Hosts: Roger Johnson, CFP®, AIF® and Joe Bert, CFP®, AIF®
Central Florida’s oldest and largest independent firm of certified financial planning professionals, it’s the Certified Financial Group in Altamonte Springs. Today, we have two of the twelve certified financial planning professionals with us, as we normally do every Saturday for like the last 25, 26 years. I don’t know, we’ll ask. We have with us, Roger Johnson, and Joe Bert. Good morning.
Happy new year.
A little crisp in the air.
Almost needed a jacket, almost.
Will you answer my question. What is it? 25, 26 years?
I don’t know, we have to go back and look in the archives, but it’s been a while.
It sure has.
<Inaudible> 20 though.
Oh, more than 20.
Do you remember what the mortgage rates were when you started.
They were a lot higher than they were today, I’ll tell you that.
You could probably get 6% in a CD <Inaudible>.
Joe, Roger, in case anybody’s new to this program, what’s it all about.
Well, Roger and I are here to answer any questions that might be on your mind regarding your personal finances. As we often times say, we go through life, we go through school, never learning about the things we need to know to make good financial decisions. We find one day we wake up, and we’re staring retirement in the face. We look back and say my gosh, what did we do, or what didn’t we do, what should we have done. Unfortunately we are raising generation upon generation of financial illiterates — it’s easy for you to say — illiterates in this country, because <Inaudible> haven’t been educated. We get our education from Money Magazine, from our co-workers, from the newspapers, our neighbors, and our brother-in-law and all of those folks that think they have a magic solution. You go to these luncheon seminars, dinner seminars, and they have the magic formula for you. We wake up and find out maybe that wasn’t such a good idea. So we’re here to answer questions that you might have. Questions and decisions that you might be contemplating. Often times, they revolve around things — about stocks and bonds and mutual funds and real estate and long-term health care and IRAs, 401(k)s, annuities, reverse mortgages, life insurance, all of that and more. We are here to take your questions. The good news is if you have any questions about any of those topics or anything else that I might not have mentioned, the lines are absolutely wide open. You can jump right to the head of the line by simply picking up the phone and dialing:
844-220-0965. 844-220-0965. Or you can text us from your mobile device. That texting number is 21232. 21232. Or if you have the News 96.5 app, check it out. You can use the open mic feature that you find there and your voice can become part of the program. So like Roger, Joe, it being like the start of 2016, do you guys have any action items that we could take right away to get a good start.
Yeah, absolutely. Here we are starting a new year. You always want to try to start it out on the right foot. You make some resolutions and so on, then you kind of forget about them, but there’s times that you really need to start looking at things to do and now is the perfect time to do it. Now, the first thing that comes to mind is if you save receipts and you do things with your tax return that involves receipts, stop right now today. Put all of the old receipts away, separate them, so that when you buy something today and tomorrow and the next few months you’re not adding to it. Then come April, you start trying to figure out where they are and which ones are which. Then you have to look at each one of them. Separate your receipts right now if you use receipts for that. There’s other things to get done early in the year. It is — it’s a great time to calculate your net worth. Find out how you’re doing compared to last year. So try to do this every year and figure out — add up all of the assets you have, take away all of the liabilities you have — including your house, but include also — track what you owe on the house and come up with a net worth for your family. Compare that to last year. Obviously we’re trying to build that over the years. Manage your household finances. Obviously that’s a great thing if you can spend less and you can save more as Clark Howard would say. Look for your — maybe even try to figure out a way to track that — your monthly expenses and yearly expenses. Those are a couple of tips for now. I mean you could use home budget online and start using that as a way to track your investments or your expenses <Inaudible> net worth.
Hold on. Save some more for later in the program.
What do you have, Kirk.
Let’s talk to Scott in Orlando.
Good morning Scott.
Good morning. Happy new year.
Same to you. How can we help you.
<Inaudible> question. My wife and I are both 70. We have some rental property. It’s all paid for. The question is what about with the economy being so questionable. Would it be better to divest ourselves of maybe that rental property that we have and put the cash into some other investment that would be generating the income that we need and just be free of the property, because it can be burdensome at some times.
This is one property you’re talking about.
Right now it’s three.
Three properties, okay. So you’re managing —
Three rental properties.
Three rental properties. How long have you had them, Scott.
We’ve had them for well over 15, 20 years.
Okay. Do you have positive cash flow on them.
Mortgage is paid down, or do you still have debt on them.
No, free and clear.
What are the properties worth. If you were to sell them all today, what do you think.
Those three properties would be worth about 750.
Okay. Then after taxes and insurance and maintenance, what’s your net cash flow on a monthly basis.
Oh wow, you know. I just didn’t know whether you were going to have a live show today so I didn’t <Inaudible> —
This is what you need to look at. You want to look at what your return is at. You’ve got a property, You have no debt, so your positive cash flow. You’re paying your taxes and insurance out of the cash flow. You’ve got some maintenance on those properties. You have to look at what your yield is on those properties and then compare that to what other investment alternatives might be out there that don’t have the hassle of the rental properties. I detect that in your voice. It’s the maintenance or the management that’s getting to you at the age of 70 plus. Right?
That’s right. Because you know <Inaudible> you know you’re going to have to have air conditioner systems replaced and roofs and things like that.
And the other thing that only you can be the judge on is the upside appreciation on these properties. Properties don’t always go up in value. In fact, in some instances, depending on where they’re located of course, they’re going to go down in value. So if you’re holding an asset that’s really depreciating or the best years are behind it, it might not be a bad time to ultimately <Inaudible>.
I’ve got a couple of thoughts here. You mentioned it’s worth $750,000. What is that worth after taxes, because I assume you’ve probably depreciated these down and you’re going to net a whole lot less than 750,000 when you do this comparison to keeping it versus selling it. The other thought I had was if you’re not all that excited about continuing to manage them, and you’ve got positive cash flow and if it turns out to be a real good number, you might want to hire a property manager. Of course you’re going to have to pay the freight on the air conditioner, but at least you have somebody taking those annoying phone calls.
So the analysis that needs to be done on those, Scott — I understand. There’s some emotional side to this too and a relation side to it that only you can measure, in terms of —
The last time I looked at it very quickly, I kind of decided that I could do — it would be at least a break even from a — I could do this. If I could make the same off of them and the cash flow on all of that if I did not have them and I invested the money and I could probably turn out about the same, maybe even a little better actually.
What kind of return were you projecting on your investments.
<Inaudible> if you cashed out, remember as Roger said, you have to look at what’s net after taxes, because you’re going to have some recapture of depreciation there. So you’re not going to net 750 out of these. So you’ve got to take that —
I was looking at about 5% probably.
That’s a reasonable return. That is what we would call total return. There’s nothing that you can invest in today that’s going to guarantee you a 5% positive cash flow year in and year out and still maintain your principal, but in a well diversified portfolio, you can — that’s a reasonable number to use for what we call total return.
Total return is made up of the interest, dividends, capital gains, and appreciation that you might have. Some years it’s going to be more than 5% and some years, like this year’s, could be flat or minus. So you have to look at the long-term on this. If you’re starting to draw out 5% right from the get-go, that’s a little aggressive frankly, in today’s environment. Really there’s a lot of calculation that needs to go into this decision. The fact that you own the properties free and clear and providing you reasonable income with the exception of the aggravation that you might have and Roger’s idea is a good one to get a property manager involved, it might not be a bad idea to keep the properties, particularly if they have upside appreciation to them.
Do you also have any family members — children — that are expecting — can’t say expecting — but assuming that they may inherit these assets and manage them. Maybe they can step up now.
Well, I don’t see that happening right now.
There’s a couple more creative alternatives that you can consider, Scott. One is what’s called a 1031 exchange. Are you familiar with that terminology.
I’m not familiar with that.
What it allows you to do is to defer all of the taxes that are due on the properties and roll them into another property that may be less management intensive, or you can have someone manage it for you. There are firms that put together programs that will allow you to roll your gain in these properties into another program or all you have to do is sit back and collect the income.
So you could use — go back to the 750,000 number —
And use all of the gains that are there in that 750, which we’re not sure of. Let’s say you got a couple hundred thousand. You could defer that and use those gains in the next property, so buying another piece of property at 750,000 that may be easier to manage and can throw off 5% or 6% yield to you.
Or another idea is a charitable trust. If you’re charitably inclined, it’s a way for you to take those properties, you donate them to a charity in a trust. The charity sells the property, you get the full $750,000. It goes into a trust, and the trust is designed to provide you and your wife income for your lifetime. The rate of return depending on your age can be in that ball park. Once again, here, you’re giving up the $750,000 in exchange for guaranteed income for your lifetime. So those are a couple of other options that you have. Aside from just selling out and paying the taxes and then reinvesting the money.
Great question Mike. This is the kind of thing that you really want to sit down and work through some different scenarios, calculate the different taxes involved and what the outcome would be and then compare.
Can I ask maybe a silly question here.
Seeing as though this is kind of like — these answers are like thinking out of the box. These are great answers. But where would Scott go to sit down for advice on this.
Sure. I mean that’s what we do for a living.
<Inaudible> financial planning. Just so happens, yes.
I didn’t know that you would do that.
That’s what we do.
Okay, so how would Scott get a hold of you.
He can e-mail us. The best place to go is on our website, financialgroup.com. Click on complimentary consultation and make an appointment.
So you get a complimentary consultation there. No arm twisting or anything like that.
<Inaudible> weigh all of those options that you have.
If you’d rather call than go online, what’s the telephone number.
407-869-9800, or 1-800-EXECUTE, as if you’re executing a legal document.
How’s that Scott.
Thank you very much. I appreciate it.
Happy new year, Scott. Thanks for the call.
Same to you, thanks.
Scott gets a complimentary consultation, how about that. Nice way to start the new year.
Of course anybody can too.
Wow, come on man, you just blew it.
Yeah. Everybody’s entitled to one.
Stand by. Dave Wall is in the news center.
This hour was paid for by the host and does not reflect the opinion of News 96.5.
It is an ask the expert Saturday morning on News 96.5, WDBO. My name is Kirk and it’s good to be with you. Honestly. It’s kind of like a dreary overcast day. We’ll get that full forecast coming up.
Maybe snow. What do you think.
We can hope.
Kind of looks like it doesn’t it.
We can hope.
A little warm for that.
The two gentlemen you just heard from, Joe Burt. The oracle of Orlando. And Roger Johnson. They call him the Geese <?>. I don’t know why.
Neither do I.
It’s a long story, you don’t want to know about it.
I tell you what. I <Inaudible> on Facebook of Roger Johnson the other day, Joe. If there was a gentleman that you would retain on the basis of looks alone —
I’m telling you now.
<Inaudible>. Jerry in Lake Mary. Good morning.
Good morning. Thanks for taking my call.
Thanks for calling. How can we help you.
My wife and I both will turn 70 and a half this year.
70 and a half.
I am fully employed. I’m a sole proprietor. I was wondering if I need to take the withdrawal from my SEP plan.
Yes you do.
WHen do you turn 70 and a half.
Two days from now.
So you have a choice here. By December 31st, you can make your first withdrawal, which is 3.65% of the balance, as of the day before yesterday — December 31st, whenever that was. Or you can defer that first deposit or the withdrawal I should say until April 1st of 2017. Then you have to take another one in 2017.
The reason why you have to take it, Jerry, is because that’s the SEPs work. Even if it was a 401(k) — and you said you’re a sole proprietor — you own the business. So because you’re larger than I think 10% or 20% owner, I’d have to look it up exactly — but it’s because you’re an owner of the company, you cannot — just because you hit 70 and a half and you’re still working, you cannot defer. Now if you were working at a General Motor plant and you were 70 and a half and you had your 401(k) and you wanted to continue to work, you could defer, not take withdrawals. You wouldn’t be forced to do a required minimum distribution, but in this case, you are. Alright.
Now being 70 and a half will be this year, can I continue to put into the SEP plan.
Okay. My wife and I filed a joint tenants return. Can she also — and she’ll be 70 and a half this year — take out an IRA.
Well, it depends on your income — you’ve got some <Inaudible> how much are you putting in the SEP.
I put in the maximum amount, which is about 45 <Inaudible> thousand.
I think you’ve got a problem there — no. I think the IRA rules —
But I’ve got an idea or you. What kind of health insurance do you have. Do you have a pot of gold health plan that is a high deductible plan that qualifies for a health <Inaudible>.
We’re under Medicare.
Okay, you’re 70 <Inaudible> okay pass that idea. That was just something that I was going to talk about later on, this health savings account. Boy, that seemed like a great plan, but <Inaudible>.
When is the last time she could take an IRA.
<Inaudible> can she do a Roth, Joe. I’m trying to think if she can contribute to a Roth with earned income past 70 and a half.
We file jointly, but she doesn’t personally have any income.
<Inaudible> but she could have a spousal if she — we’ll look that up.
Don’t go away, we’ve got the break coming up. We’ll get the crack research team on that and be back to you.
I’ll be right here.
Dave Wall is in the news center.
I can’t wait. He’s got a story about the Humpbacks. What happened to the Humpbacks. I hope he talks about it in this news thing. It’s one of the stories he’s following this morning. Standby for Dave Wall. If you’d like to join us, the number is 844-220-0965, or text us at 21232, because we’re planning tomorrow, today. <Lost Signal>
It’s an ask the expert weekend on News 96.5. It happens today and tomorrow. Today, especially.
Since it’s kind of like one of those overcast days, what would you recommend.
Grab a good book.
Take down the Christmas decorations —
Sit by the radio.
Yeah, sit by the radio.
Maybe light a fire and burn the Christmas decorations.
No, pack them up. That’s right. Good idea. <Inaudible>
Alright, listen, back to Jerry. Jerry, we had Jerry on the telephone here.
Are you still with us, sir.
Jerry, let’s recap. You’re self-employed. You’re going to be 70 and a half this year. The question is can you continue to contribute to your SEP. The answer is yes, and do you have to take your RMD out of your SEP, the answer is yes. Can you also contribute to an IRA? The answer is yes, and the question was about the Roth subject to income limitations.
Hey Jerry, let me ask you, is your wife an employee by chance?
You know, she’s on some of the bank records, et cetera, but —
But is she getting paid?
But she never — no she’s not paid <?>, no.
Okay, she’s not employed. Just a thought.
So that’s what you can do and can’t do.
It’s also the simple 401(k) — solo 401(k), thank you.
But you can still have the same income on it.
Yeah that’s — it’s just another option that you can look at, depending on how profitable your business is. We never really asked you about that. How much income are you showing in this business? Are you showing — are you just breaking even? If so —
Okay you’re doing alright, very good.
Then do the SEP.
Do the SEP and then the IRA — but you’re going to be subject to the income limitations on the IRA.
She also can —
You probably can’t do an IRA —
Or do a Roth IRA. I’m not so sure. I know she can do a Roth IRA but you don’t get any tax deduction for that, which I assume that’s what you’re shooting for.
That’s what I’m going after, yeah.
You may not be able to do a deductible because of your income. Your CPA should be able to tell you that. But I like your thinking, Jerry.
Alright, we’re trying.
Get some <Inaudible> deductions, buddy.
I tell you, I can’t afford to go out of business because the funny money — because I work out of myself, et cetera, is about a $25,000 deduction a year.
What do you do?
I am a headhunter, executive recruiter in the chemical industry.
Got it, got it.
Well good for you.
Love it to the nth degree. Obviously I’ve got a good boss.
<Inaudible> Jerry. That’s <Inaudible>.
He probably likes to think you perform well. There you go.
I try to for him. <Inaudible>. Happy new year.
Happy new year.
Thank you for your call, same to you.
Alright, if you’d like to join Roger Johnson, Joe Bert, the telephone number 844-220-0965. Again, 844-220-0965, or you can text us a question from your mobile device, just keep it short. That number is 21232. Let’s get to Gary in Lakeland. Gary, good morning.
Good morning Gary.
Morning gentlemen. Happy new year guys.
Same to you.
How can we help you?
Listen I’ve got a plan that I’m trying to put together, and I just want to make sure that I’m not going to do something <Inaudible> this year. The company I work for here in about three or four months I will have enough time in to get into their Oppenheimer savings program, and I’m 50 years of age, and I was looking to work until about 65. My wife works for Publix in the corporate office. What I was thinking about doing with this Oppenheimer is once I reach 65 and I retire, say I do, take that Oppenheimer, of course we’re going to need some money in the bank until Social Security kicks in or whatever, but then I was going to take the rest of it and give to my wife to dump into the Publix stock, then two years later she would retire. We could live off our Social Security I think because everything we’ve got is paid for, house, property, everything.
Let’s back up. You said the Oppenheimer plan, tell me about that plan. What are the specifics. Is it pre-tax money, after-tax money, is it a 401(k), what is it.
It’s like a 401(k).
It is a 401(k) — so it’s pre-tax money. So you’re getting a deduction out of your paycheck, so it is a 401(k). You cannot take that 401(k) and roll it into your wife’s plan.
<Inaudible> that — it’s an individual plan. That’s going to be yours to have and to hold. You can leave it to your wife if you pass away, but you cannot transfer it during your lifetime, you wouldn’t want to.
What’s the strategy. What’s your rationale to wanting to roll it into your wife’s Publix stock. Do you love Publix stock?
When I retire, they’ll give me of course my last paycheck, and then they’re going to give me — because the company puts in $500 a year into this Oppenheimer, then they will cut me a check for all that.
Wait a minute.
That money will be mine.
Wait, wait, wait. That doesn’t sound like a 401(k).
Well, it —
I like to think —
<Inaudible> from his 401(k), and that’s why it <Inaudible>.
Maybe — maybe it’s a deferred comp plan. Does that ring a bell?
Yeah, I believe that’s it.
Alright so it’s what’s called a deferred compensation plan. Okay. So then —
Right, so that will —
So that’s different. That’s different than a 401(k) because then when the money comes out it’s going to come to you in a lump sum, and it’s going to be taxable to you.
Okay. Then what you want to do, your plan is to take that money and buy Publix stock?
<Inaudible> my wife and have her put in at the Publix stock.
You’d have to pay all the taxes on this <Inaudible>.
<Inaudible> he could forego those taxes by letting that deferred comp roll into a <Inaudible> qualified plan.
It’s a non-qualified deferred comp plan, it’s all taxable <Inaudible>.
It’s all going to taxable when it comes out.
I’m not sure — is there any way to — do you have to take the money in a lump sum. Can you stretch it out over a period of time?
That I’m not sure.
That’s what you want to look at.
And how much are you putting into the plan every year?
I’m a couple of months away from reaching that — to get into that Oppenheimer, and I’m going to put in as much as I can. I’m looking to do 6%.
Okay 6% of your income.
Let me ask you, you said your goal was to accumulate this and give it to your wife to buy Publix stock, why don’t you just do the contribution that you’re going to be putting into this Oppenheimer plan, why don’t you just have her buy Publix stock now on a monthly basis, or yearly basis?
She is purchasing Publix stock of her own, yes.
To the full extent that you want to do?
Okay, alright. Alright.
There’s something missing in this strategy. I’m trying to recount this here. Let me — let’s back up to square one, alright. You’re eligible to start putting this money into what we call a non-qualified deferred compensation plan, and your plan is to put in 6% of your payroll between now and age 65, which is how many years?
15 years. So the next 15 years, that’s the plan. And then you believe at age 65, the way the plan is structured, they will cut you a check, you’ll pay taxes on it at that time, and then what you want to do is to use that lump sum money, allow your wife to then buy Publix stock through her stock purchase plan that has to come through her payroll. So what will happen is she’ll live off of the lump sum that you’re bringing home and not bring home anything because she’s buying all Publix stock. Is that the —
Is that what you’re thinking? Is that what your current thinking is?
Well — I didn’t know about that. But that sounds good.
Gary, I wouldn’t do that. I mean, as much as you might be in love with Publix, putting your money in any one company, I don’t care who it is, is a high risk, high reward proposition, and chances are your wife will have a fair amount of Publix stock accumulate while she’s been working there, you need some diversification. Surely from a financial planning standpoint is what you ought to be considering because I’ve been around long enough to know that the great companies of today are no longer going to be the great companies of tomorrow.
Can you say Easton Kodak <?>, can you say American Equity. I mean they’ve all — and Publix is a great company, don’t misunderstand me, and they’re going to do fine. But you don’t want to put all your money in on horse and one race, because if that horse breaks a leg, you’re in trouble. Diversification is the key. So I would do this Oppenheimer plan, and the next thing I would do is to find out if you have to take it out in lump sum. You don’t want to do that. You want to spread it out over a period of time to minimize the taxes.
Purely from a financial planning perspective, and I don’t care if your wife was working for Google or Apple or Publix, I don’t care who it is, putting all of your — you shouldn’t have more than 5% to 10% maximum of your net worth in any one particular company, particularly the company you work for.
Alright, good enough. <Inaudible>.
I appreciate the call. Thank you very much.
Is that an emotional kind of thing that <Inaudible> why people put their money in.
Well Publix stock has done so well, and we all know Publix, we all pretty much —
I shop there.
Get our groceries there and the employees there have done very well with their — it’s a non-traded stock, it’s a privately held company, but the employees are owners as well.
Is that right?
Yeah, you can’t just go you and I, because we’re not Publix employees, we cannot go out and buy Publix stock. You have to be an employee of the firm, and you have an option <?> — so their retirement plan is pretty well all tied — well, pretty much — to the performance of Publix which has been outstanding over the years.
And it’s why the Publix, when you go in there, the employees for the most part are <Inaudible>.
Is that why?
They have what’s called an ESOP, employee stock purchase plan.
I thought they just liked me.
They all have <Inaudible>.
I shop there like the Europeans shop, every day, you know. I shop for fresh food every day. Can You put in a quick plug for my Publix on Stonybrook West?
I love my Publix Pharmacy on Stonybrook West. That’s the only place I shop.
They’re probably going to give you a free cookie when you —
Oh they won’t give me a thing. They’re —
If you ask for it, they will.
I love my Publix. Alright, Brian in Castleburg wants to talk to you. Good morning Brian.
Brian, good morning.
Hey, good morning gentlemen, and happy new year to all of you.
And to you. How can we help you?
Okay, my girlfriend, she is 44 years of age, she has two <Inaudible> kids, one if 15, one is 8. And she’s got $28,000 in the checking account. She wants to put it somewhere where she’d make better interest, what do you recommend?
Well, let’s get some things ironed out here. One’s 15 and one’s 8, right?
<Inaudible>. And you’re not married, right?
No. She’s my girlfriend. She’s 44 years of age.
I understand. Heaven forbid your girlfriend gets wiped out on I-4 tomorrow morning, what happens to the kids?
That’s a good question. <Inaudible> on I-4.
That’s why I brought it up.
I don’t know. I do not know.
Alright, here’s the first thing we need to do. We need to get your wife some — your girlfriend some term insurance, at least 10 or 15 years of term insurance.
What do you mean term insurance? <Inaudible>.
It’s life insurance. Life insurance — for a period — a term being a period of years. 10 years, 15 years, until the youngest one is out of the house and on their own, and god forbid something happen to them there’s some funds there that can take care of them and get them through the growing years of their life, that’s the most important thing to look at. Okay?
Oh, so <Inaudible> the first rule <Inaudible> get a life insurance policy until they’re out of the house.
Yes. Exactly. And maybe through college. you want to look at all that because heaven forbid something happens to your girlfriend there, what’s going to happen to the kids, and that’s your first concern. Then the next thing is, is she working?
<Inaudible> just housecleaning <Inaudible>.
Okay, alright. <Inaudible>.
We’re going to need some <Inaudible> and Kirk is giving me the wrap-up here so where are we going.
Yeah we’re going to have to get to Dave Wall in the Newscenter here. I’m up against a hard block, so —
I’m going to ask Brian to hang on, and he’s already been hanging on like a trooper, but Brian, standby because we’re not finished with you yet. Also, you heard us mention Facebook earlier, talking about Roger, but I get this great blog, or this great advice from the Certified Financial Group on Facebook all the time, is that from you, Joe?
So we’re going to tell you how you can get it too. I mean this is great stuff that comes on my Facebook <Inaudible> all the time, and it’s free, and we’ll tell you where that comes from next here on News965.com.
It is an Ask the Experts Saturday morning on News 96.5, WDBO, and this is On The Money brought to you by central Florida’s oldest and largest —
Yeah — firm of certified financial planning professionals. Roger Johnson is in the studio with us.
Yes I am.
As Joe mentioned.
Looking like he just stepped out of the pages of GQ Magazine.
Yeah right. You really need to get those glasses fixed. Put both of the lenses in, don’t just walk around with that one empty and the one with it.
Oh well they make everybody look so good. Coming up right after Dave Wall gives us the news, traffic, and weather at the top of the hour, it’s Florida Homes and Gardens, and some of the things we’ll be talking about today, cracks in the exterior stucco, mostly on the second floor, what’s the best way to fix the sealant. Also an earlier text, we have water coming in our chimney when it rains very hard, we’ll talk about that, and we’ll take your home fix-up questions as well. Right now we have with us on the telephone Brian in Castleburg, and Brian’s girlfriend has X amount of dollars and she’s looking to put it somewhere safe but make it a little bit more active for her, right Joe?
Well yes. Let’s recap here. Brian’s got a girlfriend, she’s 44, got a couple of kids, five and — how old?
15 and 8.
One is 15 and one is 8.
15 and 8, alright.
And the first thing I asked is what’s going to happen if heaven forbid your girlfriend dies, and we’ve got these kids and who is going to take care of them and how are we going to pay for them. So, I suggested we get some term insurance. Roger looked up very quickly on how much insurance we could buy for a $0.25M —
And for $0.25M with death benefit, for 44 — 45 year old female, rough numbers for a 15 year term is about $250 a year. Possibly a little less. You can’t go wrong with that. I mean that’s something you <Inaudible> do.
That is cheap. Right. For the next 15 years —
That’s <Inaudible> cheap.
Lock in that rate, as long as she’s healthy, she would have to medically qualify for that, but they’re fairly liberal about that.
Non-smoker and all that.
That’s a non-smoker rate.
Then now she’s got some — we’ve got this extra money. She is working though which is the good news. Here’s what I recommend. I would suggest we put some of that money aside for emergencies, maybe $10,000, $15,000, and unfortunately because it’s for emergencies you may need to get your hands on it in a short period of time, and you want to know that it’s there, there aren’t very many attractive alternatives, if any. We’re going to put it in the bank, or put it in the money market fund, maybe only 0.5%. That’s about all you’re going to get on that. The remainder of it, the next 10, 15 — $10,000, $11,000 or so, I would put it into two IRAs — an IRA account. She can get a tax deduction for it, $5,500. Of course if you think of their tax bracket, she’s just working part-time — what is she making part-time there Brian?
Oh basically just getting — cleaning houses for the elderly, basically underneath the table.
<Inaudible> you don’t want to say that Brian. We didn’t hear that.
Okay, <Inaudible>. Sorry.
I got you. Alright. So we’ve got — so it’d be a minimal tax bracket. I’d put it in a Roth because she doesn’t have any —
Thank you Joe, if you hadn’t said that, I would have to. Yeah the Roth would be a great way to put some money aside, get some tax-free growth, and she’s in a low tax bracket so she’s all set.
Yeah. Does she have access to the Internet there Brian? She use the Internet?
Yeah, she does.
Go to Vanguard.com, get yourself a Roth IRA, put $5,500 into it, and put it in their Vanguard S&P 500 indexed fund.
Alright, we’re up against the clock here, gentlemen. In the time that we <Inaudible>.
Time flies, huh?
<Inaudible> you’re having fun. Your colleagues have some workshops coming up?
Workshops. Yep, we’ve got workshops here coming up.
Social Security Boot Camp coming up on Nancy Hecht and Denise Kovach, going to be on January 28th at our offices, 6:00, the Thursday evening 6:30 to 7:30, it is absolutely free. Go to our website, that’s financialgroup.com. Click on workshops.
Who should take advantage of a Social Security Boot Camp?
Anybody who’s at or near Social Security age, 62 and <Inaudible> 62 to 66, right around there.
Yeah that’s right. We have another one, Gary’s got one coming up January 9th, Financial Basics for Life. So that’s <Inaudible>.
<Inaudible> on Saturday, so that would be a great one to register for as well. That’s coming up sooner, that’s January 9th, and Nancy and Denise have a Social Security one Thursday, January 28th.
Those are all absolutely free, we hold them in our classroom here, can accommodate 25 or 30 people comfortably, state of the art audio-visual equipment. Leave your checkbook at home, it is free. Why do we do this? For two reasons. One to give you information so you don’t make mistakes as you go through life, and secondly to introduce you to our firm. What we do is fee-based planners and how we work with our clients and this way whether you need planning now or some time in the future, you’ll give us an opportunity to earn your business.
If you’d like to take advantage of it, here’s the telephone number, and we’ll give you the website as well. The telephone number for the Certified Financial Group in Altamonte Springs is 407-869-9800. 407-869-9800, or it’s best just to check out the website where we have all the list of the workshops available and the website address is www.financialgroup.com. financialgroup.com. So, <Inaudible>.
Happy new year.
I’m footballed out after Ohio State yesterday. <Inaudible> went over Notre Dame, good game.
You just had to mention that didn’t you.
Well, <Inaudible>. They didn’t pull it off, the won’t.
Oh it’s a tough one.
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