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WALL STREET, CALIFORNIA | MONEY MAKE-OVER / HELAINE
OLEN

Updated Menu : Restaurateurs Need a Plan That Will Yield Security

March 18, 1997|HELAINE OLEN | Helaine Olen is a Los Angeles-based freelance writer. She can be reached on the Internet at holen@aol.com

When Susan Burgett and Mary Pipersky started the homespun restaurant and catering service called Anything Goes a decade ago, they proceeded on pure instinct and hard work.

But now, as the couple seek to simplify their lives, which may include selling their Mammoth Lakes restaurant, they're eager to get the advice of a financial expert.

It's not that they are in dire monetary straits. In fact, they earned $70,000 last year from their popular business. Rather, Susan and Mary say the eatery is eating up all their time. They'd prefer not to have to rise at 4:30 a.m. to bake the restaurant's signature breads or consistently work on weekends.

Susan, 53, says she would enjoy simply running a catering service--just as the couple, together 15 years, did before opening Anything Goes. Mary, 43, says she'd like several months off to think about her options. Both would like to free up more time for volunteer efforts, their friends and each other. So they placed Anything Goes on the market several months ago, asking $138,000. But so far there've been no takers.

"I'm looking for something larger. Sometimes I wonder why I go to work and what is the real value of what I earn," Mary said wistfully. "A friend recently closed her own business and now she works out of her home. She's not doing as well financially by most standards, but she works out at the gym every day, reads a lot and spends a lot of time with friends."

Mary and Susan realize they could be forfeiting more than half their current annual income if they shift focus, but they say they are prepared to downscale.

"I'll have to go to the library instead of Barnes & Noble. So what?" Susan says.

The couple's estimated net worth is slightly more than $450,000. The women worry that their investments may be inadequate or improper to meet their goals. Besides hoping to be in a position to live on less income soon, each wants to retire between the ages of 65 and 70, and they believe a comfortable retirement would take $3,000 a month in today's dollars.

They have $63,000 parked in a bank checking account, earmarked as a restaurant emergency fund. They have almost $40,000 in four individual stocks and $27,000 in mutual funds and individual retirement accounts. They also own three Mammoth Lakes-area homes--the house they live in and two others they rent out.

However, the couple's savings and investments aren't the result of some coherent, deliberately devised plan--in fact, they have an almost accidental quality.

"We have no concept of savings. It's extra money left over at the end of the year," Mary said.

They also have widely different investment styles. Mary will read up on many mutual funds before investing. So far, she has chosen Selected Funds American Shares (five-year average annual return: 17.4%); Legg Mason Value Trust (22.3%); and American Century-Twentieth Century's Ultra Investors (15.4%), all invested in individual retirement accounts; and, as a gift for each other, American Century-Twentieth Century Giftrust (18%).

Susan, who is in charge of individual stock picks, says she invests mainly on hunches. For example, she recently purchased TJX Cos. stock because she frequently shops at the company's Marshall's clothing store. She bought Nucor Corp. shares after reading about the steel firm's record in employee relations.

"Mary reads all about these mutual fund things every night; I read Trollope or Dickens," Susan said. "She buys the IRAs. Left up to me, I'd never buy anything [financial]. It's not because I don't want to, but because I'm not that kind of person."

*

Given their rather idiosyncratic approach to investments, it's not surprising that Mary and Susan had mixed feelings about some of the suggestions made by Rick Keller, a fee-only certified planner based in Irvine.

Keller says his recommendations are based mainly on financial considerations but that "clients sometimes have emotional attachments to assets that planners aren't initially aware of."

Thus, proceeding on the pair's assertion that they would sell their rental properties if they could get better returns elsewhere, Keller suggested that they do exactly that--only to see Mary and Susan recoil in horror.

"A large percentage of your net worth is in real estate, and you would probably be a bit safer if you repositioned some of the money into mutual funds," Keller told them. He said he was also concerned about the risk of earthquakes in a seismically active area such as Mammoth Lakes.

If Mary and Susan are determined to have real estate investments be part of their portfolio, Keller said, they could, as they suggested to him, consider placing some money in a real estate investment trust mutual fund such as Cohen & Steers Realty Shares (five-year average annual return: 18.1%).

The couple pointed out that one of the reasons they became landlords was to provide themselves with a steady income--they currently net $200 a month from the houses--independent of both the restaurant and the stock market.

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