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Jewish World Review Oct. 4, 1999 /24 Tishrei, 5760

Bruce Williams

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Get a financial education! -- DEAR BRUCE: I have $4,000 in an account earning 3 percent, and I have a pension plan at work. I know nothing about investing, but I feel that I should be doing something more with my money. Would you please suggest how to find CDs or other ways to invest? -- S.G., Fort Thomas, Ky.

DEAR S.G.: I would suggest that you get yourself an education. Allowing money to sit around at 3 percent is foolish. You are shoveling money down a rat hole. While a savings account is good for the short term, using it as a parking place is not an investment. I would suggest that you spend some time at the library learning the language of investing and finding out what you can about CDs, mutual funds and the like. Then you would be in a better position to make a decision. With the amount of money you have, you'll be very hard pressed to find anyone to help you with that decision unless they are helping themselves. I would look at that advice very carefully.

DEAR BRUCE: You have hosted several authorities on income tax laws who say that income tax is voluntary and there are ways to get out of the system. I have been studying this for about six months now, and the more I learn the more confused I get. I am told one does not have to pay income tax. Is this a scam or what? -- D.C. Tampa, Fla.

DEAR D.C.: The main prophesier for this kind of activity went to jail. Does that give you a clue? They will tell you that there is no such thing as dollars, that the items we use as money are federal reserve notes and that the tax system is voluntary, etc. I doubt if any of us would volunteer to pay taxes. The people that pitch the "no tax" routine certainly stand to benefit, but the reality is that if you don't pay attention to the tax laws, you will very likely be burned.

This is another "pie-in-the-sky" operation that I would put out of my mind. To set the record straight, the only people that I have ever interviewed on taxes in the last 20 years were representatives of the IRS.

DEAR BRUCE: I am 56 years old and I am now blind. I have a part-time job, collect SSI and have $5,000 on hand. Should I invest this money in a Roth IRA, or should it be self-directed to a user broker to invest in mutual funds? I need advice. -- G.M., via e-mail

DEAR G.M.: The purpose of investing in an IRA is to avoid paying taxes later on. Unless your income increases very, very substantially, you will owe no income tax. Why bother locking the money up in an IRA for the next five years when you may need access to it? A moderately aggressive mutual fund with a decent track record would be a good place to consider. You might find that you have an affinity for one company over another, which is fine if it has been well thought out. You have no taxes to avoid; therefore, the Roth IRA appears to be of no value to you.

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).


10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
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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