If I get no 401(k) match, should I invest in a Roth IRA instead?
May 1, 2012: 11:05 AM ETMy company stopped its 401(k) match during the downturn. Should I put money into a Roth IRA instead? I'm 41. — D.R., Westlake, Ohio
Keep putting money into your 401(k). Remember that even without an employer match, the plan lets you sock away lots of pretax dollars (up to $16,500 this year) that grow tax-deferred — a terrific deal. Because your contributions are automatically withdrawn from your paycheck, 401(k) plans make saving a no-brainer. "Sometimes people intend to make Roth IRA contributions but are not consistent with it, and they end up saving less," says Jean Keener, a financial adviser in Keller, Texas. And don't forget that your employer might restore the match someday.
However, it's a good idea to put money into a Roth as well, says Warren Ward, a financial adviser in Columbus, Ind. Your Roth contributions (you can put in up to $5,000 this year) are made with after-tax money. You pay no taxes on the earnings or withdrawals after age 59½. If your tax rate rises down the road, a Roth will generally work out to a better deal than a 401(k). Since you're only 41, it's hard to predict what your tax rate might be by the time you retire. So it makes sense to split your contributions between the 401(k) and the Roth until you've maxed out the Roth, says Ward.
— Susie Poppick
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Does it make sense to put a lump sum into a 401(k)?
Do companies match lump-sum contributions to your 401(k)? If not, does it still make sense to put a lump sum into a 401(k), provided you could still afford to make regular payroll contributions to the plan throughout the year to take advantage of company matches? -- Eric B., Charlotte
Check with your employer's plan to see what is and isn't permitted. Federal law doesn't govern the speed with which employees can hit MORE
Apr 27, 2012 5:05 AM ET -
What's the best savings account for a very young child?
My infant daughter, who is not quite 1, has a piggy bank that already contains over $200. I want to open an account that will grow for her and that she can use starting around the age of 18. As money is contributed to her piggy bank we plan to take it out and add it to her investment account. For such long-term savings, with what will likely be minimal MORE
Apr 24, 2012 5:05 AM ETPosted in: Family Money, Investing -
Should I buy individual bonds or bond funds?
I have 40% of my portfolio in bond funds. Should I instead buy individual bonds to hold to maturity? — Rick W., Concord, N.H.
With individual bonds, you know exactly what you'll collect every year and what you'll get back when the bond matures. A fund can't promise that. But buying bonds from a broker can be a problem. "The pricing you'll get is terrible," says Annapolis planner Ted Toal. Institutions buying MORE
Apr 23, 2012 5:05 AM ETPosted in: Investing, Retirement -
What are some good low-cost index funds for my IRA?
I want to start an IRA with low-cost index funds. Are there any with minimums as low as $1,000? —Jason Hartman, Canoga Park, Calif.
You can find what you're looking for at Charles Schwab, which offers several low-cost stock and bond index funds with investment minimums of only $100 (for either IRAs or taxable accounts) and no upfront fees.
Or, instead of piecing together multiple funds yourself, you can get an entire index MORE
Apr 20, 2012 5:05 AM ETPosted in: Investing, Uncategorized -
Should I make a smaller down payment on my home, and invest the rest?
If I buy a home, should I make a tiny down payment and invest the difference? — Chris B., Livonia, Mich.
With 30-year mortgage rates around 4%, that's tempting. In place of a big down payment, you could write a small check, borrow the max, and invest your unused down payment funds in the hope of earning more than the interest you're paying.
There are some catches, though. A 3.5% down payment MORE
Apr 18, 2012 5:05 PM ETPosted in: Investing, Real Estate -
Do I have to claim reinvested dividends as income?
I have shares of a stock that pays quarterly dividends. At the end of the year, I get a 1099-dividend statement and I usually add the dividends to my taxes as income. This year I noticed that I reinvest all my dividends. So do I have to claim this as income? —- Name withheld
Reinvested dividends are considered income—so you do, in fact, owe tax on them. On your 1099 statement, MORE
Apr 16, 2012 5:05 AM ETPosted in: Family Money, Investing -
Should I swap my Daimler AG stock for new Daimler ADR shares?
I own shares of Daimler AG held in book form by American Stock Transfer and Trust. Recently I received a notice that I may exchange these shares, issuance fees waived, for ADRs held by Deutsche Bank Trust Co. Is this a good move? --G. H., Dover, Ohio.
It's sensible to go ahead and exchange the shares, as it appears to be a bookkeeping move.
Here's the story: The American Stock Transfer shares represent MORE
Apr 10, 2012 5:05 AM ETPosted in: Investing -
Is a 529 college savings plan a safe investment?
I want to start a 529 plan for my kids (12, 8, and 7). But I worry that my state is not doing well with managing pensions and the prepaid tuition program they sponsor. Should I be worried that a 529 investment is safe? Are there other alternatives to a state-sponsored 529? -–Denise, Sycamore, Ill.
Prepaid tuition plans have been in the news of late, and the news hasn't been good—Illinois is MORE
Mar 28, 2012 6:00 AM ETPosted in: Family Money, Investing -
How do I know what my adviser is charging me?
I currently work with a financial adviser and I have no idea what he is charging me for his services. I have seen some fees come out of my small cash account that I have with him. I know there must be more than that, but the statements are confusing. Should he provide this information to me annually? —- Name withheld
The short answer to your question is yes—an adviser should provide MORE
Mar 26, 2012 5:30 AM ETPosted in: Investing, Uncategorized
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