Greg Hilton
 Gregory
Hilton, J.D., LLM (tax), CPA, CFP is a Fee-OnlyŽ financial planner in
Chicago. Although his services are comprehensive he concentrates on the
tax and investment issues of retirement and estate planning. He is
registered as an investment advisor and maintains membership in NAPFA,
ICFP, and several legal, tax and accounting associations. Greg is a
national instructor on tax and financial issues for the National
Association of Tax Practitioners and is authoring a book on financial
planning for the highly compensated to be published by Commerce Clearing
House. Greg can be reached at (312) 222-9647 or by e-mailing gh-jdcpa@usa.net.
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Paul Pignone
 Paul
R. Pignone, CFP, CLU, ChFC, a Financial Advisor and Principal at Boston
Retirement Advisors, Inc., in Salem, New Hampshire, has been involved in
the financial industry since 1978. Paul specializes in retirement and
estate planning, investment management, and business and tax consulting.
He has taught financial planning and investments at high schools and
colleges and has conducted seminars in Retirement and Investment Planning
at Digital, Honeywell, GTE, and many other organizations. Visit Paul's
website here.
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Questions and Responses
When's the best time of year to make the maximum contribution to
my individual Roth IRA?
What's a good income-generating fund for an elderly person?
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When's the best time of year to make the maximum contribution
to my individual Roth IRA?
from Shelly
Q: This January 2001, I opened an individual Roth IRA with the maximum
yearly contribution of $2,000. I need to know the best time of year to make my
next maximum contribution - - January 2002 or December 2002?
A: (Greg) Contributions
to Roth IRAs are not deductible on your tax return the way regular IRAs are.
Instead, they use already taxed dollars but let them grow tax free forever.
Since tax deferral is the only advantage of Roth IRAs it would make sense to
start the deferral as soon as possible. Therefore, make your 2002 Roth
contribution as early as you can - January, 2002. You could wait to as late as
April, 2003 (when your 2002 tax return is due), but you will have lost 15 months
of tax free growth.
What's a good income-generating fund for an elderly person?
from Suzy
Q: What type of mutual fund/whatever would be a good place to put
$50,000 for a 78-year-old lady in good physical health, who would like to get
$250-500/month return on it?
A: (Paul) That's quite a tall order.
To generate a 6% income stream is achievable with a combination of GNMA
and corporate bond funds. You might even consider blending in some REIT's
(Real Estate Investment Trust).
Because of your investment amount, I'd stay with mutual funds to limit your
volatility and increase liquidity.
Regarding 12% return, there is nothing safe enough that I would recommend to
you.
I'm assuming these are the only funds you have available and safety of
principal is critical. My other concern for you is inflation. You
might consider minimizing your income needs, so in the future your purchasing
power is maintained. You might need to let some of those funds grow to
satisfy those future needs.
Important Disclaimer
Investing in equities involves a serious
principal risk, and no assurance can be given that the techniques described here
will be successful. Returns vary and you may have a gain or loss when you sell
your shares. Past performance is no guarantee of future results. Index returns
shown are historical and include the change in share price, reinvestment of
dividends, and capital gains. Indexes are unmanaged and do not reflect the
impact of transaction costs. Transaction costs would have reduced the total
returns.
International investments, especially those in
emerging markets, entail greater risks (as well as greater potential rewards)
than U.S. investing. These risks include political and economic uncertainties of
foreign countries, as well as the risk of currency fluctuations. These risks are
magnified in countries with emerging markets, since these countries may have
relatively unstable governments and less-established markets and economies.
Lastly, the questions and responses set forth
here are for general informational purposes only and are not intended to
substitute for performing your own independent research or contacting your
financial or legal professional before making any investment decisions. We make
no guarantees as to the performance of any investment strategy you choose and
are not responsible for any losses you might incur.
