Shelia, as I mentioned earlier, I believe most fee-only advisors will tell you to "buy term and invest the difference." I'm more of a fan of cost-effective term life insurance policies than VUL policies for the purpose of insurance, and I like being able to invest in the whole universe of mutual funds as opposed to only the funds offered by the life insurance policy. Are you married? If so, you can really contribute $11k each year into retirement funds (either IRA or Roth IRA), $5,500 for you and $5,500 for your spouse. If you aren't married, it certainly doesn't hurt to invest your $5,500 in a tax-advantaged retirement plan and another $6,500 in a tax-efficient taxable account.
Sheila, That "saying" seems more akin to a "bullet point" from an insurance sale brochure. Sorry, if I seem blunt, but investments and insurance are separate areas. Most of us need to insure our lives against the calamities that we otherwise could not financially absorb. That is the purpose of insurance. It is not, in my opinion, to be used as an investment vehicle. We have stock and bond mutual funds for that.
Sheila, Lon is correct, and says it much more kindly than I do. :-)
Pamela, the thrift savings plan offers some extremely inexpensive investment options, as well as some decent diversification tools (although it could use a mid-cap fund, emerging market fund, etc). However, your 401k may have a broader range of investment options. Weight the costs and options within both plans and make a decision. Of course, do whatever you need to do to get any employer match that is out there first and foremost. Also, remember that your kids can always get a loan for college, but no one will give you a loan for retirement. Retirement savings must be the priority.
Pamela, Congratulations on raising college-bound children on your own, and with a TSP, I'm assuming you're military, so Thank you for your service. The TSP is excellent with fees so low they're almost a moot point. These are also passively-managed, index type funds, which will serve you well over the long term. Make it your job to understand the TSP. There is also a ROTH component available to some. Look into that. Matching? If you're government ( not military ) they I think you have a matching program in the TSP, but double check that. If not, and you do have such a program in the 401k, then I might tilt toward the 401k, all other things being equal. I'd need to know more specifics before I could offer addtiional advice.
Beth, I'm not familiar with the particulars of the NC 529 plan, but be aware that in most cases you can utilize any state's 529 to meet your goals. I live in Utah, and we have a wonderful plan. Check out www.uesp.org. The investment options are well rounded and inexpensive. At least compare that to the plan in NC to see how they stack up.
Here's one from PD while Pamela gets back to us...
Beth, I just took a quick look at that plan. It seems to be a Vanguard-based product, which I find valuable. Lon is correct about the UTAH plan. You can also find some 529 info on Morningstar.com
PD, I don't recommend Gold as an investment. For those who would hold it as a defense from either hyperinflation or a financial meltdown, then physical gold would meet that purpose, in my opinion.
Cosmo, Thanks for that info.
PD - I'm fine with gold as a diversification tool... as long as it is no more than 5% of your overall portfolio. This is interesting - remember a couple months ago when someone hacked the Assocaite Press' twitter account and announced that there was an explosion in the White House? This cause the market to instantly drop dramatically. According to traditional thought, that would have been a perfect time to own gold, and we would expect the investment to be secure. However, gold didn't respond, and it was US Treasury Bills and the Yen that significantly increased in value. Perhaps gold isn't accomplishing what it sets out to do...
Marcia, if you have the knowledge, time, and expertise, I'd certainly argue that now is a good time to construct a bond ladder utilizing individual positions. With that said, I certainly wouldn't encourage anyone to liquidate their bond mutual funds or ETFs because of the direction of the bond market as anticipated by some.
Ok, we have time for one more...
Marcia, I agree with Lon. You have to consider the expense and the diversification elements of each, all within the context of what it is you're trying to accomplish with the interest-bearing side of your portfolio. My answer would also be age-specific, i.e, different for a retiree needing cash flow, than for a young adult building their financial life.
Wreckon - Good idea. As I mentioned, retirement planning should come first. The Roth IRA/401k does have the flexibility to be used for both retirement and education purposes (again, I'd only use the account if it is clear you are on pace to meet your retirement goals). Also, you are correct in that you can withdraw your CONTRIBUTIONS without a penalty, but not the growth. However, be aware that sharing this one account for two purposes creates a problem in that you now have two different investment time horizons. For education purposes, you will likely need the money in as early as 11 years. However, for your retirement, you'll likely need the funds for the next 10-40 years. That's an issue you should certainly address if you go this route.
Wreckon95, make sure that your savings toward retirements goals is in place, maximized, before contributing to 529's. As Lon said earlier, you can borrow for education, but not for retirement.
A big thank you today to our NAPFA advisors Philip and Lon!
Wreckon, I also recommend that parents consider opening additional investment accounts that are simply "earmarked" for the purpose of education, and invest into them in a tax-efficient manner, coordinated with their other investments. These accounts retain their flexibility, should your child be the next Bill Gates and not need the 529 funds.
Thanks, that was enjoyable. I hope the viewers found some answers and resources through the links that Kiplinger put up.
Thanks for having me. I was happy to contribute.