Jewish World Review Feb. 2, 2000 /29 Shevat, 5760
Money or securities?
DEAR BRUCE: My insurance company is being converted from a mutual company to a stock company, and I have the option of taking money or securities. Which would you do? -- R.S., Toronto, Ohio
DEAR R.S.: Many mutual companies (in which the shareholders own the company) are converting to stock companies. In most cases, the stock does well, and if I were faced with the decision, I would opt for the shares of stock.
If, however, you are fearful of any risk, take the cash and run.
DEAR BRUCE: You have expressed your feelings about elderly nursing patients trying to get the state to pay for their care while protecting their assets for their heirs. What do you think about an indigent elderly patient from a close-knit family whose children are financially secure? Should the state pick up the tab? What would you say to those children? -- Reader, Chelmsford, Mass.
DEAR READER: One must differentiate between obligations that are moral and those that are legal. On the moral issue, people who try to protect assets and then allow the state to pay their bills are certainly morally wrong, and in many cases, legally wrong. In the legal aspect, children are not required to care for their parents no matter how able they are.
Given that, the elderly person who is indigent can, in fact, collect all the state benefits. You can imagine the uproar there would be if they tried to pass a law that children had to be responsible for their parents.
Isn't it amazing that one set of parents can raise 10 kids, but 10 kids can't support one parent?
DEAR BRUCE: My husband and I have preached to our son about the importance of starting his own Roth IRA since he began working at a fast-food restaurant. Shortly after turning 16, he took it upon himself to go to the bank and start his own Roth IRA. He was so proud of himself.
Unfortunately, it will only grow with interest because it is not invested in a mutual fund or securities. He didn't tell us about this until his option to cancel had passed.
Would it be advisable for him to pay the penalty and convert it into an IRA with other investment goals? -- C.G. Casa Novia, N.Y.
DEAR C.G.: Congratulations on teaching your son so well.
The thing I would question the bank about is whether a 16-year-old is capable of entering into a contract for a CD. If memory serves me correctly, minors are only able to enter into contracts for necessities, and no matter how desirable a Roth IRA is, a necessity it is not.
As his parents, I would go down to the bank and tell them that you did encourage him to do this, but certainly not to put his money into CDs without some type of aggressive mutual fund. I would take the position that the contract (i.e., the purchase of the CD) is null and void because the maker was a
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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