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1:01	Andrew Chan - Hello and welcome to today’s Spending Smart chat. My name is Andrew Chan and I am a certified financial planner. I’m glad to provide you with guidance on your financial planning questions so let’s get started.

1:01	[Comment From btd43] what is the best/easiest way to set up a roth IRA? should i do it through my credit union, or is it better to set it up through an online brokerage like etrade?

1:02

Andrew Chan -

I would recommend you go with the one that provides you with the widest range of strong investment options to choose from. This will allow you to have the most flexibility when building a good diversified portfolio. I would also check with each provider and compare the fees that they charge for administering your account (if any) and conducting transactions (transaction costs, commissions, etc.).

1:02

Andrew Chan -

While the rules and regulations governing Roth IRAs will be the same wherever you set it up, you should consider how easy it would be to get questions answered or transactions processed with each method. It may be more difficult to talk to a live person after normal business hours if you did it at your credit union if they don’t provide extended hours of service. Online providers, on the other hand, may not have a physical office (that is convenient) for you to go to if you wanted to do a transaction in person. Weigh the conveniences/options that are important to you and evaluate the providers on those criteria (after considering investment options and fees).

1:05	[Comment From Nancy] What do I do with my money in my incredibly strinking mutual funds? Do I transfer to a 2.5 cd at local bank?

1:05

Andrew Chan - Nancy, this is tough one because it really depends on a lot of factors including your overall financial picture. From a very general perspective, if you are losing sleep over the decline of your mutual funds, I would consider moving them into something that will reduce your stress and anxiety. However, this decision should be made with some consideration for where you are financially, what your long-term goals are and how you will practically achieve those goals.

1:09	[Comment From paul] Should I continue to contribute to my 401k plan?

1:11

Andrew Chan -

Yes, in general, I think it is a good idea to continue to contribute to your 401(k) plan but it depends on your specific situation. If your employer provides a matching contribution, I would generally encourage you to continue to take dvantage of that match because it is free money. However, contributing to your 401(k) plan may not be the right thing for you if you cannot afford it from a cash flow perspective. In that case, I would still recommend you try to contribute a much as you can afford without jeopardizing your or your family’s health and well-being.

1:12

[Comment From Dan]
My mother will be retiring in approximately 12 years at age 66. She will have a pension that will pay her about $53K/year. She recently sold a home for a profit of $253,000. She now needs to know what is the best course to take with this money to supplement her retirement. It has been recommended that she purchase a tax deferred variable annuity that she will be able to take 5% from/year after her retirement. She has zero other debt at this time, a $50K emergency fund, and a $40K Fidelity Contra fund. What is your recommendation?

1:17

Andrew Chan - Hi Dan, I think your mom should talk to a fee-only financial advisor to help her map out her retirement plan. Her time horizon of 12 years until retirement is fairly long so a planner will be able to help her implement a strategy for her retirement with her specific goals in mind. An annuity may not be the right choice without understanding what type of lifestyle she expects when she retires.

1:18

[Comment From Jean]
What is the best way to get a modification of your current mortgage? There are agencies that are charging a fee and there is a governmental agency called HOPE which is free. The for profits claim they can do the modification quicker and they have a better relationship with the lenders.

1:21

Andrew Chan - Jean, I would start with your mortgage lender. Find out what they can do to assist and if they have any programs that you can take advantage of. If that doesn't work I would go through the government agency and find out about the free programs. Unfortunately, I don't have too much experience with the the for-profit companies but generally look towards the mortgage lenders first.

1:21	[Comment From Colleen] Hi Andrew, my father has some money he wants to give me which is about $80,000, what are your recommendations to do with it. I don't plan on using it for about 5 years and what are the tax consequences?

1:29	Andrew Chan - Hi Colleen, If your father can afford the gift you the money over several years, I would recommend he do so under the annual gift exclusion limit. Under this rule, he can gift you $13,000 per year without any estate or gift tax implications.

1:30	[Comment From broke] I'm getting 100K from a buyout pkg. at work soon. What can I do with it? CD's are only around 2%. I may need 1/3 of it to draw of for 5 years of mortage payments

1:35

Andrew Chan - I would make sure that you have enough of an emergency fund established. If that is all set, I would set aside the portion you expect to need for your mortgage payments in higher yield cd's or money market funds. Some of the 1 - 2 year cd's are paying as mouch as 3% but shop around. I would use any remaining funds to fund your retirement and or educational saving plans (if applicable).

1:39

[Comment From Jerry]
Question: I am 57 and making approx 45,000 my wife has been out of work almost a year. We have a mort of $40,000 no credit card debt and no other bills. I lke everyone else have lost money in my retirement plan. I receive $100 per mo from a company I used to work for but I put it in a checking acct where it receives no interest. I have no plans on retiring until in my 70's so where should I put the money each month that is safe. If there is such a place. Thanks.

1:46

Andrew Chan - Hi Jerry, I would take the portion of your checking account that you don't think you'll need to pay your monthly bills and make sure you have enough of an emergency fund (if you haven't already done so). I would put that money in a high yield money market funds. You can set this up at your local bank, credit union or online. Generally, the online providers have offered higher rates. This will allow you to earn something on the funds you do not think you'll need to draw from.

1:49	Andrew Chan - If your emergency fund is all set, I would look into contributing to your retirement account. This may sounds counter intuitive but your time horizon for retirement is 13 years away and there is a good buying opportunity right now.

1:50	[Comment From maldengay] my company does offer a 401k to their employees, but they do not match. is it a waste of time? and if so, where do you suggest i invest if not in a 401k. my roth ira is maxed out.

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