Jump-Start Your Financial Plan with NAPFA
NAPFA financial planners took your questions about retirement, taxes, insurance, saving for college and more.
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Jeff, I'm a big fan of the 529 account. When you calculate the advantage of tax-deferred growth, you'll be better off over-funding these accounts than you will be in a traditional taxable account. Here's an article I wrote on tracking your 529 savings progress:
The 85% College Savings Plan
www.marottaonmoney.com -
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Okay, I guess I have mittens on!!!! First, if you have a 13 month old son, you better invest in a new pair of sneakers, that boy will keep you running!! I like the 529 plan, unless you are maximizing the contriubtion already, it's a great place to save for college -- and keep ownership -- just in case. As you son gets older, you may want to start and alowance and have him invest some of it and if he has any real income, even it's just $250 a year, start a Roth. Jamie -
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Stephen, I recommend that you build up an emergency fund first, usually about 6 months worth of living expenses in cash. Put this into a money market account and keep it liquid in case something comes up. After you have this fund set up, then I would recommend a Roth IRA (if your income is low enough). This is a great savings vehicle for retirement as you do not pay taxes on any withdraws during retirement. In this account you can be more aggressive and use all stock mutual funds and let them grow. -
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Hi, I'm 28 and I've started thinking about buying my first house, but the market where I live has not been affected much by the depression. How can I go about calculating whether it is better to rent and save for larger down payment, or buy now with a smaller down payment?
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Sharon, we just published a column about why you need REITs, filled with guidance on picking them -- www.kiplinger.com -
Sharon, when the financial crisis hit, we overemphasized health care REITS as we were waiting for the bottom in other sectors. Now that the worst is behind us, I don't recommend emphasizing one sector or company over another. We use VNQ and VNQI for our international REIT exposure. The main points are diversifying away company specific risk and keep costs as low as possible.
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Andrew, buying your first home in this environment is a terrific idea. you should have an idea of how much mortgage you can afford. For example, if you are paying $1000/month in rent and find that amount a stretch, then you should aim lower on monthly payment. Remember this is principle, interest, taxes and insurance. Once you know how much monthly payment your can afford you will know how much house you can afford. there are many calculators on bank sites that you can use. Then, I recommend you set out saving money for a downpayment. Since this is money you know you will be using in a relatively short time period, I wouldn't invest it in anything more excotic that a short term bond fund. Vanguard has several high quality, low cost ones to choose from The 20% downpayment saves you the cost of mortgage insurance, which can be high. -
Mike, if I understand your question and mortgage protection insurance, no it's not a good investment, but it may be the only way you can purchase a house without 20% down -- and that makes it a good investment if that gets you into an affordable house. Ask about when and how you can get rid of the mortgage insurance, I think I just heard 5 years from a borrower -- longer than it used to be. Jamie
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Donna, here's our Special Report on Long Term Care Insurance
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I have inherited some stock as the executor of my deceased parent's estate. I would like to cash in the stock to recope costs I have incurred dealing with probate fees and final debts. Since it is inherited stocks, will I be subjected to the same sort of capital gains fees and such as if it was my own stock I was cashing in or is inherited stock treated differently?
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Our household income is into the six figures, which is good for a family of our in our part of the country. We aren't big spenders, our home is well within what we can afford, and we save aggressively for retirement, emergency savings, future large purchases, etc. But in doing so we feel really pinched in other areas: college savings, vacations, etc. What advice would you give for people like us who manage their money well but want to wring more out of their budget? Are there any bigger solutions I'm missing or is it all working around the margins, trying to cut back in other areas?
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Since the economy tank, my wife and I have had several months where we have been late on our mortgage payment. We currently have an interest rate of 6% and have to pay a PMI of around 450 per month. Is there anything I can do to reduce or refinance so we can get to a point where we are always on time?
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When applying for a mortgage, is it better to (a) have significant savings above and beyond the 20% down payment but also have student loans that are not paid off yet (I have the money saved to pay them but they are not accruing interest or due yet because I am in grad school) or (b) loans that are paid off but significantly less in savings? Even with the student loans, my and my husband's credit scores are above 750, and the loan debt is our only debt. I believe that even with the loan debt our credit utilization ratio is quite low.
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Hi, I am am 58 year's old and the family owned company I worked for has been purchased by a much larger company. My current 401k is with Wells Fargo and the new company uses Fidelity. The funds available through Fidelity are not as broad and diversified. At my age and with approximately 80,000 to invest could you recommend other ideas/funds to roll the money over to? Thank you.
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I'm returning to school for a J.D. I can afford to pay as I go by redirecting money that would have been invested. The only financial aid I was offered was an unsubsidized loan. I have an employer provided 401K. I think I should just pay as the loan rate is higher (over 8%) than the return I could reasonable expect to get on investing it. This degree will take 4 years. Is my analysis reasonable?
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Between me and my wife, we have about 250K in student loan debt. I am currently earning 70K and she is earning 55K. We have two children, a mortgage, and little money left over. It is tempting to ignore this debt forever, but I am concerned that I will eventually have to deal with it. Any advice on how to approach this problem? Or will I be making massive payments forever?
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Me and my wife just bought a house and are in a 3 yr arm. right now we are at 4% apr and in 3 years could go up to 6% and 3 years later 7.5% with that as the max. we had a cosigner to start the loan but when we refinance in ~3 yrs dont want to again. what are our options in the way of getting out of the ARM and getting it to just us under the loan. without getting credit cards.
