what the First Couple owns. But it's consistent with previous disclosures, which also show conservative holdings laced with lightning leaps of faith.
The division of assets between Bill and Hillary reflects their basic Team Clinton approach. He tends to U.S. government bond funds. She's the family wealth builder, choosing stocks, tax-exempt municipals and private deals often brought to her by pals.
She reportedly made a killing in a partnership that bid on a cellular phone contract, running a $2,000 investment up to $48,000. On the other hand, the couple apparently lost most of the $68,000 they jointly sank into an Ozark land-development deal.
Hillary's commitment to Wal-Mart - where she once sat on the board of directors - also creates some extra risk. A great stock doesn't always stay that way, and lately Wal-Mart has been stumbling. "You can get blindsided when you've concentrated on a single position," says Evensky.
Most of the planners who studied the portfolio find it too conservative for a couple their age. Bill Clinton is 46 years old and Hillary is 45. They recommend anywhere from 55 percent to 85 percent in diversified stock-owning mutual funds. They also need to think more globally. The $4,000 or so in their foreign fund (G.T. Pacific Growth) is too little to matter and too concentrated in one part of the world. New York planner Lewis Altfest suggests a larger fund that diversifies over several continents.
The Clintons' daughter, Chelsea, needs even more investment attention than her parents. She owns $45,000, received under the Uniform Gifts to Minors Act. But most of it snoozes in a money-market fund earning around 2.5 percent, at a time when college costs are rising by upward of 7 percent a year.
Because at 13 she's pretty close to entering college, Chelsea shouldn't be taking much investment risk. Still, Evensky would put one-third of her money into stock funds and diversify most of the other two-thirds into funds that buy short- or intermediate-term bonds. When she was younger, John Sestina says, she should have been fully invested for growth.
Luckily, these mistakes hardly matter because the Clintons are secure. Bill's presidential pension equals a Cabinet officer's pay, which is $148,400 a year, with substantial extra payments for staff. On leaving office, both Clintons can expect a life sprinkled with book contracts, speaking fees, teaching offers, corner offices in prestigious law firms and fees for likely service on corporate boards.
Right now, they're considering a blind trust for their White House years. That would put a professional in charge of their money, who might hatch a more balanced investment plan.
\ THE CLINTON PORTFOLIO, 1992
Fixed income: $339,000. Cash ($142,000), government bond funds, municipal bonds.
Growth: $197,000. Common stock (mostly Wal-Mart Stores Inc., of Bentonville,Ark.), a private growth fund and $4,000 in a Pacific-area mutual fund.
Pension: $155,000. His IRA and deferred compensation from his salary as governor of Arkansas and in her law firm's profit-sharing plan, part of which may be managed for growth.
Unspecified: $150,000. Includes her investment plunges, such as a movie limited partnership.
Real estate: $90,000. Half interest in her mother's condominium.
by CNB