<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (March 26, 1998) -- Often I use this daily space to talk about investing techniques, tax strategies, historical tests, and other subjects, all usually interwoven with the basic idea of investing in the high-yield Dow approaches. My favorite subject, though, always has been the powerful effect of time on money regularly saved.

Never has the opportunity for simple saving been so great than with the new Roth IRA, which allows you to sock away up to $2,000 a year (subject to income limitations). It's true that you'll already have paid taxes on this $2,000 when you put it in your Roth IRA, but from that point on, the growth is completely tax free, even when you pull the money out upon retirement. If you're not convinced of the power of this opportunity, look at the table below.

If you invest $2,000 every year from now until retirement (and that's assuming the $2,000 cap never gets increased), the following table will show what it grows to at various growth rates and periods. Find the number of years closest to your own time horizon and pick the growth rate you think you're likely to achieve and then sit back and marvel.
10% 15% 20%
10 Yrs 35,062 46,699 62,301
20 Yrs 126,005 235,620 448,051
30 Yrs 361,887 999,914 2,836,516
40 Yrs 973,704 4,091,908 17,625,259
50 Yrs 2,560,599 16,600,747 109,193,258

If you're 20 years old, can you imagine having a completely tax-free nest-egg of more than $100 million, just from stashing away $5.50 a day until you're 70? And yet, it's possible.

Even if you're 40 years old and haven't saved a penny, by age 70 you can have nearly $3 million if you start now with just $2,000 a year, averaging 20% (roughly the long-term growth rate of the best Dow Approaches over the last four decades).

It gets even more mind-boggling if you and your spouse both put away $2,000 in such a plan. A couple of college sweethearts just launching new careers could have over $200 million to spend -- tax free -- in their golden years. And remember, this is assuming no other retirement plans, no inheritance from mom and dad (which you shouldn't count on anyway), no additional savings of any kind. Just a simple $2,000 a year in a completely tax-free growth plan.

It almost makes me want to get my son a part-time job to start his Roth IRA today. (So what if he's only five? Surely there's a Popsicle stand somewhere with his name on it!)

Start saving today, Fools. It's just not that hard to do. No crybabies, no whining, no excuses. Make it happen!

[Robert Sheard is the author of the forthcoming book, The Unemotional Investor, due out from Simon & Schuster on May 12. To pre-order your copy, please visit Amazon.com, where it's available at a discounted price.]

TODAY'S NUMBERS
Stock  Change   Last 
 -------------------- 
 UK   ---       48.88 
 IP   -   1/4   48.81 
 MO   -1  1/4   42.63 
 EK   -   3/8   63.31 
 
 
                    Day   Month    Year 
         FOOL-4   -0.91%   1.86%   7.10% 
         DJIA     -0.29%   3.52%  11.87% 
         S&P 500  -0.11%   4.90%  13.43% 
         NASDAQ   +0.21%   3.28%  16.44% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  291 Union Carb    42.94     48.88    13.83% 
  12/31/97  289 Int'l Pape    43.13     48.81    13.19% 
  12/31/97  206 Eastman Ko    60.56     63.31     4.54% 
  12/31/97  276 Philip Mor    45.25     42.63    -5.80% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  291 Union Carb 12494.81  14222.63  $1727.81 
  12/31/97  289 Int'l Pape 12463.13  14106.81  $1643.69 
  12/31/97  206 Eastman Ko 12475.88  13042.38   $566.50 
  12/31/97  276 Philip Mor 12489.00  11764.50  -$724.50 
  
  
                              CASH    $415.96 
                             TOTAL  $53552.27