In Investing No Risk Means No Reward

 

Dear Mary: This may be the ultimate in stupid questions but it’s been plaguing me for a while. Is there any value in converting my existing 401(k) into cash without removing the funds from my 401(k). Do they even allow that? I hate losing all that lovely money as things dip and swirl. I would continue to contribute at my existing rate, 12 percent, including the company match of 3% for the 401(k). Symantha, email

Dear Symantha: Employer-sponsored retirement plans like 401(k) typically have a cash option within list of investment available to plan members. Look for a “Money Market” fund. If you move your account assets into that fund (which is perfectly allowable) the money is going to just sit there, not earning. It will be shielded from the wild swings in the market but will begin to lose value because you will not earn enough on your account to even keep up with inflation (currently about 3.3 percent).

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The very nature of investing is that you expose money to reasonable levels of risk with the expectation of achieving a profit or gain. Not all of the choices in your 401(k) plan carry the same level of risk. Just remember that in order to achieve a reward you must be willing to take a reasonable level of risk. No risk, no reward.

The biggest problem with moving your account into a “cash position” is how will you know when to move it back into investment funds that will give you a chance of achieving a gain? A better idea would be to contact your plan’s administrator and make an appointment to meet with an investment counselor to assess all of the options you have in your 401k plan. This person can help you match your tolerance for risk against the options you have in order to find the most comfortable place for the money you are contributing to your retirement account. 

Readers Share Clever Ideas to Use “This for That”

Have you ever wondered if it’s socially acceptable to split a restaurant meal? Today’s great reader tips include words of advice on that as well as clever ways to use “this for that.”

Split to save. I have found it’s possible to dine at expensive restaurants while still being a cheapskate. You can order an appetizer plus a small salad, and tell the server you want the appetizer as your main course. One person can order an entree and the other can order a large salad, then tell the server you want an extra plate so you can share. If this seems to be a strange way to order in an upscale restaurant, believe me, it isn’t. A friend of mine who is an experienced server has seen this many times. Sometimes there’s a charge  for splitting an entree (the highest I’ve seen is $5.00). With huge portion sizes and today’s economy, it makes sense. It’s also okay not to order a beverage and drink water with a meal. -Marcia

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Write on, wipe off. I am always thinking of things I need to do or buy while I’m in the bathroom getting ready for the day. But keeping a notepad in a room with so much moisture doesn’t work well. Instead, I use a wipe-off marker right on the mirror. I jot quick notes as I think of them. Then, when I’m ready to go, I transfer all my notes to paper and wipe them off the mirror. This routine keeps me from getting frustrated about not remembering something, and it keeps the mirror clean, too! -Leanne

Eyeglass cleaner. If you’re out when you realize your glasses or purse mirror needs cleaning, try using a drop of hand sanitizer to give you crystal clear results instantly. This works great on glass but should be tested on plastic. -Angelique T.

Holiday Shopping Guide for Whole Family Gifts

 

Whether your family tree is a small sapling or a mighty oak, it can get spendy to buy an individual Christmas gift for every person on the tree. One way cut costs and at the same time bump up the quality of your gift is to start thinking “whole family gifts”—a single gift that every member of a family will enjoy.

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Here are six whole family gift ideas to help you get started early—all the way from high-tech gadgets to low tech tickets:

Plan is Not a Four-Letter Word

 

A friend—let’s call her Sally—who in her early thirties, moved from Arizona to Florida in search of a better job and a fresh start. Not that many months later she decided a change of scenery wasn’t the solution she thought it would be and moved back.

She decided that what she really wanted was to settle down and buy a house.

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She’d had surgery the year before and thanks to some poor choices during employee benefits enrollment, she’d had to pay a big share of the bill. The recovery was easy; the  doctor and hospital bills were far more difficult to deal with. Back in Arizona she was working two jobs just to make a dent in the medical bills, not to mention her rent, credit-card debt and car loan. Naturally, it was time to take on a mortgage.

To jumpstart her dream, Sally packed up her belongings and moved again, but this time into the basement of some friends for a hundred bucks a month. It wasn’t the ideal housing arrangement for a thirty-something professional, but it helped her overcome the obstacles blocking her way to her dream of home ownership. 

Gluten-Free Lasagna and Apple Pie

 

It’s been about six months since my husband decided to go gluten-free—to give up wheat, which means just about anything that tastes good. My reaction? Oh, please. Do you really have to follow every food fad and trend that comes down the pike?

I’ve changed my tune.

It seems that many people are sensitive—even allergic to wheat. It gives them some level of discomfort even to the point of being sick depending on that person’s inability to digest the gluten found in wheat.

At first, Harold and I agreed that he would cut back on gluten. The more I’ve learned the harder I’ve worked at finding recipes that will help him to do that. The results have been quite amazing, actually.

Finding recipes that meet (or beat) my old standbys for his favorites things (Lasagna and Apple Pie), has not been that hard. I’m happy to say I’ve achieved it in these two versions for Slow-Cooker Lasagna and this wonderful Apple Pie with a crumbly topping.

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If anyone that you love and cook for is on a gluten-free regimen, show them a little Lasagna and Apple Pie love. Here’s the best part: Everyone will love these dishes whether they know they’re gluten-free or not.

Stop the Cycle

 

Sometimes, just a simple change in the way we do things can result in significant savings over time. Take the way you wash your clothes. I have to admit to using lots of cycles on my washer just because they’re there. And every cycle adds more time and uses more resources. Today’s first reader suggests a simple way to reduce the resources without sacrificing good results. Great idea, Natalie!

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Pre-soak. Instead of using the pre-soak and pre-wash cycle on your washing machine use the regular cycle but turn it off after the clothes agitate after a few minutes. Let them soak an hour or overnight then resume the cycle. This way you save water and electricity but achieve the same result. Natalie H.

Invest in Your Debt

 

Dear Mary: Soon I will receive an inheritance that is almost equal to the amount remaining on my mortgage. I am a widow, age 55 with no dependents. I have 25 years with the same employer and have been participating in the company’s 401k plan for the past 15 years. I plan to work until I am 65. Should I use the inheritance to pay off the mortgage or, as friends suggest, invest it in a variety of stocks and bonds and keep my mortgage because the interest is tax-deductible? Eleanor D., Iowa

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Dear Eleanor: You need to check with your tax professional because, as you know, I am not one. However, If I were you I’d pay off that mortgage so fast the lender would get dizzy. Investing in your debt is always a wise decision because you cannot lose and your mortgage should be the last debt you pay off—after you have a healthy emergency fund and you have paid off all of your unsecured debts.

Hurry! HARP 2.0 to Expire Soon

 

At first you might mistake it for a large, stringed musical instrument. It’s not, but the Home Affordable Refinance Program (HARP 2.0) could be music to your ears if your home mortgage is still underwater.

First announced in March 2009, the federal government program designed HARP to help underwater or near-underwater homeowners refinance into a fixed loan with a lower monthly payment.

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The first HARP was not that successful. It was difficult to qualify to refinance under the terms of the program and contained too many roadblocks for the typical homeowner who needed the service so badly.

The program was revised in 2011 to be much more successful and available to many more needy homeowners.