The tour is being sponsored by the NAPFA Consumer Education Foundation, TD AMERITRADE, and Kiplinger’s Personal Finance magazine. The bus will tour the country during the next year, beginning on October 1, 2009 and will be visiting major city centers to promote the message of saving and financial literacy. At the various stops Fee-Only, fiduciary financial advisors will be on hand to deliver free financial guidance - no strings attached!
A woman from the World Bank asked a great question on investments and tax planning. Since she is exempt from US income taxes, she wanted to know if she should invest in an annuity. A broker had recently suggested that she put her investments in an annuity to get tax deferred growth. I told her that she could invest in the same type of mutual funds as the annuity sub accounts and save the cost of the broker commissions which can range from 4 to 11 percent.
She also had questions on accumulating enough money for retirement and had additional questions on using money in a savings account to pay off the mortgage of her condo.Since she was paying 6.5 percent for her mortgage and was earning 2 percent on her savings, I did suggest that she keep 6 months of savings in an emergency fund and use the additional $30,000 to pay down her mortgage.Her current cash flow will allow her to pay off the mortgage balance in about 2 years which will give her peace of mind.
As she asked additional questions which were beyond the scope of the limited time we could spend with her, I suggested that she find a fee-only fiduciary financial advisor to answer her additional questions on an hourly basis or project fee.Alternatively, she could continue to do her financial homework as she was plotting her financial future.
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