In this month’s Ask The Expert Column, Mark Greenblatt, an investment adviser with RVR Wealth Advisors in Sylvania, offers financial advice to our readers.
Q If my child receives a college scholarship, what happens with the college fund that I established for them? What other ways can they use this money without being penalized?
Scholarships might not cover all costs. The funds could be used for post-graduate studies like medical or law school. It could be transferred to another beneficiary like a younger sibling, back to the parents, or saved for his or her own child(ren). A scholarship is a good problem to have.
Q I’m wondering how to approach college loan repayment. I have debts both big and small — do I go about paying all the small ones first, and just making minimum payments on the bigger loans? Or do I pay a little to each loan continually?
Make sure to make minimum payments and not incur any penalties or late fees. Attack the account with the highest interest rate first. Consider consolidating, but make sure you understand how consolidating can impact survivors in the event of a death.
Q At what age should I start planning for my 401 K? Is there such a thing as starting too early? And what actions should I take if I can’t set one up through my employer?
You should’ve started planning your 401 K yesterday. It’s never too early to start. Consider a ROTH or Traditional Individual Retirement Account (IRA). The days of loyalty are behind us. That applies to employers and defined benefit pension plans, employees who switch jobs regularly, and to the social security system which was only intended to provide SUPPLEMENTAL retirements benefits when it was created (and life expectancy was shorter). Pay yourself first and commit to saving and investing early and regularly; spend what is left.
Q What’s the best way to create financial security for my child?
Lead by example and HAVE A PLAN. Make sure you have adequate insurance protection for auto, home, life, disability, and an umbrella policy in case of a catastrophic loss. Teach your child to save a portion of allowance, gifts, and part time job money. Have a budget for your family and have your child develop his/her own budget.
Q What are the best options for putting away money for my newborn baby?
It depends on the goal. Education? For parochial school or for college? Are you interested in growth and willing to assume more risk, or preservation of savings and want something more conservative? There is no one size fits all answer. Anything from a bank savings account to CDs to bonds to mutual funds and stocks might be appropriate. Then, type of account is also important — savings, UGMA/UTMA, 529, Coverdell ESA? Best approach is to determine specific goals and then find the most appropriate solution.
Q I think about making investments in stocks, but I find them intimidating and confusing — not sure where to start.
Diversify. Individual stocks are probably not the answer. The best place to start, for this and all the prior questions, is by working with a professional — hire a coach. Find someone who will educate you and answer your questions. Make sure your coach is credentialed and will listen to your specific goals and dreams. A coach will first teach you about your options in general and then help to build a plan unique to your situation. It is a team effort (which may also include lawyers and CPAs for specifics) and you are the player; you have to take action and stick to the game plan. Take emotion and market timing out of the mix. Don’t chase winners or listen to every expert’s opinion today; it will change tomorrow. Start early and stick with it — your financial future is a marathon, not a sprint, and there is no dress rehearsal.
RVR Wealth Advisors, 7135 Sylvania Ave. 419-824-8200. www.rvrwealthadvisors.com. Questions on any subject, from health to relationship advice, can be submitted to Ask The Expert by emailing email@example.com.