Simply ask yourself, "What will happen if I die?"

That answer will help you determine how much life insurance you need. For example, if you have a lot of debt that your spouse would be stuck with if you died, then you need some life insurance. Even still, a couple with a double income and no children normally will not need much life insurance.

When you have kids, you need to take out a term-life insurance policy that is 10 times your annual take home pay. The point is to have enough money to replace the income of the deceased spouse.

This is even true for stay-at-home moms and dads. They provide economic benefits by doing the majority of the cooking, cleaning, shuttling the kids, so do not forget to take out some life insurance on stay-at-home parents.

Few people need insurance on their children. Life insurance is meant to protect an income stream that can disappear due to a death. That why parents should consider carrying it, because others are depending on their income.

You might take the money you would have paid in premiums for your child and park that in your emergency fund or put it in a mutual fund. That is a good way to help your child no matter what happens.

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Posted By: Joe on Monday, March 31, 2008
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In these times of foreclosures and high gas prices, some people may have IRAs they want to tap into before 59 1/2. Read on to see how you can.

1. Permanent disability of IRA owner.
Your money can be withdrawn without penalty in the event the IRA you become permanently disabled. You are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration.

2. Withdrawals are used to pay non-reimbursed medical expenses.
In the event of serious illness or injury that requires prolonged or expensive medical treatment, the IRS will waive the early withdrawal fee on the condition that the expenses are in excess of 7.5% of your adjusted gross income.

3. Withdrawals used to help pay for first-time home purchase.
Despite a lifetime limit of $10,000, this exemption can make it much easier for an IRA owner to buy a house. It must be used to pay qualified acquisition costs for the main home of a first-time homebuyer who is any of the following.
a. Yourself.
b. Your spouse.
c. Your or your spouse's child.
d. Your or your spouse's grandchild.
e. Your or your spouse's parent or other ancestor.

4. Higher education costs.
Higher education expenses can be paid for as long as they are tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a student at an eligible educational institution. They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. In addition, if the individual is at least a half-time student, room and board are qualified higher education expenses.

5. Money is used to pay back taxes to the IRS after a levy has been placed against the IRA.
This is not an exemption that will make you rich, but it may save you money if you find yourself in an uncomfortable position with the IRS.

6. Withdrawals used to pay medical insurance premiums.
You will not have to pay the tax on these amounts if all of the following conditions apply.
a. You lost your job.
b. You received unemployment compensation paid under any federal or state law for 12 consecutive weeks because you lost your job.
c. You receive the distributions during either the year you received the unemployment compensation or the following year.
d. You receive the distributions no later than 60 days after you have been reemployed.

7. Death of IRA owner.
Hey who said the IRS was heartless. If you pass away before you are 59 1/2 years old, your estate will not be paying the 10% early withdrawal fee.

One hitch to all of this is the holder of an IRA is subject to a five year waiting period. An investor could not, for example, deposit $2,500 in their IRA this year and withdrawal it next year penalty-free even if it would otherwise qualify as an exemption.

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Posted By: Joe on Monday, March 24, 2008
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I actually found an article on CNN Money that I agree with 100%. It discusses the advantage of dollar cost averaging over lump sum. This is the strategy I use on my Roth IRAs that enable me to sleep at night.

Labels: investing, IRA, mutual fund, Roth IRA

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Posted By: Joe on Friday, January 25, 2008
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If your teenage child or grandchild is gainfully employed, they are able to contribute up to $4,000 a year to a Roth IRA. If a you want to give them a present, contributing to their IRA and it will pay big dividends. If $4,000 is deposited on a teenager between the ages of 16 and 21 every year and the Roth IRA earns a measly 10% per year, at age 65 the amount in the fund will be $2,045,042!

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Posted By: Joe on Saturday, January 12, 2008
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