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 Dear Bob...

Dear Bob is written by Robert D. Child, President and Founder, of Child Group Wealth Management. When economic times and financial markets were tough, Bob Child was there and learned from those financial tragedies. Bob leverages experiences gained over his 40 year career into a disciplined approach to investing.

DEAR BOB: I turned 70 years old last year. When can I start to withdraw from my IRA? –Ready to Retire in FL

DEAR READY TO RETIRE IN FL: If you own an IRA and turned 70 ½ in 2010, you have until April 1, 2011, to take the first required minimum distribution (RMD). The next RMD must be taken by December 31, 2011. Failure to withdraw an RMD by the applicable deadline may result in a 50% tax penalty on the required amount not withdrawn. (

DEAR BOB: I mistakenly contributed too much to my traditional IRA in 2010. What are my options? –Confused in NY

DEAR CONFUSED IN NY: The 2010 contribution limit for individual retirement accounts (IRAs) was $5,000 ($6,000 for those ages 50 or older). If you “over contributed,” you have until your 2010 income tax return is due (including extensions) to withdraw the net excess amount (adjusted for any investment gains or losses on the amount) without penalty. If you leave the money in the IRA, the excess amount will be subject to an annual 6% excise tax. You can avoid paying this excise tax in future years by applying the 2010 excess to your IRA contributions for 2011. (

DEAR BOB: I hear so much about risk when it comes to my finances. What is the biggest risk in retirement? –Ready to Retire in FL

DEAR READY TO RETIRE IN FL: There really isn't a cookie-cutter solution when it comes to planning for retirement. I recently read an article in the Wall Street Journal that spoke about the biggest risk being longevity. Americans are living longer, sometimes past 100 years old. Although this can be a gift, it can also feel like a burden when planning for retirement. Medicare and Social Security were designed and based on a different world. The ratio of those retiring and collecting social security is much greater then those paying into social security. Pre-Retirees cannot and should not depend on these outlets to afford their cost of living.

Planning for your financial well-being over 50 years can be overwhelming. I build my client’s portfolios based on meeting their most important goals. Having the ability to maintain one’s current lifestyle during retirement years without spending principle is the most common goal I hear.

For my clients, I invest in a mix of municipal and corporate bonds with varying maturity dates, depending on a clients tax situation, in order to generate income and meet their current lifestyle needs, at a minimum. Any excess principle and/or income I re-invest into equity type investments for growth.

In short, diversification is key. There is no panacea to solve all financial variables of your personal economic situation and no one can control the outside world and what happens in the markets. However, choosing the right financial advisor to guide you can certainly go a long way towards solving these issues, protecting principle and managing risk.

DEAR BOB: What are three important steps one can take to prepare for retirement? –Preparing to Retire Early in FL 

DEAR PREPARING TO RETIRE EARLY IN FL: 60% of Americans approaching retirement do not have any financial strategy in place. Nearly 42% of workers and retirees just guess, when asked how much money they will need for retirement. These guesses are typically wrong.

Here are three steps an investor can take to better prepare for retirement, since there is no better time to prepare, then the present. 

  • Formulate a Budget: As simplistic as this may seem, you need to know how much it costs you to live each month. It is crucial to know where you stand presently, in order to maintain your lifestyle during your retirement years.
  • Review your Portfolio: Are your current investments appropriate your lifestyle and needs? Could it be time to move over to fixed income investments and start receiving monthly cash flow? Are you pulling money from your principle to live on each month?
  • Acknowledge that an investment is not performing as expected: Perhaps you need to take initiative and sell positions that are underperforming? Holding on to underperforming investments could be detrimental to a retirement plan. Accepting that you may have made an error in judgment regarding an investment, and moving out of it, is extremely important for maintaining your principal. 

DEAR BOB: I just received a seven-figure inheritance from my late aunt’s estate. The inheritance is the largest sum of money that I have ever handled. I would like to make sure I have a good plan in place to manage this inheritance. What do you suggest? –What to Do With a Financial Windfall in FL

DEAR WHAT TO DO WITH A FINANCIAL WINDFALL IN FL : You are wise to be cautious and not give into the urge to spend and shrink your inheritance to nothing. A little planning will go a long way toward making the most of your money.

In many cases, receiving a large sum of money carries a “price tag” in terms of taxes. Although income taxes generally are not due on inheritances, there are exceptions. (e.g. for withdrawal from an inherited IRA). So the first thing you should do is find out what the tax consequences will be. Next, put together a sound, long-term strategy for investing and spending.

Sit down with an experienced financial advisor and identify your needs and investment goals.

  • What is your current financial situation?
  • What is your risk tolerance ?
  • Age is also a factor to consider.
Since your wealth has increased substantially, you will also want to review your estate plan. You may have an opportunity to control estate taxes and you will want to make appropriate provisions for your family.
Receiving a large sum of money can be thrilling, but it can also be overwhelming. Having a plan for handling the money can help ensure that wise financial decisions are made.

DEAR BOB: What is the number one financial tip you can give me?
-Searching for a Tip in FL

DEAR SEARCHING FOR TIP IN FL: The best “tip” I can give is quite simple, Precautions are useless after a crisis! When’s the worst time to buy a home-security system? After a break-in. When’s the worst time to check your tire pressure? After you’ve already had a blowout. When’s the worst time to put your seat belt on? You get the idea.
It’s a fundamental fact of life, and it extends to your finances, too. Money can take hits just like everything else. People lose their jobs. Investments can plummet. There might be a death in the family. We have to contend with natural disasters, theft, fraud, and just plain bad luck. There’s only one way to fight it: by having a plan. But a plan is nearly useless after the fact. So what’s my number one tip as a financial advisor?

Do now what you’ll wish you had done later. If you take suitable precautions for your money, you’ll find that it’s always there to support you, even in your direst need. Don’t trap yourself by the hardships of life. Because precautions are useless after a crisis.

Disclosure: Securities offered through vFinance Investments, Inc., Member FINRA/SIPC. The Child Group Wealth Management advisors are registered with National Asset Management, Inc., a SEC Registered Investment Advisor and affiliate of vFinance Investments, Inc., Accounts are carried by National Financial Services LLC, Member NYSE/SIPC, a Fidelity Investments company. National Asset Management and vFinance Investments are not affiliated with the Child Group Wealth Management.

Disclaimer: There are risks involved with investing, including loss of principal. Past performance does not guarantee future results. By investing in bonds you may be subjected to price volatility based on fluctuations in issuer and credit quality. When investing in bonds, you are subject, but not limited to, the interest rate, inflation and credit risks associated with the bonds. Bonds may be worth less than original cost upon redemption or maturity. ** Fixed Income investments may limit a client’s risk exposure by receiving consistent cash flow on their investment depending on the terms and rating of the investment, no matter what the market value of the bond is at that time. So, even thru volatile times, as we have seen these past few years, while the principal value of bonds will fluctuate with the markets, most bond investments are locked in at a fixed interest rate of return.

* Interest payments are determined by the interest paying ability of the underlying guarantor. Principal for fixed income products are generally paid upon maturity date unless called prior to maturity by the underlying guarantor. Investments in Fixed Income products may lose principal value if sold prior to maturity. ** Please discuss your specific investment objectives, time horizon and risk tolerance with your investment professional prior to investing.

National Asset Management, Inc. ("NAM") is a registered investment advisor with the Securities and Exchange Commission. NAM provides fundamental investment management services to investors. The views expressed contain certain forward looking statements. NAM believes these forward looking statements to be reasonable, although they are forecasts and actual results may be meaningfully different. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. This material represents an assessment of the market at a particular time and is not a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any security in particular. No representation is being made that any investor will or is likely to achieve profits or losses.

Diversification: Diversification does not guarantee against loss. It is a method used to help manage investment risk.


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