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Jewish World Review August 13, 1999 /1 Elul, 5759

Bruce Williams

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Short-term mutual funds a-OK -- DEAR BRUCE: I am 29 years old. My wife and I are planning to buy another home in four years, when our youngest starts kindergarten. We will be debt-free in a few months, besides the current mortgage, and will have an extra $1,000 to save or invest every month. I know that four years is not long enough for mutual funds and I can't afford to take a loss on this money, since I have plans for it. Should I put the money in a savings account, or is there a better way? -- J.K., via e-mail

DEAR J.K.: I am not sure where you determined that four years isn't long enough for mutual funds, but let me disabuse you of that notion immediately. I have no problem with mutual-fund investments for a much shorter period of time. You need to recognize that you could possibly take a loss, but the likelihood of that is relatively remote. That, of course, assumes that you don't pick some high-flying, long-on-risk, long-on-profit possibilities. It just seems foolish to me for someone of your relatively young age to invest in fixed-income securities. The only way to have a decent return is to assume some risk.

DEAR BRUCE: My wife and I both contributed to our companies' 401(k) programs and are maxed. I understand that we both can contribute $2,000 each year to a Roth IRA as long as we don't touch it for 5-1/2 years. Can we then draw any amount of this IRA each year, and it will be tax-free? We are 55 and 58 years old. -- C.K., via e-mail

DEAR C.K.: Yes, you can both contribute the $2,000 in AFTER-TAX dollars to a Roth IRA. As long as you do not make premature withdrawals, the money that you withdraw will be completely tax-free. While at your age you will not be able to take maximum advantage of compounding, Roth IRAs are still a very handsome way to save.

DEAR BRUCE: Having moved to Florida some years ago, we decided to update our wills and chose a local lawyer who specializes in elder-care. We had several questions that we were prepared to ask her, and she signaled "stop" as soon as we started talking, and informed us that her fee was $250 per hour for regular wills -- and we could tack on $4,000 if Medicare planning was involved. Naturally, we went with the regular will. What is your opinion? -- A.M., Port Charlotte, Fla.

DEAR A.M.: My suggestion is to get another lawyer. There is no reason in the world why someone would jump to a minimum fee of $4,000 for Medicaid or Medicare information. As a matter of fact, $250 would be more than ample for an entire regular will, as opposed to $250 per hour. This lady seems to be very overpriced and I would look elsewhere. Perhaps she is worth it, but for this kind of job expensive talent is not needed.

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).


08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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