Need Advice With My Future Planning

**project15** · 01-16-2009, 10:24 AM

Are you married or do you have kids? If not, why do you need life insurance? If your answer is "because it's an investment vehicle", then I would say that there are better places to invest that money.

**sweeps** · 01-16-2009, 10:35 AM

More to project15's point, universal life insurance. Generally speaking, it is a ripoff.

Your transamerica mutual fund... what is the commission and expense ratio on that fund?

I'd like to get more information about the 401k. Do you get a company match? Rule of thumb is to maximize your company match in your 401k, then max out a Roth IRA using low-cost mutual funds, then add more to your 401k if you still have money to invest.

**LuckyJB** · 01-16-2009, 10:37 AM

I have life insurance because i am young and healthy and I locked myself in. And what if I got diabeties as it runs in my family and then i couldnt qualify. So thats why I did. PLus I like the cash value tax advantage part. I hope to have my policy pay for itself when I am in my 40's. No kids. Not married.

**LuckyJB** · 01-16-2009, 10:47 AM

No match on 401K. Where can I look into for a roth IRA?

Mutal fund? hmmm...I have no clue.

**LuckyJB** · 01-16-2009, 10:47 AM

Ever had Universal life insurance? I did lots of research on it. I am pretty comfortable with my policy.

**sweeps** · 01-16-2009, 11:07 AM

T. Rowe Price, Fidelity and Vanguard are good sources of low-cost funds. If you invest directly with them, there is no advisor commission to pay, your investments can be monitored and managed easily over the web, and the expenses are generally very low.

To find out how much you're paying on commissions, fees and expenses for any fund including your transamerica fund, you should have been given a prospectus (usually a thick, white booklet) detailing the information. You could also ask your advisor, but he may not tell you the whole truth of the risks and costs of your investments.

Typically universal life insurance is more expensive and performs worse than investing the same amount of money in term life insurance and low-cost mutual funds. There are many people on this site who had universal life and once they did the math realized they were getting ripped off. Having said that if you've done the research and you are happy with your policy, then that is all that matters.

**LuckyJB** · 01-16-2009, 11:25 AM

Thank You Kindly

**LuckyJB** · 01-16-2009, 11:37 AM

What Do You Suggest About The 401k At Work?

**snafu** · 01-16-2009, 11:50 AM

No one cares more about your money than you! If you invest a bit of time to learn about investing, it will pay huge dividends over time...much better than your universal life which you describe as index minus initial and annual commissions minus fees. You library likely has the bright yellow series of books "Investing for Dummies' [no offense, it's truly the name] which is an easy read primer. If you have time, take a continuing ed course at your local college and combine investing knowledge with minimizing your income tax.

Sweeps gave an excellent list.

**sweeps** · 01-16-2009, 12:09 PM

LuckyJB: We'd need more information about the investments available in your 401k to determine if it's worth it. I don't know anything about John Hancock funds, but they sound expensive to me. Also you mention that you don't get a company match. So my gut feeling is that you should be looking at a Roth IRA with T.Rowe, Fidelity or Vanguard before investing in your 401k... but again that's just a gut feeling, hard to say without details.

**Bernz** · 01-16-2009, 12:27 PM

I would suggests setting aside as much as you can for now either on a savings account or cd's and possibly use this money to buy a house. (I assume that you are not a homeowner.) You should also, start getting into undervalued mutual funds or even buy individual stocks being very young yourself. Universal life insurance is not something I usually recommend, even at your age.

**jIM_Ohio** · 01-16-2009, 01:15 PM

401k vs Roth IRA is a tax issue.

If you are single and have taxable income more than 34k, the 401k is a better deal (IMO). If your taxable income is less than 34k, the Roth is better deal.

34k is cutoff for 15% bracket. If your money goes into Roth at 15% and comes out at 25% or higher, you saved 10% in taxes.
If 34k or more of taxable income, the 401k saves you 25% of taxes on every dollar contributed.

Realize 34k is TAXABLE income, not gross income.
Add in $5700 std deduction
Add in $3650 exemption
You could gross 44k and easily have less than 34k be taxable come tax time (so don't think taxable=gross)
health care benefits might not be taxable to you
It you have a house the gross pay could even be higher (we gross 103k and only have 65k taxable because of 401ks and house).

I would question the life insurance to make sure you create a better plan first.

Put 15% of gross into a retirement account (401k or IRA). Take deductions in 25% bracket and do not take deductions in 15% bracket is my advice.
Put 5% of gross into short term savings, life insurance or similar.
If you cannot do 15% into retirement, then drop the life insurance and direct that money into retirement accounts. Buy term instead.

You should first calculate what your savings should be (based on gross income) and NOT base savings on what is left after all bills are paid. Savings comes first, not with what is left.

Need Advice With My Future Planning