- Never have your old employer send you your 401k money directly for you to roll over
- Always open an IRA account somewhere(discount brokerage house preferably) and have them contact your old employer and your old employer sends your 401k money directly to your discount brokerage house (e.g. TD Ameritrade, Scottrade.com, or Muriel Siebert)
- If you do not do this you will lose 20% of that 401k money to withholding and pay and extra 10% penalty for early withdrawal (if you are not of age to withdrawal).
Archive for April, 2006
How to Do an IRA Rollover
Sunday, April 30th, 2006treasurydirect.gov
Saturday, April 29th, 2006If you are interested in U.S. government bonds or currently invest in them www.treasurydirect.gov is a great place to start. Here you set up and account and can buytreasury bills, treasury notes, treasury bonds, treasury inflation-protected securities (TIPS), I bonds, EE/E bonds, and HH/H bonds.
At treasurydirect.gov it is the first and only financial services website that allows you to buy and redeem securities directly through the U.S. Department of Treasury
Financial and Life Matters
Friday, April 28th, 2006Everyone tells you to plan ahead, but few want to think about the inevitableness of dying.
Here are 5 things to think about completing:
- Agree on a place to keep all important document. Let the importnat people in your life know where to get this information.
- Make sure you have enough life insurance so if you do die your family does not become destitute. You would never want that tradgedy to become worse.
- Prepare a will.
- Prepare a living will and make sure you have legally given power of attorney for health-care and financial matters.
- Make sure all your beneficiary information is correct and up-to-date. Probate is no fun. Avoid it by updating this information
W-4 Calculator
Friday, April 28th, 2006If you want to reduce the amount you get back from the IRS at taxtime try their W-4 Calculator. Have at least a few recent paychecks and your tax return from the year prior to obtain accurate information. The calculator is surprisingly accurate and will typically be within $100.
Save Money on Gasoline II
Friday, April 28th, 2006Yesterday it was reported that the U.S. Senate is considering a bill that would refund $100 to each taxpayer in order to offset the rising gas prices. If you are interested in some free more you should e-mail or call your senators. The approval rating of the Congress is around 20% (well below President Bush’s approval rating). Now is time to strike when the iron is hot to get some money from the government. You might think this too good to be true, but in August of 2001 many taxpayers received $300-600 checks in the mail from the government because of the surplus. Obviously, that was poor timing since 9/11 occurred shortly after that. Congress is vulnerable and if you push you could get some easy cash.
Save Money on Gasoline
Thursday, April 27th, 2006There are not many novel approaches to saving money at the gas pump, but it is worth discussing when gas prices are breaking all-time highs as oil topped $75 a barrel recently. Eventually if prices remain this high people’s habits will have to change.
Taxes
Wednesday, April 26th, 2006I am not an accountant, but I know a few things that can be helpful.
Do not think of tax time as when you should be getting money back from the government. The one thing most people will look forward to during tax season if their big return they will be getting. If you are getting money back from the government that is the equivalent of you paying more taxes than you should. This is true because you allowed the government to withhold too much money from your paycheck. The government then got to keep that money for an extended period of time without paying you interest on it.
So . . .
> If you received a lot of money back this year check with your Human Resource person to change your withholding number
> The lower the number your fill out on your W-4 form the more money the government will withhold from you paycheck
> The higher the number on your W-4 the more money you get in your paycheck. Make sure to remember you might owe
money come April 15
> If you know you will get money back do your taxes ASAP so you get your check ASAP
> If you know you have to pay you should wait as long as possible to pay (April 15 unless it is on the weekend or you get
an extension)
Excel Spreadsheet Budget Example
Tuesday, April 25th, 2006
Mad Money
Tuesday, April 25th, 2006Jim Cramer’s CNBC show, Mad Money, is a great source of information if you have extra money and you like to speculate a little. If you are interested in this he is about as knowledgeable of an investor as you will find.
Start with watching a little of Cramer and learn the ropes from him. He has some important DOs and DON’Ts. Then if your whistle is whetted and you want to pursue this type of investing, he recommends, and I will second, subscribing to Investor’s Business Daily. This is not free information at IBD, but it is respected and good. This is one tool Jim Cramer uses to make Mad Money and if you are serious this is something you will need. The Financial Times and Wall Street Journal are reputable sources of information as well, but IBD is the best.
In Mad Money investing, information is king and converting that information into actionable intelliegence is essential to making that Mad Money.
If you are a neophyte I would not recommend jumping into the deep end of the pool yet. Learn the basics first and then when you feel more comfortable and have some excess cash that you can afford to lose–go for it!
Investing
Monday, April 24th, 2006Once you have a safety net of cash as a back up and have maxed out your 401k and IRA then you can focus on investing for profit and short/long term growth. The safest way to go with this is to focus on mutual funds. If you do not have the knowledge or time mutual funds do the work for you. My recommendation is to avoid brokers at all costs because they are not looking out for your best interest–they are trying to make money for themselves.
Rule: Never invest in a mutual fund that has a front or back load!
Do not be intimidated by doing the investing yourself. This is your life and your money. Is it worth paying up to 5-6% of your investment in a load just so the broker picks a mutual fund for you? No way!
If you are investing $10,000 in a mutual fund through a broker do not be surprise if there is a 5% front load. This means you have invested $9,500 instead of the $10,000 you could have if you did it yourself. Go to a computer, ask friends, get some information on mutual funds you would like to invest in and call that mutual fund directly and invest directly through them. You will be more satisfied because you did it yourself. Paying a load in no way means you are getting a better mutual fund. It means that brokerage firm has a deal with certain mutual fund companies to sell their mutual funds. The load is part of that deal. No one is looking out for you here. Invest on your own. I would rather have a fund go down that I picked than one that a broker did (and paid 5%).