Hi Allan, taking a higher deductible (if possible for your situation) may help lower the premium. You are facing a problem that is all too common and about to get much more expensive. The equation tends to boil down to evaluating your health and how much risk you can cover before paying $1700/month starts to look like a bargain.
We do recommend folks shop all insurance policies annually to see what's out there.
Allen, is this just for you or are you paying for employees? Of course self insuring by increasing deductible and annual limits are one way of lowering costs. You should have received the renewal book from your insurer by now, look at all of the options available. Compare them with your current costs for healthcare. You could try a competitive bid, but I assume that you have some health issues. luckily you will qualify for medicare at age 65 which will dramatically lower your health costs and the affordable healthcare act is SUPPOSE to lower premiums. When do pigs fly anyway?
Allan - You might check into your state's health insurance pool. They help insure people who are otherwise have circumstances that create either uninsurability or very high premiums. They also aren't inexpensive, but maybe less than what you're paying now.
Thanks, Randy. Certainly something to check out, particularly with the new health law.
Alright, as we approach the final half-hour here, I’m going to start directing questions to individual advisors (or a couple at a time).
Rich and Debbie, how about you take this one from Deb
Hi Deb, if you have the itch to trade on your own, my recommendation is to start with a very small amount of money. An amount of money that you would not miss if lost. You can open an account with any number of brokerage firms, but beware of their commissions before opening an account. Also, remember to do your due diligence on any investment you make and do not let emotion cloud your judgement (aka selling due to a drop).
Deb, your adviser may be right, but it is your money and you have the right to invest it as you see fit. Take only the money you can afford to lose. That is key as you will be a new investor and losses are probably going to happen. don't get married to your choices. The investor gets a report card once he sells, either she is a hero or a goat. If you hold on, you can always "wish and hope" that the stock will rise again. Do your homework and do not invest in anything whose product you do not understand. good luck
And turning off the TV during a sell-off, right Rich? ;)
Randy and Wendy, here's one from Elizabeth.
Elizabeth - Traditional IRA or Roth IRA depends on whether you want your tax break now or later. With rates going up, most say later. f you are under the income limits, by all means a Roth would be great.
Elizabeth - The 1099 Capital Gains were likely end of year distributions by the funds. you would owe capital gains on any profit from when you bought them which can be found on their site unless you transferred the funds there.
And Bonnie, here's one from Mandy
Hi Mandy, Depends. What's the other 30% in? If it's company stock for example, we usually like to hold that to 10%. The goal of a target date fund is to move you through a timeline based allocation between stocks and bonds. At 23, I'd be more inclined to have 60% in stock funds and 40% in bond funds if you have the time and inclination to review it at least once a year. If you have no interest at this time (I suspect you do though since you posed a good question), you could let the target date fund do its work but then I'd say put the whole thing in there on autopilot targeted for your age. I'd prefer you to stay interested however and learn as you earn and get a solid allocation that you can follow. I hope this helps and congratulations on saving in a 401k at 23!!
Thanks for the follow-up Mandy. Some other things to think/learn about in your 401k. Today the fees should be transparent and those matter to your ultimate returns so make sure to note what they are for the funds you're interested in. It can also be tempting to go to 70 or even 80% equities to get that 'extra' return. Unfortunately, research does not bear out that most investors get paid for taking that extra risk, hence the somewhat generic 60/40 split. Another fundamental that is often missed is a personal savings rate - investment returns matter and savings rates matter even more. Investment returns can almost never overcome inadequate savings so consider investing in a taxable account too if your spending plan allows it.
One more thing Mandy - most folks live with a figure of 10% for savings and we know from research (look up Dr. Pfau's research) that it is closer to 20% if started early and grows from there if started later . . .
Rich, how about you take this one from Vtran
Vtran, we have always liked vanguard and their funds. Their funds are low cost and a lot have high ratings from Morningstar. I would switch to Vanguard assuming through a non-taxed 1035 exchange. I think their funds are better, even though they have less options than fidelity.
Debbie and Wendy, here's one from Evelyn (an eager shopper!)
Evelyn, I too am an eager shopper. My friends and I always have a budget, and to help us stick to it, we only bring cash to our shopping trips. Also, be sure to plan for the little expenses (that can add up) such as wrapping paper, stocking stuffers, etc.
Wendy, I like the idea of only bringing cash on shopping trips!
Evelyn, have a plan on shopping, bring only the cash you want to spend, when it is gone, have some coffee and go home. The bargains aren't always real and it is almost impossible to get the ones that are. Friday shopping is more of an event so enjoy
Randy, if you're ready, here's one from SaverPlannerWanderer
Saver - Trying to guess what Congress will do is frustrating for everyone. My understanding is dividends will once again be treated at the ordinary tax rates. Without knowing your income taxes, I would consider munis as an option. You could possible check into a bucketized portfolio where you trim the growth each year, but it has to be put together to generate some growth, or you have enough money to last another year when the portfolio goes up.
Saver - Consider doing all three...dividends, tax free, bucketized portfolio. If you're working with an advisor, they can put it together for you. If not, go to napfa.org to find a good CFP.
Thanks, Randy. Some great options there.
Alright Bonnie, how about you take this one from Nate
Bonnie/Planners, any advice for Nate about the $10,000 he has to invest?
I have some funds from a 401 K that I want to roll over into something ASAP and want to know if I take some of my funds and pay taxes on it and then put it into precious metals if this would be a wise investment due to my thoughts that the market will crash again in 2013 and I want to protect some of my assets
Hi Allan, taking a higher deductible (if possible for your situation) may help lower the premium. You are facing a problem that is all too common and about to get much more expensive. The equation tends to boil down to evaluating your health and how much risk you can cover before paying $1700/month starts to look like a bargain.
Allen, is this just for you or are you paying for employees? Of course self insuring by increasing deductible and annual limits are one way of lowering costs. You should have received the renewal book from your insurer by now, look at all of the options available. Compare them with your current costs for healthcare. You could try a competitive bid, but I assume that you have some health issues. luckily you will qualify for medicare at age 65 which will dramatically lower your health costs and the affordable healthcare act is SUPPOSE to lower premiums. When do pigs fly anyway?
Allan - You might check into your state's health insurance pool. They help insure people who are otherwise have circumstances that create either uninsurability or very high premiums. They also aren't inexpensive, but maybe less than what you're paying now.
Hi Deb, if you have the itch to trade on your own, my recommendation is to start with a very small amount of money. An amount of money that you would not miss if lost. You can open an account with any number of brokerage firms, but beware of their commissions before opening an account. Also, remember to do your due diligence on any investment you make and do not let emotion cloud your judgement (aka selling due to a drop).
Elizabeth, it sounds like you are pretty knowledgeable about tax forms. If you don’t use a tax planning software, you might try the tax estimator on Bank Rate www.bankrate.com
