Retirement Planning/Investing Advice

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Question
Hi David-
I hope you can offer some advice.  I'm 51, taking classes online for a job that first paycheck should be end Jan.2013- making only $8.00/hr to start. I have $113K in savings, and 16K in ROTH IRA's. One maturing now I'm transferring to savings, one doing 10% avg. for 2 years (index fund), and one only about 1% maturing later next year. I would like to save for retirement and have my money work harder for me. I like the idea of index funds like VFINX. I've heard dividends are the way to go too. My expenses currently do not exceed $1k/mo. total. I feel I should be able to invest at least $50K.  Any advice will be greatly appreciated. Thank you for your kind time and help.  Have a wonderful day!
Respectfully,
Susie

Answer
Hi Susie,

While I can not offer you specific investment advice in this forum, I may be able to shed some light on a few things. While having available cash on hand as in savings accounts is not a bad thing, current interest rates are so low that you are actually losing money due to inflation. It is definitely not the way to save for retirement. I do like investments that pay dividends as they give you the opportunity to make money in two ways. The growth of the investment and the dividend payout which can be used to purchase more shares. The index fund you have does not pay dividends. If you wanted something similar that did pay dividends you could use an ETF or "Exchange Traded Fund". The problem I see with non dividend paying index funds is that you will basically track the performance of the market, so you are "riding a roller coaster" so to speak. How well you did will depend entirely on when you sell them. Many people will tell you to buy an index fund and hold it for life but if it were to reach an all time high, there would be no place to go but down. You could also look into some high quality dividend paying stocks.

I would highly recommend that you sit down with an advisor who can access you risk tolerance and put together a plan that you feel comfortable with. They will also have to help you decide which types of accounts will give you the best tax treatment for the future. Good luck with the new job. I hope this helps, best of luck!

Dave
diannopollo@twcny.rr.com  

Retirement Planning

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David M Iannopollo

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I am a professional financial advisor who can assist you with answers on mutual funds, annuities, IRA's, rollovers, qualified and non-qualified retirement plans, retirement planning, educational planning, life, disability and LTC insurances. I can also show you how to take advantage of the stock market gains without the risk of loss!

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