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Subject: persfin-digest V4 #99
Date: Wed, 5 Nov 1997 20:24:49 -0500 (EST)
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persfin-digest Wednesday, November 5 1997 Volume 04 : Number 099
IN THIS ISSUE:
ADVERTISEMENT: MCI FAX BROADCAST SERVICE
Heartland High Yield Municipal Fund?
Re: Spreadsheets and Y2K Problem
Re: Roth vs. Education IRA / Roth IRA
Re: Medical Insurance for Playing Sports at School?
re: Almost Teenager + Mutual funds
Re:Steven Klein-Almost teenager and mutual funds
Convert non-deductible ira to roth?
Re: get rich quick in real estate
Another Roth IRA Question
new capital gains tax law and principal place of residence...
Roth IRA contributions
mortgage worksheet?
Re: Rebate Cards
IRA this year?
Stock Email Quotes? / Text Listing of Stock Company Names?
asset allocation and bond question
Money Market ?
home loans web site?
Mortgage Prepay Calculator?
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Date: Wed, 5 Nov 1997 19:20:42 -0500 (EST)
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Date: Wed, 5 Nov 1997 19:21:38 -0500 (EST)
From: bh314@scn.org (SCN User)
Subject: Heartland High Yield Municipal Fund?
I'm thinking about investing in a municipal bond fund--
Heartland Short Duration High-Yield Municipal Fund.
A few Qs from a novice:
1 The income generated by the bonds in the fund portfolio
is exempt from federal tax. Correct?
2 If I sell shares in the fund at a profit, I pay capital
gains tax; if I sell shares at a loss, I can deduct this
loss. Correct?
3 Do bond fund managers sell bonds, generating taxable
capital gains that are passed on to the fund shareholders?
4 Some say to avoid bond funds because they "never mature"
as contrasted with an individual bond. What does this mean
and why does it matter?
5 FInally, does anyone have any experience with the
Heartland group of funds?
Thanks for an excellent newsletter--
bh314@scn.org
------------------------------
Date: Wed, 5 Nov 1997 19:22:13 -0500 (EST)
From: "L. Chen" <am302@FreeNet.Buffalo.EDU>
Subject: Re: Spreadsheets and Y2K Problem
> Has anyone encountered and solved the following problem using 1-2-3 or
> Excel?
>
> Frequently, when I model cash flows I do it over a long time horizon--say
> 1995 to 2025. Often the flows must be graphed but the horizontal axis
> labels do not fit along the horizontal access (too crowded) (I know about
> changing font size, orientation, etc.) ..........................
Have you tried "place label every x ticks" for the X axis ? e.g. if you say
every 5 ticks, it will print/display every 5th year. It will reduce clutter.
Lily Chen
am302@freenet.buffalo.edu
------------------------------
Date: Wed, 5 Nov 1997 19:24:29 -0500 (EST)
From: Shankar.Prasad@Eng.Sun.COM (Shankar Prasad)
Subject: Re: Roth vs. Education IRA / Roth IRA
> From: Bhupinder Singh <Bhupinder.Singh@bentley.com>
> Subject: Question on Roth vs Education IRA
>
> If I can withdraw without penalty or have to pay income tax, from a Roth
> IRA account for my kids education, why would I use the Education IRA,
> unless of course that the money was not enough from the Roth.
>
> Or am I missing some aspect of the Roth IRA ?
Yes, you are missing some aspect of Roth IRA. Withdrawals from IRAs
in general are liable to taxes (regular income rate) and penalties (10%).
The "use-for-higher-education" exception applies only for penalties.
You will still have to pay the regular income tax on IRA withdrawals
(whether from Roth or ordinary IRA), treating the distribution in the
manner the IRA specifies (for Roth, it will be 'first-from-contributions';
for regular with ded.+non-ded. contributions, it will be according to
Form 8606).
So, if you use Roth IRA to save for education, then you will not pay
penalties, but you WILL pay regular taxes on the withdrawals (to the
extent that the withdrawals exceed your contributions). Using an
Education IRA, you will not pay penalties OR taxes. So, the Educ.IRA
is better from this "purely-tax" standpoint.
> The advantage being that the Roth IRA would not necessarily have to be
> used for education, in case I am lucky and my kids are Einstein and
> Tiger Woods :-). Also I am not sure if I have an Education IRA, how does
> that show up in financial aid calculations for need-based assistance. Or
> how do IRA's, 401K's show up as, when a college is figuring out how much
> one can afford to pay, for one's kids education ?
Yes, there are other reasons why you might not want to consider an Educ.IRA.
You have given a couple of them here (child may not go to college or need
money from parents (scholarships?)). Educ.IRA is too new to understand
what impact it would have on financial aid. I would GUESS that it would
get treated as "child's-money-fully-available-for-college", (even worse
than an UGMA/UTMA account). After all, it is earmarked in the child's
name and is meant only for education. Also, the limit of 500/year seems
too low to me - barely meet even a year's worth of expenses at a public
college.
I had made a slightly longer post on saving for education in the last
persfin digest #97. But, I am also tending towards using Roth IRA
(withdrawals-upto-contributions) and regular IRA withdrawals to pay
college expenses.
> From: Steve Foulks <steve_foulks@up.bresnan.net>
> Subject: Re: Yet another Roth IRA question
>
> >From: Rich Carreiro <rlcarr@animato.pn.com>
> >Subject: Re: Yet another Roth IRA question
>
> >>The folks at Strong funds recently informed me that when I transfer
> >>deductible contributions from a regular IRA to a Roth IRA, the taxes
> >>due can be paid out of the principal in the IRA, by virtue of a
> >>premature withdrawal of principal which would not be subject to a 10%
> >>penalty.
>
> >I don't know if it is true or false, but I wouldn't do it anyway
> >(unless I had no choice). Paying the taxes out of the IRA funds
> >reduces the amount of money that can grow (and be withdrawn) tax free.
> >By paying the taxes out-of-pocket you are in effect making a
> >contribution (the taxes paid) to the Roth.
>
> I agree with Rich's logic. In addition the people at Strong gave you some
> bad advice. Money withdrawn from a regular IRA, and not deposited in the
> ROTH IRA is subject to the 10% penalty.
Well, I recall reading something at the Strong web page about this. My
understanding is that Strong recommends that you rollover the ENTIRE
IRA withdrawal to a ROTH IRA. Then, on Apr 15 (or over 4 years in 1998)
withdraw enough money from the ROTH to pay taxes on the rollover amount.
This withdrawal from the ROTH will not be taxable as it will be part of
the "contributions" made to the Roth. This achieves the exact same
effect as rolling over a part of the money to the Roth and keeping the
rest to pay tax. HOWEVER, if you want to do this, please keep in mind
that there is a "technical corrections bill" being planned, which will
prevent you from taking tax-free-from-contributions withdrawals from a
Roth-Conversion-IRA for 5 years, and also sock double penalties etc.
I would suggest to perform the IRA-to-Roth rollover for a partial amount
for which you can come up with the taxes out of pocket. If you are
comfortable, you can do rollover again in 1999 or later (as long as you
qualify to do rollovers)
- --
Shankar Prasad
sprasad@eng.sun.com
------------------------------
Date: Wed, 5 Nov 1997 19:25:16 -0500 (EST)
From: Energo Ed <energo@fwa.cioe.com>
Subject: Re: Medical Insurance for Playing Sports at School?
Avrum Lapin stated:
>The school officials may not have an interest personally but you can be
>sure that the school district receives a "kick-back" not only from the
>insurance agency but from the guy who takes pictures........
And if I want to buy the pictures, I have to pay for them before ever
seeing them. Arrrgh.
Ed
------------------------------
Date: Wed, 5 Nov 1997 19:25:43 -0500 (EST)
From: Fred Schiff <f.schiff@ieee.org>
Subject: re: Almost Teenager + Mutual funds
You'll have to setup the mutual fund as an UGMA/UTMA because of your
child's age. UGMA almost always have much lower minimums (~$50)
You can check out these things at http://www.morningstar.net
The Stein Rowe Young Investor's fund is interesting - supposed to be
educational and only invest in companies kids would find interesting.
Fred Schiff (f.schiff@ieee.org)
------------------------------
Date: Wed, 5 Nov 1997 19:26:13 -0500 (EST)
From: Bill MacMillan <bill0612@ziplink.net>
Subject: Re:Steven Klein-Almost teenager and mutual funds
A decent mid-cap fund for long range goals might be Muhlenkamp.It has a
min. initial inv. of $200 and any sub. inv of $100. It is a 4 star fund
with a Sharpe Ratio of 2.15. and a beta of .82 It has been in existance
since '88 and has a five year return of 20.82.Tel. # is 1-800-860-3863.
(I have no assoc. with this fund.)
------------------------------
Date: Wed, 5 Nov 1997 19:26:48 -0500 (EST)
From: james cook <i000404@disch3.disc.dla.mil>
Subject: Convert non-deductible ira to roth?
I have a question about the Roth IRA. I am thinking of opening
up a "non-deductible" IRA (I have a 401K at work, so I can't have a
deductible IRA) for $2000 in the next few weeks for 1997. Then
in Jan. 1998 I will convert it to a Roth IRA.
1. Can I do this?
2. If I can, what taxes & penalities will I owe? From my
understanding, there are no penalities and I will only pay tax
on any dividends/interest/capital gains I receive between
the time I open the account and 12/31/97. For example, if
I put the $2000 into a money market fund and I get $10
in dividends, then I will only pay the tax on the $10. Is
this correct?
3. I also have approximately $18,000 in a "deductible" IRA that I
set up before I started my present job. I do not plan to
convert this money to the Roth IRA. Does this "deductible" IRA
money have any affect on the $2000 that I plan to convert?
Someone told me I had to pay a tax on this money even though I
don't plan to convert it to the Roth.
Thanks,
Jim
i000404@discg1.disc.dla.mil
------------------------------
Date: Wed, 5 Nov 1997 19:30:01 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: Re: get rich quick in real estate
>From: "Anderson, Alfred I." <anderson@mayo.edu>
>Subject: Get Rich Quick - Real Estate - $0 Down?
ALFRED
There is a good reason they will not send you anything by mail. If they do
not send you anything by mail, they can not be charged with using the mail
to defraud.
Every get rich quick in real estate sales pitch over the last 20 years that
had a real money back guarantee has went bankrupt. It just can not be
done by 99 percent of people who get their tapes.
The postal authorities are well aware of these scams and will crack down
hard on these people if they use the mail. They just do not use the mail.
You will get the tapes via some other way (UPS, FEDEX, etc)
GOOD LUCK
BOB FORD
BOB_FORD@COMPUSERVE.COM
------------------------------
Date: Wed, 5 Nov 1997 20:03:30 -0500 (EST)
From: "Derrick Green" <HW1.DGREEN@HW1.CAHWNET.GOV>
Subject: Another Roth IRA Question
Well, there hasn't been enough discussion about the Roth IRA, so I
have another question.
Me: 40 years old, State of CA employee, gross $60K/year, covered by
State of CA retirement, currently maxing out my 401K, no IRAs,
misc. mutual funds, member of an investment club
Situation: I was considering opening a $2000 non-deductible 1997 IRA
near the end of December, then rolling it over into a 1998
Roth IRA at the beginning of January and adding another
$2000. This would allow me to have $4000 growing tax-free
in the Roth IRA while having to pay very little taxes on
the amount I roll over into the Roth IRA.
Question: Is this a good idea?
Thanks for any input.
Derrick Green dgreen@hw1.cahwnet.gov
------------------------------
Date: Wed, 5 Nov 1997 20:04:28 -0500 (EST)
From: Jo Anne Freeman <jfreeman@calpoly.edu>
Subject: new capital gains tax law and principal place of residence...
We have a rental property in our community, which has a lot of equity.
It was a house in which one of us lived until about 10 years ago. We
would like to move back into it in about 8 months and then live in it
for two years prior to putting it onto the market, thereby saving a lot
in taxes (we hope).
Can anyone think of any drawbacks to this plan? (We would plan to rent
our current home and move back into it later -- we have a very good
management firm in town which manages our rental property now.)
Thanks in advance.
HJF
------------------------------
Date: Wed, 5 Nov 1997 20:06:13 -0500 (EST)
From: Peter & Karen Diamond <diamond@vsi.net>
Subject: Roth IRA contributions
I am currently making monthly contributions into my non-deductible IRA.
I am going to convert it to a Roth IRA next year. Should I stop my
contributions at the end of this year and wait until it is converted to
make contributions for 1998? It seems that this will keep the paperwork
cleaner and reduce the gains that will be taxed.
Peter Diamond
------------------------------
Date: Wed, 5 Nov 1997 20:07:07 -0500 (EST)
From: Brian Michalak <brianm@pdt-cav.com>
Subject: mortgage worksheet?
Does anybody know of a website worksheet that will not only
amortize a mortgage loan, but tell you how much you will be shedding off
the life of the loan by plugging in certain additional principal
payments?
------------------------------
Date: Wed, 5 Nov 1997 20:07:35 -0500 (EST)
From: dmak@tma-net.org
Subject: Re: Rebate Cards
The best gasoline rebate card around that I know of is the Citibank
Drivers Edge; however, I've been informed by Citibank that the card's
rebate feature (5% cash back for any gas station you use) is being
terminated by year end (another rebate card going by the wayside!).
Both Shell and Amoco seem to offer the best gas rebate now at 3%.
You may want to check out a service called GETSMART (www.getsmart.com
or 800-GETSMART). It's a free service where they'll give you a list
of the best rebate cards that meet your criteria.
------------------------------
Date: Wed, 5 Nov 1997 20:08:24 -0500 (EST)
From: JBednarzyk@aol.com
Subject: IRA this year?
I've been keeping track of the Roth discussions - even asking a question
once, however, I think I haven't figured something out yet....
I am contributing 15% to my 401(k). I may be eligible to contribute to a
Roth next year, but don't plan on converting any of my existing IRA's since
they have all been deductible and I believe I will be in a lower tax bracket
when I retire (I'm in the 31% bracket this year).
My question is should I make a non-deductible IRA contribution this year or
would it needlessly complicate my life?
If I did, could I convert only that IRA account to a Roth? I had thought
that if that were possible, to contribute to a money market account in Jan,
then convert it in Feb. Then I would have to pay taxes on only a few dollars
of profit.
Suggestions?
Thanks, Juli Bednarzyk
JBednarzyk@aol.com
------------------------------
Date: Wed, 5 Nov 1997 20:09:29 -0500 (EST)
From: Baynon <Toothdoc@Liii.com>
Subject: Stock Email Quotes? / Text Listing of Stock Company Names?
Does anyone know if there are any free services that will automatically
email daily stock quotes out to you?
Does anyone have or know where I can find a FULL text listing of all
stock company names and their corresponding symbols. (Not just a stock
lookup utility.)
Please respond to me via email directly if possible.
Thanks in advance.
- --
mailto:ToothDoc@Liii.com
------------------------------
Date: Wed, 5 Nov 1997 20:10:11 -0500 (EST)
From: JBednarzyk@aol.com
Subject: asset allocation and bond question
I've been doing a bit of research to determine my next investing steps. My
investment money has been primarily in my retirement accounts, and I've got
some money in an emergency fund. I have a short term goal (< 2 yrs) of
buying a house, so plan on putting the bullk of my money into my money market
and into an ultra short term bond fund (both Strong).
But looking ahead, I've decided to start a monthly monthly in Safeco Growth.
Having read a lot about the importance of asset allocation, I've decided to
out some of my money into bonds. Andrew Tobias, in his book "The Only
Investment Guide You'll Ever Need" says that bond funds are not a good value
for several reasons, including paying for professional mgmt when you can do
it yourself for less cost by laddering Treasuries; the possibility of losing
money since a bond fund never matures; etc. So I'm considering laddering
T-notes and holding them to maturity.
Comments on this? My main question is what to do with the interest paid on
the bonds? The money can't be reivested into bonds easily since the interest
isn't enough to buy another one. And the bonds must be purchased in
multiples of $1K, so I can't hold the interest until the bond comes due and
then reinvest.... Should the money go into the cash or equities portion of
my portfolio? But that skews the allocation - true?
Thanks, Juli
JBednarzk@aol.com
------------------------------
Date: Wed, 5 Nov 1997 20:10:51 -0500 (EST)
From: Steven Klein <SKLEIN@snm.org>
Subject: Money Market ?
I want to put $10,000 into a money market account. It seems like all the
banks here in Northern VA are paying between 2%-3% interest.
However one of the brokerages (Charles Schwab is paying 4.71% in
there money market account). Scwab offers free check writing and no
fee visa debit card with the account.
The question is, does anyone know of a reason why I should use bank
instead of Schwab?
Steve Klein
------------------------------
Date: Wed, 5 Nov 1997 20:11:47 -0500 (EST)
From: eric <eric_marcus@compuserve.com>
Subject: home loans web site?
Anyone know any web sites for home loans?( Merrill Lynch has a loan
program, no down payment, with a blocked account until equity reaches 20%.)
Any drawbacks? Any other lenders that have a similiar program?
------------------------------
Date: Wed, 5 Nov 1997 20:14:51 -0500 (EST)
From: Ken Stone <krstone@mindspring.com>
Subject: Mortgage Prepay Calculator?
There has recently been discussion on the list about prepayment of
mortgage principle. Does anyone know of a handy calculator that one can use
to assess different scenarios? Perhaps an online calculator? Part of a
financial software package (eg. Quicken)? Or is there an simple formula
that someone can share with the rest of us?
Thanks,
Ken
------------------------------
End of persfin-digest V4 #99
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