Read fine print of bank ads for 'free checking'

The Ticker

October 17, 1997|By Julius Westheimer

HERE ARE some suggestions about where to put your money:

FREE LUNCH? Find out if a bank's checking is really free. "If you see a bank ad for 'free checking,' read the fine print," warns Consumer Digest. "Banks can't say an account is free if they sock you with a fee for letting your balance slip below a certain minimum."

My advice: Read the bank's brochure carefully, particularly "disclosure" and account terms. Beware of hidden fees tied to ATMs, minimum balances and special services. Note that some accounts are free to seniors.

BIG NUMBERS: "Someone earning $50,000 a year would need $1 million to retire and maintain his or her living standard," says Better Investing. "Great way to bridge the shortfall between what you saved and what you'll need is to maximize your 401(k). It's 'forced saving,' tax-deferred, a gift from Uncle Sam and one of the best investments. Many companies match at least part of your contributions."

RETIRE RICH: "Secure Your Future: Retire Rich," says Money, November. Excerpts: "Estimate your retirement expenses and figure out how much you must save to produce needed income. If you must save more than now, add pay raises and bonuses to your nest egg. Open a new Roth IRA in 1998. Put at least 60 percent of your retirement portfolio in stocks for inflation protection."

BE SAFE, NOT SORRY: Want to bomb-proof your portfolio? "The wonderful scenario of low inflation, low interest rates and a booming market can't continue forever," says Robert Bingham, investment adviser, adding, "Eventually, stocks will correct and we should be prepared."

Mr. Bingham's ideas: Take the possibility of a correction seriously. Figure out how much of a decline you can stand and still sleep well. Build a cushion of bonds -- less volatile than stocks -- to help survive a downdraft. Moderate investors should put 50 percent of assets in stocks, the rest in bonds.

GOOD SWITCH: "Convert your IRA to a Roth IRA by notifying your trustee you would like to convert. Make a direct transfer of an IRA from one trustee to another, notifying the new trustee the account should be a Roth IRA. Never take possession of this money yourself. Roll over your IRA, meaning you receive a distribution from your IRA and then invest that money in a Roth IRA within 60 days. See your benefits department or accountant for details." (Financial Strategies, Alexandra Armstrong.)

ROTH RUNDOWN: "The Roth IRA is a gift from Congress, a no-brainer. Just say, yes." (Jane Bryant Quinn.)

"In a Roth IRA there are no required minimum distributions and no minimum withdrawal amounts." (FBW News, a local brokerage newsletter.)

"Before deciding on a Roth IRA, let a professional financial planner run the numbers to determine the best strategy for your particular situation." (Financial Planning Perspectives.)

Pub Date: 10/17/97

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