Ira: seek out a fee only advisor that do not sell products. A possible site for you to visit is www.NAPFA.org to locate a fee-only advisor in your area.
Mishka - It sounds like there are many issues around this property that may require more analysis than we can do here. Check if there NAFPA or Garrett Planning Network member in your area that has experience. They should be able to answer your question.
And advisors, when you're ready, we have a follow-up from Robin
Robin's original question was:
"Hi - I have a US Treasury Strip Maturing on 02/14/2014. The Face Value is $8,000 and the Market Value is $7,980.80. This is in a very small Deductable IRA I opened 20 years ago before I had a 401K. I do not and have not contributed to this account for about 18 years (I only contribute to my 401K). What should I reinvest this US Treasury Strip into when it matures? I want to be conservative with it. I am 52 years old. I am already moderately agressive in my 401K. Thank you."
Robin: Yes, I think it would definitely be worthwhile for you to meet with a fee-only adviser. The decision, for example, to work until 67 or until 70 may have a greater impact on your retirement than the specific asset allocation you might choose. A good adviser can not only provide answers, but help you to ask all the right questions in the first place. You can find an adviser near you by going to napfa.org and typing your ZIP into the "Find an Advisor" box on the home page
Thanks, Robin. Glad we could help!
N: That requires an annual rate of return of around 9.5%. Will that happen...unsure anyone here can say that with all sincerity. Its a lofty return by any measure.
N-If you are continuing to contribute to your 401(k), you have a reasonably good chance of achieving your $1-million goal. Without new contributions, the odds are not as good. However, it's not something I can quantify for you.
Hi N - in general, if you want to grow $400k into $1M, and assuming you max out the contribution every year at $23000 (2013 rate), you will need to get around a 5.75% return on your investment. If you don't max the contribution, as Helen said, it will be 9.5% rate of return. That is really high, especially as you approach retirement and want to start persevering the assets.
And another one from Terry
Hi Terry-Your best approach is to open an account with another brokerage firm with low costs and have the bonds transferred there. Many bonds are available only in electronic form, so you can't have them issued out to you in paper. Some of the many brokerage options would include Schwab, TD Ameritrade, Fidelity, Vanguard, Scottrade, etc.
Next up, we have a question about charitable giving from Karla
Karla-When you say you want to "maximize funds in retirement funds," it sounds as though you are talking about leaving retirement accounts such as 401k, 403b, IRAs, etc. to charity at your death. If that's not what you are talking about, please speak up. When you are talking about a long time frame, there is always the possibility of tax laws changing, but the way the laws work now, you should know that if you live a long time, you cannot leave all your money in your retirement accounts until you die. You will be required to start taking minimum distributions at 70 1/2, although they can be postponed in a workplace plan like a 401k if you are still on the job. Tax law currently allows direct contributions from IRAs to charity if you are at least 70 1/2. Whether a direct contribution from an IRA is the best way to make a charitable contribution depends on your circumstances. Mutual funds are the best way for most people to invest their retirement accounts. I would go with a mix based on your own tolerance for risk. That would be the kind of thing that I'd recommend sitting down with an adviser to discuss. If you are investing outside retirement accounts, there are options to set up a charitable trust, give to a charitable gift fund or even buy life insurance naming the charity as beneficiary.
Advisors, when you're ready, you can take this next question from Wolf
Wolf: You may be making this unnecessarily complicated. If you really don't need the life insurance itself anymore, why not just cash in the policy? I believe you will be taxed on only the amount you receive that's over and above what you paid in to the policy -- not a very large sum, most likely.
Thanks, Steve. Great suggestion
Alright planners, here's our next two questions. The first one is from Joseph
And here is one from Sheila
Brian, being off to such a great financial start, I would encourage you to meet with a fee-only financial planner who could take a look at the details of your financial situation and help you determine the best places to direct your savings. Keep up the good work!
Hi Gatsy - You are making all the right moves. If you feel that you are short-changing your current lifestyle to save for the future, then you may wish to cut back on savings. If you are living comfortably, then the savings may well be appropriate. The monthly pension is a great benefit in this day and age and provides some security that most workers no longer enjoy.
Gatsy - You might want to consult with a financial advisor to make sure you are addressing your goals appropriately. The advisor will be able to confirm the appropriate level of saving, and perhaps free up some cash to meet your present goals.
Herb, have you ever taken a risk profile? I would start there and then sit down with an fee-only advisor. Getting this right will make all the difference in your long-term portfolio performance and happiness.
Herb, I would focus more on your comfort level with risk to determine the appropiate allocation. A more conservative investors should have more in cash and bonds and less in stocks and alts.
It is important to keep an eye out for inflation. Some ways to try to cope with it include investing a portion of your assets in things that go up with inflation such as food, gas, and natural resources. This acts as a hedge, so that while your expenses may be increasing, your investments in these areas will, as well. It is also important to be concious of how much you hold in fixed assets, cash and bonds go down as inflation goes up. Overall, this is an argument for staying diversified as we never know what is going to happen next and diversification gives us the strongest overall footing. I hope that helps! Good luck!
Planners, here's one for you from Joseph
A few other planners already weighed in on this one, but it looks like he submitted it again looking for some more advice -- the more, the merrier!
Joseph, do you own a home and have any equity in it? If so, you could switch your credit card debt to a home loan and reduce your interest and payments. With $70k in student loans, I'm not sure taking on more debt is the answer. It sounds like you are an engineer now so that should be a good paying job.