SAMUEL A. RAMIREZ JR.
Samuel A. Ramirez and Co.
Samuel A. Ramirez Jr. heads the New York investment banking firm's private client group, including retail and institutional sales in all major asset classes, overseeing investment advisory accounts and real estate investments, and coordinating the firm's advertising and business development. He is involved with New York's Municipal Bond Club and Municipal Forum.
Mr. Ramirez predicts moderate GDP growth of 3.5 percent to 4 percent this year amid continued productivity gains and only gradually rising inflation.
Overall, he says, both inflationary and deflationary forces are at work in the economy. Most of the increases in commodity prices are caused by external forces such as demand from China and India. Deflationary forces include large debt burdens and a globalization process that is introducing less-expensive goods and labor. Inflationary issues stem from low interest rates that are keeping the cost of money low for both consumers and corporations, and fueling real estate prices. Mr. Ramirez expects that these contrary forces will keep interest rate increases at moderate levels, with the Federal Funds rate expected to peak in the 3 percent to 3.5 percent range, and the 30-year Treasury bond to adjust to the 5 percent to 5.25 percent range.
Using this economic forecast, Mr. Ramirez constructed investment strategies that weighted a variety of factors, including short- and long-term goals, time horizons for retirement, and the investors' risk tolerance. In choosing investments, he sought to accomplish three criteria: risk tolerance, consistent return, and diversification.
INVESTOR PROFILE #1
Married couple, both of whom are 48 years old, college educated, and employed full time. Both are business professionals and they have two children, ages 4 and 10. Average annual household income is $136,900. They recently purchased a new home valued at $350,000 and have a 30-year, fixed-rate mortgage with monthly payments of $2,100. Currently, they have $50,000 in savings invested in 401(k)-based mutual funds. The couple's risk tolerance is moderate, with an investment time horizon of 15-plus years.
•Financial objective Plan for full retirement at age 65; secure spouse's finances; save for children's college education.
Monthly Financial Statement
•Electric, heat, phone, etc. $400
•Fuel, misc. $200
Leaving a net savings pool of $2,080.25 per month ($24,963 annually).
Strategies and Assumptions
A joint salary of $136,900 would result in federal and state taxes of about 33 percent. After combined maximum 401(k) contributions of $28,000, taxable income would be $108,900, resulting in after-tax take-home pay of $72,963 ($6,080.25 per month). A working assumption is that health insurance for the family is provided through an employer plan.