In general, yes, but there are some important exceptions. You cannot roll over required minimum distributions (RMDs). You also cannot roll over hardship distributions from your 401(k) plan, or certain periodic payments you receive from the plan. Most other distributions are eligible for rollover.<
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- Contribute as much as you can. The more you put in now, the more you will have when you retire. And, if your company has a matching program, at least put in the amount required to receive the matching funds.
- Set a basic target allocation between stocks and bonds. If you have 10 or more years before retirement, most of your 401K should be invested in stocks which usually return more than bonds over the long run.
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Charitable gift funds combine mutual fund investing with deductible charitable giving. How they work: The fund is managed by a mutual fund company, much like a normal mutual fund. But you get an immediate tax deduction for your contributions because fund proceeds will eventually be paid to a charity.<
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With interest rates near historic lows, it?s hard for many people to safely secure enough investment income to meet their living needs.<
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New inflation-protected security is being offered by student-loan giant Sallie Mae, reports bond expert Marilyn Cohen. The notes (OSM, yielding 5.7%), which mature in 12 years, pay dividends monthly in an amount tied to the Consumer Price Index.<
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High dividends from foreign stocks. Companies in countries that have undervalued currencies are especially attractive to US investors who are concerned about inflation.<
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Growth stocks are likely to lead the market. Typically, value outperforms growth over long periods, but now growth stocks are cheaper than value stocks.<
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Investors can earn generous, steady yields with preferred stocks. Despite their name, these securities are more like bonds-they pay fixed dividends and are sensitive to fluctuations in interest rates and their issuers' credit ratings.<
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Free independent stock research now must be offered to investors by a number of major brokerage firms, including Merrill Lynch, Smith Barney and JP Morgan. The firms continue to provide their own research but also must offer independent analysis from firms that don't have investment banking relationships with the companies they follow.<
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College partnerships allow students to earn degrees from private universities at lower cost. Students transfer to specific private universities after graduating from a two-year community-college program.<
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Investor?s Business Daily founder Bill O?Neil has a unique stock-selection system. It has chalked up a six-year cumulative gain of 705% from 1998 through December 31, 2003, versus the S&P 500 Index?s 14.6% for the same period. O?Neil?s approach has been labeled one of the most consistent in both bull and bear markets by the American Association of Individual Investors.<
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Coming into some money? Before rushing to pay off your mortgage, take these steps?
Establish an emergency fund?three months of living expenses for two-income married couples?six months for singles or one-income couples.<
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Is there a better way to buy stocks for my 10 nieces and nephews? On each of their birthdays, I put $50 in a separate account at BuyandHold-but it charges $10 a year for each account.You can invest small amounts in fractional shares of stock less expensively through ShareBuilder (866-747-2537, www.sharebuilder.com).<
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Instead of cashing in gains on stock or mutual fund shares to pay a child?s tuition, make a gift of them to the child and have him/ her cash them in. A child claimed as a dependent can receive as much as $800 of investment income tax free and then take another $29,050 of long-term capital gain subject to just 5% tax. But if you cash in the same securities, you probably would pay 15% gains tax on the total.<
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Guard against inflation in a retirement portfolio by buying either Series I bonds or Treasury Inflation Protected Securities (TIPS). Both pay interest on a principal amount that?s adjusted for inflation. Series I bonds have a 30-year maturity, and TIPS have a maximum maturity of 20 years.<
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To size up a professional financial planner, look for?
Qualifications and course work, including titles, such as certified financial planner (CFP) and chartered financial consultant (ChFC).<
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How do you calculate a stock's price-to-earnings ratio, and why is it so important?
You can't tell whether a stock is cheap by price alone. That's where the price-to-earnings ratio (PE) comes in. To calculate PE, divide the stock price by the company's annual earnings per share. In general, the higher the PE, the more investors are paying for a stock relative to its earnings. When calculating PE, use "trailing" earnings-earnings from the past year. Most publications and Web sites include this calculation with a stock's price listing.<
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Thieves are joining ethnic, religious, political and professional groups in an attempt to gain members? trust and get them to invest in bogus financial or insurance schemes. This is known as affinity fraud.<
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Dual-income spouses who roll over their 401(k)s into the same fund family may qualify for discounts on sales charges.<
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Software to track investment taxes makes it easy to stay aware of your cost basis for specific purchases?whether gains and losses are short- or long-term?and whether stocks have split, merged, been spun off, changed names or been otherwise modified.<
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If you plan to leave bonds to your heirs, consider "death put" bonds, says bond guru Marilyn Cohen.
Reason: Issuers will buy them back from your heirs at the original price even if they have fallen in value.<
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How risky is your portfolio? Go to RiskGrades (www.riskgrades.com), type in the ticker symbols of your portfolio holdings and find out. RiskGrades assigns your combined holdings a numerical RiskGrades measure and also assigns grades to individual securities within your portfolio.<
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Bank CDs with fancy features rarely have better rates, warns financial analyst Greg McBride.
Liquid CDs allow you to withdraw part of your money before the term ends with no penalty?but if you do so more than twice or your balance drops below the minimum, your rate could be lowered.<
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A debit card won't work at a gas pump or other merchants if the funds in the bank account it draws from get very low. The electronic processing system for the cards blocks access unless the account contains a minimum amount. If your account falls below that, you cannot pump $10 of gas even if the money is in the bank.<
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Free checking accounts aren?t really free, warns consumer advocate Ken McEldowney. Legally, "free" means no minimum-balance requirements and no activity or maintenance fees, such as monthly service charges.<
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Online bill paying is safer than using traditional checks. Identity thieves get most of their information from bills and credit card statements that they find in the garbage. Paying online can reduce the amount of paperwork you have to throw away.<
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Unforeseen cost of retiring early: Premiums and out-of-pocket costs for medical insurance. Until Medicare eligibility begins at age 65, a 55-year-old retiree who must buy his/her own health insurance may spend between $140,000 and $234,000.<
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Trading foreign-listed stocks is easier and cheaper than it used to be?but still much more expensive than trading US stocks or American Depositary Receipts (ADRs) of foreign companies on US exchanges.<
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Listen to management conference calls for free over the Internet at the same time that institutional investors do. Web sites such as www.bestcalls.com and www.vcall.comlist times when conference calls are made?or check a firm?s own Web site.<
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