We're in the home stretch! Thank you to the advisers who were with us for the past few hours.
Brian, good point. I strongly recommend that you have your own insurance outside of work, unless you own the company and control the insurance decisions. That gives you the greatest flexibility in your career.
Joining us now we have Kelly McCauley and Celeste Mirassou, plus Peter, Delia and Bobbie are still taking your questions as well.
Brian: You should compare the Group coverage vs. Individually owned life insurance. If the cost is similar, the individually owned coverage has some important advantages.
Apple Z: Short term capital gains are taxed at your current income tax rate. Long term capital gains are taxed at a lower rates- which can range from 0% to over 20% depending on your income. If you put funds into a bond mutual fund, you will pay taxes on income/distributions. The "type"- long or short- are dependent on how the fund classifies them.
Apple Z: You can take a look at the past distributions from the bond fund to get an idea of the classifications of the distributions- long-term or short-term. Same goes for other funds. (Each year, though, distributions will vary.)
Brian you might want to consider a Level 20 year term as your need for insurance will decrease during that time, but it depends what you want to the insurance to replace i.e. income, college fund or pay off the mortgage.
Yes, absolutely, if your need for insurance does not span your entire life expectancy, then certainly buy term and invest the difference.
AppleZ: Consider using a boring old cash account for a 6 month emergency cash reserve. Bonds can fluctuate in value and are generally not suitable for a short term vehicle for emergency funds.
It depends on how long you need the coverage. There will be a break-even point for the insurance product to be advantageous. It's just that it will be a long way down the road. It's been awhile since I have done the analysis.
Brian: In terms of costs, it is usually more beneficial to keep insurance separate from investments. Whole life and other universal life policies can have extra fee layers, which will increase your costs of insurance (and the investments within life insurance can be expensive). Term life insurance will maximize your total death benefits and keep costs down. While whole life and Universal life have their places, based on the information you provided thus far, it seems like term life insurance is the most cost-effective way to protect your future "lost income" for your family.
Stacy, what do you like about the savings bonds. What type of savings goal are you trying to fund?
Fixed income investments are just one piece of the portfolio. You want to diversify your fixed income investments across types, maturities, and even across countries.
Allan: Yes, that is true.
Stacy, you also to diversify across quality of bonds as well.
Allan: However, other fund companies may offer a similar Short Duration Real Return strategy. Do you work with an advisor?
Stacy: EE Savings bonds earn a fixed rate of interest for 30 years. On bonds purchased between May 1, 2014 and October 30, 2014, the current interest rate is .5%. It is low due to the current interest rate environment. It is important to consider the purpose of the funds you are considering investing in the savings bond, and what type of risk you are will to take with the funds.
Brian: You are welcome! Best of luck.
AppleZ, it should be around September, but stay tuned for a solid date.
AppleZ, tell your friends and family about this. Kiplinger has created a great platform for free advice from fee only planners.
Maura, HSAs are paired with high-deductible insurance plans, so you have to first ask yourself if you can afford that. You have to do a comparison (some people say they're for the "healthy wealthy). That said, if you can afford it I really like them because they do allow you to save for future medical costs.
Maura, HSAs are also a great way for an employer to add to an employee's "medical savings account" with tax-free contributions.
Maura: I agree with Delia, she can type faster than me.
Maura: The cost of health insurance is a major concern for retirees.
Maura: If you have do not have a high deductible plan, the best bet for medical expenses in the current year is to research into whether or not your company offers an FSA- Flexible Savings account. While you can contribute to an FSA throughout the year via payroll deductions, you must use these funds by the end of the year. You get the benefit of paying for medical expenses with pre-tax income.
Thomas, you should look at your portfolio as a whole (combine all accounts) when doing your asset allocation. Then, place the investment in the different accounts according to their tax advantages or lack of them.
Thomas: Was that a trick question?
Thomas I suspect your 401K lets you see the asset allocation but there is no way to combine it with your IRA. Other sites might let you enter all the info on both of them. I know Morningstar.com has this feature but it may be a premium service.
Thomas: Seriously, Morningstar has a "stock overlap" program that I use. I am not sure if it is available to the public. Check it out!
Thomas: I believe Morningstar has a service on the retail side called Instant X-Ray. You may have to pay a fee to get access, but it does something very similar to what professional tools offer.