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What the experts say

Tiny stocks, big returns; The rising cost of bling; The rich worry, too

Tiny stocks, big returnsSecurity is an “admirable” concern in this market, but the tiny yield you’re earning on that money market fund isn’t going to fund your golden years, said Elizabeth Ody in Kiplinger’s Personal Finance. If you want to “make the big bucks,” make bold moves. “Today, one of those moves appears to be stashing money in micro caps—the smallest of small companies.” These “little guys” are, no doubt, risky. But “micro-cap stocks could lead the way out of this down market.” After the last bear market, for example, the Russell 2000 Index, which tracks small-cap stocks, bounced back in a big way—with a 47 percent return in 2003. While you don’t want to bet the farm on micro caps, consider easing into a micro-cap fund by making regular monthly investments. That way “you’ll neither miss the rally when it comes nor lose a pile in the meantime.”

The rising cost of blingGentlemen, you may want to pop the question sooner rather than later, said Simon Constable in The Wall Street Journal. Slipping a diamond engagement ring onto your love’s finger is becoming increasingly expensive. Prices for half-carat stones are up 9 percent year-to-date, says Martin Rapaport, a diamond-market specialist and founder and chief executive of the Rapaport Group. “At the high end of the high end, the price increase is even sharper.” Five-carat diamonds are up 40 percent this year. Thanks to windfall oil profits, the world has more rich people than ever before, “and they want diamonds.” In fact, global demand for polished diamonds is expected to almost double by 2016, while supply is forecast to increase only 50 percent, says Rapaport. In a few years, the same ring that costs you two months’ salary today could soon set you back the equivalent of four months’ salary.

The rich worry, tooDuring tough economic times, even the rich worry, said Christine Haughney in The New York Times. Granted, the things they fret about include the tab for filling up their private jets and the plummeting values of their $100 million portfolios. “But the combination of depressed financial investments and declining real estate values is a formidable burden, even for those who have accumulated the most.” In fact, psychologists say that money angst often increases proportionately with net worth. For wealthier worriers, this economy is providing a “valuable lesson,” not only about living within one’s means but about getting through life’s ups and downs, financial or otherwise. “When somebody has confidence that they can live on less,” says New York psychologist Elyse Goldstein, “then it gives them a greater sense of power and comfort.” Just what the rich need.

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