Brenda, I seldom see a reason to stay inside an old employer plan. I usually recommend a rollover to an individual IRA with a low-cost provider like Vanguard or Fidelity. Seek a hourly-based, Fee-only advisor to help you with this, if possible.
Hi Izzy, although I'm not an attorney, my opinion would be that if your condo is your only asset that can have a beneficiary attached to it (like a retirement account), and you have no dependents, a trust likely isn't necessary. Really, in your situation, the difference between a trust and a will is when you want to incur the expense -- a trust costs money now, while a will is less expensive now but has some additional probate cost at death.
*condo the only asset that CAN'T have a beneficiary....
Brenda, as Lon said, however, be sure that you're not leaving a plan that might offer superior investment choices. Some plans, for example, include mutual funds that are not available to the independent investor.
Izzy, I agree with Lon. Sometimes the "fear" of probate is a "bark that's worse than its' bite."
Marcia, in my opinion, the most efficient way to "pay" a tithe is to use appreciated assets, gifting them directly to the organization. I would also suggest that you look into a Donor-Advised Fund, into which you can contribute appreciated assets, and then make "grants" or gifts from. Over-funding the DAF's in years during which you need additional tax deductions can be very efficient. Fidelity and Vanguard have low-cost DAFs.
Oh, and a follow up from Holly too...
Holly, according to Fidelity's recent study, you are correct.
Ip, there will always be a place for valuable advice. I was just talking to my doctor about this the other day.
IP, remember, a true comprehensive financial planner can provide assistance in areas far beyond asset management - taxes, estate, insurance, education, etc. Also, I consider a large part of my job to be behavior management. Many DIY investors really benefit from having a financial planner on their team to ensure they don't allow emotions to impact their investment decisions.
Cosmo, interesting question. Can you provide more details on your student loan?
Ip, Lon is right. To add, tax management is an often overlooked area for DIY'ers. Where best to keep invested assets...ROTH's, IRA's, 401k's, Taxable accounts, etc. By being selective about which assets live where, you can significantly impact a portfolio.
While Cosmo gets back to us, let's take one from Toni.
Cosmo, are you buying or refinancing? Rates and housing prices seem to be on the move in most markets, so your question is important. If refinancing, is it possible to use equity to pay off the student loan? If so, you're trading a loan with limited deductibility for one with the interest fully deductible....if you can itemize. Do you have other debts? These are the questions I would be asking of you if you were in my office.
IP, a favorite word of every financial planner is diversification. Remember, you can also be tax-diversified. You are most of the way there with your traditional and Roth accounts. However, be aware that there can be additional benefit to having a taxable account, as they are subject to capital gains rates as opposed to being taxed as ordinary income like your traditional accounts. Since we don't know what the spread will be between cap gains and ordinary income tax rates in the future, it could be beneficial to have tax-efficient investments in a taxable account as well. Also, recognize that there are fee-only advisors who charge in manners other than assets under management. Perhaps you could benefit from paying an hourly fee to speak to an advisor to get a second opinion and address your questions.
Ip, non-qualified money is good to have. I would argue that it's essential to have if you want to maximize your ability to manage your investment taxation. Your saying....WHAT?.... In 2008-09 what happened to your qualified accounts? They went down. You could and should have rebalanced within them, but that's all you had at your disposal. Had you had taxable accounts, you could and should have "harvested" the losses, and would be using those harvested losses to offset not only gains, but future income taxes at your personal rate.
Toni, in my region, it is becoming a "sellers" market. Incredible, isn't it? In such a market, the seller holds the advantage. If that's your situation, the answer to your question is likely NO.
Cosmo, depending upon the stability and amount of your income, I would prefer to see you in a home sooner rather than later. Run a timeline and see how long it will take you to do either/or, or both.
Back to Toni. Unfortunately, I'm not a professional negotiator. However, I'd encourage you to be aware of how your real estate agent is paid. Suppose the agent obtains 5% of the closing cost as their fee. Now suppose you get an offer $5k less than what you are hoping for. If you accept the lower offer, the real estate's agent makes $250 (5% x $5k) less than he would if you got your full asking price. In most cases, the agent would gladly accept $250 less if it meant a week, month, or six month's less work. Consequently, I sometimes see real estate agents encouraging clients to take that first offer, but be aware of their potential motivation.
Cosmo. This is a tough one. As it so often does, this frequently comes down to risk tolerance. Already, a 30-year mortgage is likely to cost you more than the 3.25% you are currently paying on the student loan. By that metric, putting the additional money towards the down payment makes sense. However, as you alluded to, we don't know how quickly that variable interest rate will rise, and making matters worse, you can't deduct the interest. Generally speaking, I'm always a fan of paying off debt before taking on further investments. Consequently, I'd favor paying off the loan first. However, again, this comes down to your risk tolerance. Of course, buying the home and enjoying appreciation could be the better long term investment, but there is more risk involved. That is a tough one, and probably justifies more analysis by a fee only planner in your area.
Kate, I think that I would prefer not to incur additional interest charges, and go ahead and pay off the card, or at least meet the issue at it's mid-point. Do whatever you need to do to build it back up as soon as possible, because I have the feeling that it's going to haunt you until you reach that goal.
Kate, another good question. So you had a large, unexpected expense? That is the purpose of the emergency reserve! As you know, the interest rate on credit cards can be pretty dramatic. I side with Phil in that I'd favor using the emergency funds and saving the interest rate. If a second emergency comes up, you could always utilize your credit balance at that time as a last resort. Of course, reestablishing the emergency fund has to be a PRIORITY.
Moneyball, this is another question that is so personal to you that it really requires a more in-depth discussion with a planner. With that said, I'm not ever a fan of a 100% stock portfolio. The reduction in return from even having a small portion of bonds in a portfolio is so nominal that it is easily justified by the significant reduction in risk. Shooting from the hip, I'd encourage 80%-90% stocks for an individual in their mid 30's, well diversified of course.
Moneyball....I can't think of an example of a situation in which I would recommend a 100% stock position. As was mentioned earlier, a balanced portfolio, specific to an individual or family, is almost always the better advice. Balanced can mean 50/50 ( equities/interest-bearing) to some, 60/40 to others, etc.
P.S. Moneyball, you mention the volatility in the markets over the last 5 years. Remind yourself that you don't care what the value of your investments are tomorrow, next year, or five years from now. You care what the value is 30 years from now, when you need the money. Remember that factor, and stick to your strategy in good times and bad.
Wreckon, there are multiple ways to find an asset allocation that is appropriate for you, but comfort is key. Having an allocation that causes you to loose sleep and not digest your food doesn't do you any good, as you're sure to change that allocation when the market drops out of your comfort level. Of course, that effectively causes you to buy high and sell low. Consequently, comfort has the be the #1 priority, but age-based methods are a good place to start.
Moneyball, I will offer a slightly different slant on this. I prefer to see younger couples be more conservative as they build their financial foundation. Once they're in a home, and have accumulated a healthy operating fund, and an emergency fund, then I feel it's appropriate to move a balance toward equities, but not before those goals are reached.
Wreckon, I agree with Lon. Rules of thumb are great for starting the conversation, but not a place to anchor.
Here's another from Sheila...