Investing for the first time is a lot like taking that plunge into a new activity - you are intimidated by everything you think you don't know and you don't want to appear clumsy in front of others. With the plethora of online brokerages, the opportunities for first-time investors are wide open. However, this wide variety of investment options means you do need to be educated before you begin. You don't want to put your money in the wrong hands when you start to invest.
Keith McGurrin, Certified Financial Planner and a lead financial planner at T. Rowe Price has some tips for newcomers.
Checking accounts are notorious for just sitting there and doing nothing for you except holding onto your cash until you need to pay a bill. But there are accounts out there that do pay interest - albeit minuscule - and offer other benefits and enticements! We've done the research for you.
Several things to look for in a checking account:
A Spousal Individual Retirement Account (IRA) is a special type of IRA that is designed to benefit a non-working spouse and allows a married couple to each have an IRA to help fund their retirement.
Internal Revenue Service rules require that you earn taxable compensation from work in order to have an IRA. The IRS defines "compensation" as income generated from a wage, salary, commission or self-employment. It also counts alimony, separate maintenance and tax-exempt military combat pay as compensation.
What else not to do: Don't name your estate as your IRA beneficiary (also important to note: if you DON'T name a beneficiary, your estate becomes the default). Typically, nonspouse beneficiaries who inherit a traditional IRA can either liquidate and pay taxes on those assets within five years of the owner's death, or take the so-called "stretch option" and stretch the required minimum distributions out over their own lifetime. This could amount to thousands of dollars of lost growth. On top of that, if the IRA becomes part of your estate and enters probate, it can be accessed by creditors.
Has anyone seen that form? Do you know where your IRA beneficiary form is? Don't assume it's easily accessible from your broker or bank, because with all the mergers and acquisitions over the last decade, paperwork may have become lost in the shuffle. So, find that piece of paper -- and all your important financial documents -- and secure them. Then, tell your attorney and your family members where you have stored them.
Inheriting an IRA as a Spouse
According to the IRS, if you inherit a traditional IRA from your spouse, you generally have the following three choices. You can:
Sometimes it's hard to think about making those IRA contributions and taking the time out to understand IRA contribution limits because, well, retirement seems so far off. But the U.S. tax structure has several incentives that make both Roth and traditional IRAs worth the look. It also pays to make sure you know about deductions relating to your income level, so we'll deal with that here as well.
IRA contribution limits
For tax year 2016, the contribution limits on IRA contributions are:
I've just come from the gym. My arms are so spent I can barely type. My glutes are killing me as I sit on my wooden chair. I am guzzling ice water and still sweating a little. An hour of concentrated exercise with a trainer -- part of my gym memberships -- has left me feeling both exhausted and accomplished. I love my gym.
My gym membership costs us $158.46 per month. I can hear the gasps of horror from the frugal corner: that's 1,901.52 a year! Over the next 10 years, that's almost $20K I could be putting into my Roth IRA. That's $5,704.56 we could be putting into the 529 college account for our second child (you remember him, the one we call Hope He Gets A Soccer Scholarship)! I could use that to open a stock investment account and invest in electronic-traded funds. I could purchase corporate bonds!
The recent uproar over the cost of EpiPens, the life saving self-injection device that contains epinephrine, a chemical that narrows blood vessels and opens airways in the lungs to offset an allergic reaction, has garnered tremendous media attention and consumer outrage. Through massive marketing and outreach efforts by the manufacturer, Mylan, EpiPen has become to the go-to device for anyone facing a potentially serious or life-threatening allergic reaction. It is a brand that has “become” the device, like Kleenex has “become” tissues, and Jet Ski has become the catch-all for personal watercraft.
The EpiPen price has been raised 17 times in 11 years. When Mylan bought the device from Merck KgAA, a German company, in 2007, it cost $124 for a two-pack. Today, a two-pack costs more than $600. And there is no real competitor in the market, as Auvi-Q, a similar product launched in 2013 by Sanofi, was withdrawn in 2015 because of dosing issues. Mylan controls 94% of this market.
As I write this, I am on vacation. And I'm not just working for GRS while on my break. I'm posting on social media for six other clients, and writing freelance pieces for two other websites.
So when I say I am on vacation, I really mean that I am working in a house that is not my own, with a lovely view of a beach. Since being laid off from my traditional full time job three years ago, I have fashioned a working life that involves working for multiple entities, doing multiple tasks.
Staying Afloat When Prospects are Slim
My most stable employer provides 25 hours a week (but it's also the lowest paying). The rest range anywhere from 3 to 10 hours a week, depending on what's happening and what's needed. Some of the work is seasonal. Some clients pop up for a few hours' work and then disappear for months.
We joined a CSA this year, our first time venturing into the realm of Community Supported Agriculture. I have been intrigued with the concept for several years, as I have friends who rave about their weekly boxes of fresh veggies from a local farm. A special deal popped up in my Facebook feed in late winter and I decided to do it.
We shelled out $475 ($450 for the CSA and $25 one-time delivery fee). The reason I finally took the plunge is because the CSA was coming from a farm in Salem, Connecticut, (about 30 miles from my home) but was being delivered to a farm in our town (about a 7 minute drive up the road). So the convenience factor weighed heavily in the decision.
The $450 applies to a season that started the last week in May and will run through November. That's 25 weeks, equaling an expense of $18 a week. The box of vegetables provides about 5-10 lbs of produce a week. From May through October we typically shop for veggies and fruits at our local farmers' markets (we are blessed with several near our home), where we easily spend around $40 a week. The CSA does not include fruit.
I turned 53 on Tuesday. My daughter made me breakfast. My husband gave me roses. AARP sent me another membership solicitation. It all adds up to one thing: senior discounts.
Like many, when the AARP pitch arrives in the mail, I ditch it. I'M NOT OLD, I say to anyone who is listening (usually just the dog). Just this season on the Netflix series Frankie and Grace, one of the characters — who is in her 70s — noted that she refused to join AARP because it means admitting she was all done. “There's an article in the newsletter on how to get over that,” another character rebuts.
I mean, what is old? I have some decent longevity in my genetic pool, so let's figure I make it to 90. That would have made me middle-aged at 45! I appeal that decision! And honestly at 53, I feel pretty good. It's hard for me to remember how old I am, except for when I see photos of my 25-year-old self and I remember that skin.