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Global investments offer profits, risks

When Raymond James & Associates Inc.'s top market analyst came to theNorth Suncoast last month, more than three dozen investors crowded into the company's Spring Hill office.

But their minds were thousands of miles away. One of the first questions asked was what kind of opportunities will arise because of the political upheaval in Europe.

There are some opportunities, say financial experts from New Port Richey to Inverness. But in general they are riskier than the conservative investments preferred by most of the retired investors in the area.

"I feel that internationally there are some tremendous opportunities with all that is going on over there," said Glenn Shane, a certified financial planner with offices in Spring Hill and Clearwater.

"Opportunities to make money are going to be created," Shane said. "Just because you're investing overseas doesn't mean you're not making a quality investment."

The most common way for small investors to invest overseas is to buy shares in a mutual fund that invests in foreign companies. But Shane cautioned that international mutual funds make sense only when a person has enough money in more secure investments, such as certificates of deposit (CDs).

Philip R. King, a certified financial planner in Inverness, said he classifies the international mutual funds as "aggressive growth"

investments, a risk-filled category that most of his clients are unwilling to explore.

Not only do international investors need to be concerned with the

performance of the companies themselves, but also with the exchange rate between dollars and foreign currencies such as the Japanese yen, King said.

The political changes will open up new markets for some American companies, brokers said. Telecommunications companies could be a good investment, said Evan Price of Raymond James' Spring Hill office, because their products will be desperately needed as Eastern Europe modernizes.

Of course, the growth of European democracy has not helped all U.S. companies. "The company right now that is solely into defense is hurting," Price said.

The stock market is not the most popular area for investment for many investors on the North Suncoast, experts say. Most of them are retirees who turn to conservative investments because they are trying to protect the wealth they earned through a lifetime of work.

And because many of them are on fixed incomes, the threat of rising prices also looms large.

"Retired people realize more than anybody how inflation has impacted them through the years," said Joe Rettig with IDS Financial Services in Spring Hill. "Their primary (investment) objective is safety. Their second objective is a total after-tax return to offset inflation."

And inflation was higher last year - 4.6 percent, according to government figures - than any year since 1981.

Long-term, fixed-rate investments are not a good hedge against rising prices and rising interest rates. But most financial planners and brokers interviewed said they expected both inflation and interest rates to drop before the end of the year.

Lawrence Wall, the New Port Richey office manager for Merrill Lynch Pierce Fenner & Smith, said he is recommending generally that investors should put one-third of their assets in two-year to 10-year notes such as bonds and government securities.

Shane, the financial planner, said investors would be wise to buy three- or four-year certificates of deposit if they can get interest rates as high as 9 percent.

Annuities that permit investors to defer taxes on the investment until they use the money remain popular with many retirees, experts said.

With the national economy growing slowly and some economists predicting a recession may be around the corner, experts said people should stick with quality investments, even though they may not provide the generous rates of return seen during the 1980s.

"In general, investors are going to need to be more conservative and are going to accept a lower rate of total return then they've had from their previous investments," Wall said.