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Disney Joins The Parade Of No-Load Stocks

Sat., Oct. 4, 1997

One of the hottest trends on Wall Street has been the emergence of what are called no-load stocks, those securities that can be purchased directly from companies.

At the beginning of 1995, just 52 companies sold their shares directly to the public and the majority of those were small.

When companies such as Exxon and Chevron entered the arena that changed, and now more than 330 companies sell their stock directly to the public.

And now Walt Disney Co. has joined the parade.

Small investors - particularly parents and grandparents - have long desired a way to buy a small part of the Disney empire for their children and grandchildren.

The Magic Kingdom company has been a solid performer on Wall Street, and with its acquisition of Capital Cities/ABC in 1996 has become an even larger player in the media market.

In addition to its Disneyland-type operations in California, Florida, Tokyo and France, the company owns the Disney Channel, ESPN, A&E; and Lifetime TV.

Here’s the inside story on the stock purchase program according to Charles Carlson, editor of the “DRIP Investor,” which tracks no-load stocks: The minimum investment is $1,000 but Disney will waive that minimum if an investor agrees to automatic investments of $100 a month from a bank account.

There is a one-time enrollment fee of $10.

Optional cash investments will incur a charge of $5 plus 4 cents per share. Optional cash investments made via automatic monthly debit will incur a charge of $1 plus 4 cents per share.

If you do not make your initial purchase of stock directly from the company, you need to have at least 10 shares to enroll in the plan.

You must maintain at least five shares in the account. If you are a new investor who signs up for the monthly deductions, your account will be exempt from this requirement.

All dividends - currently 53 cents a share a year - will be reinvested in the plan to purchase more shares or parts of a share.

For more information, Disney has set up a toll free number (800) 948-2222. Carlson says he will provide a list of other no-load stocks to investors free of charge. To get the list, and probably a pitch letter to subscribe to his newsletter, call 1-800-233-5922. Or write to DRIP Investor, 7412 Calumet Ave., Suite 200 Hammond, Ind., 46324.

Kids can learn money skills

When you want to start teaching your kids about handling money is up to you, of course.

But, if you want to start them early, pre-school isn’t too soon, says the Credit Union National Association.

Parents with children younger than 5 can use piggy banks to help teach their children to identify coins and count money, the credit union trade association suggests.

Youngsters between ages 5 and 10 are old enough to learn money handling skills with a weekly allowance. With teenagers, additional occasional supplements to their allowance - for clothes or one-time school expenses - may be a good idea.

For a free brochure with more information, send a self-addressed stamped business size envelope to Teach Children about Money, CUNA Customer Service, Box 431, Madison, Wis., 53701.

Workers use Web to manage 401(k)s

The Internet is quickly becoming a preferred channel for American retirement savers to manage their 401(k) accounts.

In its first year of providing online services for retirement account customers, Fidelity Investments says 1,000 U.S. companies and organizations are offering more than 2 million employees the option of the Web to manage their accounts.

Fidelity says 10,000 connections are made each day by retirement plan participants viewing their electronic statements through the online channel.

Retirement savers use Fidelity’s NetBenefits service to check account balances, stock quotes and asset allocation. Additionally, they review 90-day transaction histories and fund performance, get information on loans and withdrawals, and conduct online investment exchanges.

Taxes on vacation homes change

Among the many things that became more complicated with the new tax law is the treatment of investment property such as a vacation home, rental or home office - any property on which the owner can take tax deductions for depreciation.

When an investment property is sold, the profit will be taxed at the capital-gains tax rate of 20 percent, compared with 28 percent under the old law. But the new law established a new rate of 25 percent for “depreciation recapture,” which used to be taxed at 28 percent.

Owners have long been able to claim depreciation of investment property, essentially declaring a partial loss on the property each year, just as if it were a machine or vehicle that loses value each year. The loss reduces the owner’s taxes.

Here’s how the recapture tax now works, according to Ed Slott, a Rockville Center, N.Y., accountant and author of “Your Tax Questions Answered”:

Suppose a building were purchased for $100,000, the owner claimed $25,000 in depreciation over the years, then sold it for $200,000. The gain would be $125,000, since the depreciation is subtracted from the original cost. The $25,000 in gain attributable to depreciation is taxed at 25 percent, the remaining gain at 20 percent. Obviously, the more depreciation the owner has claimed, the heavier the recapture-tax hit.



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