1. Let's say you are a family of four making
The first option to save is if you are employed and your employer offers a savings plan that matches your contributions. This should be your first choice due to the investment flexibility and the matching funds the company offers.
2. How closely should one worry about the day to day when it comes to interest rates, stock prices and the bond market?
Freeburg:Monitor your investments quarterly, do your homework, prepare your plan, work your plan, doing this will help you pass the sleep test.
Stowell: It depends on your investment objectives. Traders watch markets daily, perhaps hourly. Investors should review monthly to quarterly.
3. There are 529 plans which allow a person to save, tax free, for college, Are these a good route to go for our sample family or is it better to invest potentially in an IRA or a Roth IRA of some kind?
Freeburg: Do not confuse 529 Plans and IRAs these are two different sets of rules and programs, i.e.: parts of the
- Stowell: This question refers to different investment vehicles that are used to achieve different investment goals. The investor needs to fully understand all of the fees you will incur. IRAs and Roth IRAs can have brokerage fees, custodial fees, asset management fees, and transaction fees. The investor needs to know who is getting paid and how much.
When saving for children and grandchildren, I prefer to consider custodial accounts if the investment amounts are going to be small (
4. In general, and without specifics, how much risk should a person take early in life as opposed to late in life?
Freeburg: Understanding investment risk is beyond the scope of this discussion. Obviously younger people have more time to recoup investment losses. How much risk and what kind of risk should be determined individually.
Stowell: In the most general term, the "rule of thumb" is 20-100 percent. A person 30 years old should allocate 70 percent of their assets for growth and 30 percent towards income producing investments. A person 70 years old should have 30 percent allocated to growth and 70 percent in income oriented investments.
5. What is the most important single thing one can do for their future?
Freeburg: The most important single thing a person can do for their future is create good habits. This includes good financial habits.
Stowell: Educate themselves on the various investment alternatives and start saving as early as possible.
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