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11/12/97 6:58:11 PM Opening "11-12-97.txt" You have just entered room ╥MoneyWhiz I╙ MW Opa: Welcome, Sb. Care to discuss retirement planning? Or perhaps something else? MW Opa: Were you here last week? Sbriel: Hi.....Question: I have comingled ded. and non-ded. IRA funds. What can I do. Enjoyed Sbriel: chat last week MW Opa: I thought your name was familiar. MW Opa: It doesn't matter whether ded & nonded are comingled or not. MW Opa: There is no difference whatso ever. Sbriel: At distribution time will I be taxed on the non-ded. funds? MW Opa: No. ---- Well, did you file Form 8606 with your taxes... MW Opa: ... in the years that you made nondeductible contributions? Sbriel: That's the problem. I didn't. Can I go back thru the years and file now? MW Opa: Yes. how far back? Sbriel: Five years. MW Opa: that should be no problem. Sbriel: Where can I get the forms? MW Opa: I do not think that you need to file an official amended form. MW Opa: Form 1040X, that is. MW Opa: You need to file the Form 8606. WeSixPicks: hi opa. can I sit in? MW Opa: You can get these at libraries and IRS offices. MW Opa: Welcome We6. Sbriel: Could I just include the past year 8606s with my next tax filing? MW Opa: We6, perhpas you can help. WeSixPicks: what's the Q? MW Opa: Sb has not filed any Form 8606 in past 5 years. MW Opa: I don't think she needs a 1040X -- just a 8606. Is that right? WeSixPicks: I would file each required form 8606. There's a signature line on the form. sign them. WeSixPicks: NO 1040X MW Opa: OK. Sbriel: Thank you for the help MW Opa: and yes, Sb, you can submit them with your next tax return. WeSixPicks: I would submit the 8606s before then, separately MW Opa: Why is that? MW Opa: Jag, welcome. WeSixPicks: Although you could send them together, meaning with each other. but apart from the 1040 JAGALLEN13: hi WeSixPicks: because they're already late. And if you include prior years' 8606s with the 1040 for '97, MW Opa: Yes, I agree, We6. Same envelope WeSixPicks: they'll get lost WeSixPicks: file them asap, and apart from any other filing MW Opa: Jag, we're talking about retirement planning -- and occasionally taxes. Jump in. MW Opa: The crowds at this chat averages a whopping 4-5 each week. MW Opa: Where are those 9,000,000 members? 8-) MW Opa: What were we talking about last week, Sb? WeSixPicks: surfing the net for adult pictures :-) MW Opa: lol Sbriel: Living trusts....bypass trusts... MW Opa: That is We6's department, Sb. MW Opa: He is expert. MW Opa: Ask those questions again, and get the correct answers this time. 8-) JAGALLEN13: MW, I'm 31, I have about 1 year of investing under my belt, looking for growth, suggestions? WeSixPicks: jagallen, what time frame? retirement? MW Opa: What have you bought so far? JAGALLEN13: Call it a fantasy, but I would like to retire in my 40's. JAGALLEN13: I've invested in drips, but I'm looking for faster growth. WeSixPicks: "It's a fantasy!" MW Opa: That's not impossible but your cost of living needs to be fairly low compared to your.. MW Opa: ...income Sbriel: It's a fantasy!!! MW Opa: Not if you live under a bridge. JAGALLEN13: Lot's of encouragement in here! MW Opa: I think that you need to increase your savings rate, Jag. MW Opa: What percentage of income are you saving? MW Opa: It should be about 30%. WeSixPicks: The amount of capital to be able to retire in your 40's is staggering. JAGALLEN13: 30% is correct WeSixPicks: Remember that you still need to be accumulating wealth MW Opa: At age 40, you would need $26 for... MW Opa: ...each dollar that you plan to spend annually during retirement. WeSixPicks: which dollars will be increasing with inflation each year MW Opa: That $26 includes the inflation factor. MW Opa: Retirement income would increase each year. MW Opa: FIJI, welcome. WeSixPicks: ok MW Opa: So you would need about 1,300,000 to spend $50,000 annually. MW Opa: adjusted for inflation. MW Opa: What is your retirement income goal? MW Opa: Welcome to Retirement Planning. Jump in with questions, comments and/or answers. WeSixPicks: opa, what earnings factor is in that equation? MW Opa: 3% during retirement... MW Opa: ... with the remainder reinvested for inflation and risk management WeSixPicks: 3% flat or 3% above inflation? MW Opa: 3% above inflation and risk. WeSixPicks: ok MW Opa: Death by age 90. MW Opa: You need more if you have long-living genes. WeSixPicks: no funeral JAGALLEN13: mw, when you said 30% toward investments, what rate of return did you calculate? FIJIALUM: MW Opa -- What is the best option for a tax sheltered retirement fund if my company is not MW Opa: That was off the top of head guess, Jag. FIJIALUM: offering any match JAGALLEN13: Thanks WeSixPicks: fiji, if the company doesn't provide anything, all you can do is an IRA MW Opa: Your best bet is still your company's plan, FIJI. FIJIALUM: but an IRAis only sheltered up tp 2000? correct? WeSixPicks: fiji, does your company have a 401k or anything of the sort? MW Opa: I use 7.6% plus inflation, Jag, during the accumulation phase. WeSixPicks: ira's are limited to $2K FIJIALUM: But wihtout a mathc on the 401K and with fees included ... could it not be better to MW Opa: SNG, welcome. FIJIALUM: invest in a high yield mutual fund? JAGALLEN13: That's what I thought WeSixPicks: fiji, invest in the hi yield mutual fund with 401k money, if that's what you want MW Opa: What are your options in your 401(k), FIJI? WeSixPicks: although I always prefer growth vehicles MW Opa: FIJI, the stock market is better than bonds, even high yield bonds, long-term. JAGALLEN13: mw, knowing my goal, what avenue would you pursue for growth? WeSixPicks: (except for the last month) :-( Sbriel: Take a little risk in your 401k.....growth funds FIJIALUM: MW and WSix - I just began with the company and do not know if I have many options MW Opa: Self-employment, JAG, would be the first choice. Start a business. FIJIALUM: with the 401K they are offering ... howver I do know employees are not high on it JAGALLEN13: I am self employed MW Opa: Real estate would be a second choice if you will provide sweat equity, Jag. MW Opa: Scratch that, Jag MW Opa: You are self-employed so you should concentrate on your business. MW Opa: Ron, welcome MW Opa: So stocks would be the remaining investment vehicle. MW Opa: Do you have employees, Jag? JAGALLEN13: No, subcontractors only. WeSixPicks: opa, I'm calling it a nite MW Opa: Thanks for coming, WE6. MW Opa: Always enjoy your company. FIJIALUM: MW -- do you prefer any particular fund companies? MW Opa: You are a prime contractor, Jag, in construction? MW Opa: No-load, FIJI. JAGALLEN13: Home Improvement contractor Sbriel: Fiji....fund your 401k to the max with growth funds.....Vanguard, Fidelity, my favorites FIJIALUM: MW - any in particular? Sbriel: Vanguard...very low expense ratio.....Index 500 MW Opa: Can you expand that business by hiring, Jag? FIJIALUM: Sbriel -- do they have no load options? MW Opa: FIJI, I use Scudder out of habit. I suggeest you check with Morningstar. JAGALLEN13: I've expanded about as far as I can, trying to avoid more headaches. Sbriel: Index 500....no load Sbriel: What is your age? FIJIALUM: 27 Sbriel: I'd be very aggressive...You have a long time horizon MW Opa: I'm just suggesting, Jag, that you might accomplish more if you hired people to do some FIJIALUM: That is what I have been told .. MW Opa: portion of your work. Employees earn money for you. FIJIALUM: Sbriel - a HAncok "banking and finance" growth fund has been suggested to me .. relatively FIJIALUM: new JAGALLEN13: I have 15 people, any more and I would need a bottle of tylenol per day. Sbriel: Not familiar with fund, but financial services do well when rates are low. MW Opa: Jag, you said "only subcontractors."?? MW Opa: FIGI, what do you know about banking & finance? MW Opa: Marti, JWS, welcome. JAGALLEN13: only subs, but they work for me very often MW Opa: Welcome to Retirement Planning. Jump in with questions, comments and/or answers. MW Opa: So they are like independent contractors working more like employees. JAGALLEN13: somewhat FIJIALUM: just learning ... getting ready to make my first move ... I have been researchig for awhile Sbriel: That's the way to begin.. MW Opa: FIGI, I suggest you stay away from sector funds unless you know the sectors..... MW Opa: ... definitely while you are learning. FIJIALUM: Is it not true that if I am in for the long haul (6 or greater) not to go with a growth fund MW Opa: I understand better, Jag, and I can see why you don't want to expand. MW Opa: FIJI, growth funds are good for the long term. MW Opa: The growth fund manager selects the sectors in which he invests. FIJIALUM: that is what I am looking into ... this growth fund that was suggested to me is FIJIALUM: a Financial Industries fund MW Opa: that is a sector fund that the salesman thinks will grow. MW Opa: I wouldn't call it a growth fund. FIJIALUM: Diversification is mainly finance and technology and insurance (40%) MW Opa: Sectors are specific industries -- like gold mining. MW Opa: Gold mining is not a growth fund. MW Opa: Currently JAGALLEN13: Mw, do you you follow the sectors? MW Opa: Not at all, Jag. MW Opa: That's why I asked if you knew the industry. Sbriel: Any comments on the Asian situation and the US markets MW Opa: Sb, I just wish the Asian markets would calm down. Sbriel: So do I. MW Opa: I think that the US market would still be volitile without the Asian mess. JWS1504: Hi everyone. thanks for the welcome. quick question, What is Financial Industries fund ? MW Opa: Jag? JAGALLEN13: Yes MW Opa: You know the answer to JWS' answer? JAGALLEN13: I have not a clue MW Opa: I thought that is what you were going to invest in? MW Opa: what's the name of the fund in which you were interested, Jag? JAGALLEN13: No, I'm looking at individual stocks in sectors, not funds. MW Opa: Oh, my mistake. JAGALLEN13: No problem FIJIALUM: I am looking into Hancocks Financial Industries fund JWS1504: Ok. Thanks anyway. Need to sign off for tonight. Thank you MW Opa: Oh, well. MW Opa: 8-) FIJIALUM: MW, Sb thanks for the advice ... I am going to move on for now MW Opa: Figi, thanks for coming. MW Opa: Do come back FIJIALUM: I will ..... this time every night? MW Opa: Yup. MW Opa: No MW Opa: Every week MW Opa: Wednesday FIJIALUM: got it .... later! JAGALLEN13: MW, you are a money manager, correct? MW Opa: Retired. MW Opa: CB, welcome MW Opa: MV, welcome. MW Opa: And --- Hi, Joe. MW Opa: Welcome to Retirement Planning. Jump in with questions, comments and/or answers. MW Opa: Anyone planning to transfer their IRA money to a Roth IRA next year? Sbriel: I plan to have both....Roth and Traditional MW Opa: Good idea, Sb. Sbriel: Don't want to pay the cap. gain tax to transfer MW Opa: I finding that converting is not a good move for most people. MW Opa: Including myself. MW Opa: The Roth is especially good if you expect to be in a higher tax bracket while reitred. MW Opa: It is also good if you cannot make deductible IRA contributions. MW Opa: Anyone have a last comment? MW Opa: Closing on the hour. 8-) JAGALLEN13: Thanks Sbriel: Very good chat room. MW Opa: I was not fishing for compliments, Sb, ... MW Opa: ... but I'll accept that. thank you. MW Opa: How's the snow in ILL, Sb? Joe4jazz: For you retired folks. What % of current expenses required when you retire? Sbriel: It hasn't arrived yet, but is expected tomorrow thru the weekend. MW Opa: Joe, most studies always end up showing aboout 80% of pre-retirement income. Sbriel: That's the figure I have been using in my planning MW Opa: I prefer pre-retirement income less savings rate less tax decreases, etc. Joe4jazz: Does it work? MW Opa: It is more conservative. MW Opa: Assume your other expenses continue. Some go up like health care and travel. MW Opa: I assume, Joe, that you do not plan on waiting for each pension check and death. MW Opa: 8-) Joe4jazz: I retire in 4 months and am concerned about whether these planning factors really work. MW Opa: Why did you decide to retire in 4 months? Joe4jazz: I reach the magic number of 62 and thought this would be a good time. MW Opa: I see. But you are concerned that you are not ready financially? MW Opa: Wouldn't that indicate that you should wait until you are? MW Opa: It is just that unemployment can be a drag without the money to substitute other intere MW Opa: interest. MW Opa: There is also an emotional thing of going from usefulness to semi-usefulness. MW Opa: we tend to get out feeling of usefulness from our work. MW Opa: We need to be productive during retirement also. MW Opa: Hey, I'm into overtime. MW Opa: Gotta go. Joe4jazz: I think I am. In my calculations I can achieve 85% of my current income. MW Opa: Did you take into account inflation and risk, Joe? Joe4jazz: Yes I did. I`m a little concerned about after tax income. MW Opa: $60000 yearly will buy $30000 worth of stuff 25 years from now. MW Opa: Really -- with taxes decreasing during retirement. MW Opa: I still gotta go, Joe. Joe4jazz: MW Opa, thanks for some of your insight. Any good advice is always welcomed. MW Opa: See you next week. Sbriel: Thank you Opa JAGALLEN13: Thanks MW MW Opa: Good bye, all. 11/12/97 8:07:59 PM Closing "11-12-97.txt"