Ben, I would recommend rolling the entire amount into a rollover IRA. You will not have to pay taxes on this, until you take it out in retirement. Inside an IRA you can hold funds which have exposure to precious metals. Also, in order to protect your assets, precious metals may not do the trick. Id include a small exposure as an extra asset class, but put the bulk in stocks and bonds. Perhaps a larger portion than normal in short term bonds if you are nervous about the market. However there is no rush to invest it all at once. You can do it little by little.
Ben, there are more tax efficient ways to get to your goal. If you take some of the money out you will pay taxes, thereby losing that money and it's ability to grow tax deferred. Roll over the money, invest in a diversified manner and if you want to invest in gold, look at gold mining funds or exchange traded funds specializing in that. Don't be hasty, their are many ways to protect against inflation other than physical gold.
Ben, it can be difficult to time the market. It’s best to pick a portfolio that has assets that do not correlate with each other—to paraphrase my esteemed colleague, Randy “one zigs while the other zags.” Precious metals can be quite volatile, just as volatile as stocks. Keep the exposure to that asset class under 5% of the portfolio. Asset allocation strategies and more conservative investments may better meet your goal of preserving your assets.
Sounds like all of the advisors are mostly in agreement! Try your hand at a precious metals fund and don't rush into anything.
Alright, let's go ahead and take this next question from Stephen
Hi Stephen, I'm sorry you're going through this - I know others who are as well. Are you able to pay your other bills? If so, my suggestion is to continue to do that, rent for 1-3 years (if you are a veteran, you may be able to buy again in one year with good credit) and pay rent on time each month. Do not accept additional credit in this time period. Time and consistent payment are the two keys to raising that score again.
Stephen, you are not alone in getting caught up in the housing crash, I am so sorry that you had to take the short sale option. Repairing credit takes time. Be sure all bills are paid on time, that you review your credit history fairly regularly and don't buy another house for awhile. Renting is a perfectly good option.
Stephen, So sorry to hear about your situation. Unfortunately, there is no way to repair a credit score quickly. It takes time to repair your credit score. Don’t fall into the trap of these organizations that tell you they will fix your credit score, because they can’t.
I'm not a FICO expert by any means, but I believe a FICO score will go up more efficiently if you have some debt and pay it rather than no debt at all. Consider going to your bank and buying a CD, then obtaining a loan for the same amount with the CD as collateral. That's what we used to do in the good ole days and it worked well.
Thanks, all. And great point about those sneaky organizations, Wendy. Certainly something to be aware of.
Alright, let's go ahead and take our next question from "Bad Saver"
If you are a self employed consultant, you can always look into starting a SEP IRA for yourself. Depending on your income, there are also traditional and Roth IRA's.
Bad Saver (cute name), it is never to late to start saving. If you are a one man shop and have no employees, I recommend a SEP IRA, it is easy and you can contribute quite a bit. Start now with opening up one. If you have employees, you have to contribute the same percentage of income that you do for yourself.
Bad - I agree with the SEP IRA. You can easily open one on any major discount brokers site.
Bad, the individual or solo 401(k) is a great way to get started. The plan allows you to put in the employee contribution of $17,000 and if you are over 50, $5,500 catch up contribution. In addition, you may make a profit sharing contribution. The plan must be opened before 12/31 to make a contribution for 2012. Most brokerage firms, such as Schwab or Fidelity, offer this type of plan.
Dear Bad Saver (and if the statistics are right, most of your country men and women) - good for you for asking the question. I suspect you know the answer - start saving as much as you can now. Also, is it possible you can structure your consulting activities as a saleable business?
If you have not saved yet, you have every saving option available to you - tax-deferred, taxable, tax-free . . .you may wish to talk to someone who counsels on business sales to see what it would take to make your work saleable to someone else. Also, real estate is still cheap with good credit terms - if you have cash, that could end up working nicely for you - particularly if you can pick up a rental property
Or a property you use for work, rent back to yourself and ultimately sell
Several great options for Bad Saver (not for long though, right?!). Thanks, all.
We have a question from Allan, who is also self-employed
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.