Ask a Certified Financial Planner

[Mark P. Cussen]

Hi everyone,

I'm a Wise Bread blogger and a Certified Financial Planner. For the next few weeks, I'll be visiting this thread about three times a week to answer your questions.

I probably won't be able to answer everyone's questions. For that I apologize in advance.

If you ask an especially interesting question, I might discuss it in a post for the blog. Don't worry, all names will be changed to protect the innocent.

Mark

[The Honest Dollar]

Awesome! I don't have any questions right now, but this is a great service. Thanks for providing it!

[kav122]

I have two questions:

1. We are actively paying down debt right now, but we would like to throw a little something into a college fund for our son. What type of plan would you suggest and how do I get one? Go to the bank or do I go to a financial planner like yourself?

2. I hope the stock market doesn't go down too much, but in addition to my 401(k), I would like to buy some stocks if they are really cheap this year. How do I go about that? I have some ideas of what I am watching for, and it won't be any tons of cash, maybe a few hundred. I am also not looking to be a "day trader" or make a million, I just want to buy some shares and stash them away but I don't have the slightest on how/where to purchase a stock/bond.

Sorry, in advance if these questions are too simplistic for you and your readers, but I am a newbie to trading/investing.

And THANKS so much for doing this, even if you don't get to my questions!!! VERY generous of you!

[Mark P. Cussen]

Your questions are exactly the type that I am here to answer. As for your first question, I would suggest a 529 plan. These state-sponsored plans grow tax-free and offer a portfolio of mutual funds to choose from. Your contributions are state tax deductible if you use the plan that your own state offers, but you can use the plan from any state. Just be sure to have either your parents or your husband's parents listed as the account owners and not you or your husband, because having the plan assets in either of your names can cost you financial aid when the time comes.

Your second question is easy to answer. Just go to an online broker like Scottrade and open an account. The website will lead you step-by-step through how to open an account and place trades. I do feel compelled to point out that it doesn't sound to me at this point like you've got enough assets yet to be trading individual stocks, but if you want to do that, Scottrade would be my first suggestion. Let me know if you have any other questions!

Mark P. Cussen, CFP, CMFC

[Joanne]

Originally Posted by kav122

2. I hope the stock market doesn't go down too much, but in addition to my 401(k), I would like to buy some stocks if they are really cheap this year. How do I go about that? I have some ideas of what I am watching for, and it won't be any tons of cash, maybe a few hundred. I am also not looking to be a "day trader" or make a million, I just want to buy some shares and stash them away but I don't have the slightest on how/where to purchase a stock/bond.

My husband & I have an Ameritrade account and I highly reccommend them. My nine year old daughter has her own account there also. Their customer service is wonderful. I also suggest watching Mad Money and Fast Money on CNBC. Also, just watching CNBC throughout the day will teach you a lot. My husband also said (I'm telling him about your post as I'm typing) to check out thestreet.com and yahoo finance. We've been investing in the stock market (day trading and long term) for several months now and have had good results. Good luck!

[Julie Rains]

Originally Posted by kav122

1. We are actively paying down debt right now, but we would like to throw a little something into a college fund for our son. What type of plan would you suggest and how do I get one? Go to the bank or do I go to a financial planner like yourself?

If it's okay I'll mention that I did an article on 529s a few months ago: What's Cool and What's Quirky. Best "what's cool" is that the money grows tax-free and you don't pay taxes when you withdraw the money; what's quirky is that you have to choose from state-sponsored investment programs.

I haven't done an article on Coverdell/Education IRAs but you get a tax deduction the year when you make the contribution and you can invest however you'd like. But you pay taxes when you withdraw the money but that should be at the child's lower rate.

And as Mark mentioned, currently financial aid doesn't look at grandparents' assets when considering financial aid but look at parental assets (weighted some) and children's assets (weighted more).

[cmele]

I have a 403b and a 457b from a former employer. I am 51 yo. I have left the funds there for now, mostly invested in equities, but I want to invest in Vanguard mutual funds which are not offered by the company. Should I roll my funds over to an IRA so that I can do this? What are the pro's and con's of doing this, in terms of the following issues:
1. Age at which I can gain access to funds,
2. Required distributions
3. Implications for beneficiaries if I kick the bucket
4. Tax minimizing strategies


Thank you very much for your comments.

[kav122]

that was a good question cmele, so I am going to bump this thread up so it gets answered!

[khorrell]

Hi Mark! Thanks for answering our questions. I am interested in becoming a CFP, but I'm having a little trouble figuring out how I would get the required hours of practice. How did you do it?

Thank you in advance for your answer.

[Mark P. Cussen]

I fulfilled my CFP experience requirement as a stockbroker, but there are a great many jobs in the financial industry that will qualify you. Stockbroker, accountant, tax preparer, insurance agent, loan officer, banker, the list is quite long. For more information on this, go to www.cfp-board.com. The site will have a more complete answer to your question, and there's a phone number you can call as well. Good luck!

Mark P. Cussen, CFP, CMFC