Jill on Money: Labor Day, Bonds, Investments

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While you were shopping for your Labor Day BBQ, Jill on Money listeners were busy, taking control of their financial lives!

Neal from VA is ready to jump into the bond market, but fears that he is buying into a bubble. What should he do? The bond market has soared for two reasons: investors around the world are freaked out and see US debt as the safest bet and the Federal Reserve has purchased trillions of dollars worth of bonds to spur economic growth. The effect of a rising market is plunging rates-currently; you can lend the US government money for 10 years and only receive 1.6 percent interest. Considering inflation, bond investors are essentially paying the government for the privilege of holding their money!

How bad could a bond market shake-up be? The worst calendar year for the broad bond market was 1994, when due to an unexpected upward shift in interest rates, the bond market returned -2.9% (in 1995, the bond market returned 18.5%). This summer, the 10-year treasury market saw big price drops. In the three weeks from the July 25 peak to August 16, prices tumbled about 8.5 percent and yields went to 1.82 percent from 1.38 percent. So yes, you can lose money in the bond market, just as quickly as you can in the stock market! But for a part of your portfolio, I might be more concerned with the return of your money than the return on your money.

Adding to the bond discussion was Bradley, who wanted to know whether he should stop reinvesting dividends in his municipal bond fund.

When is it time to stop contributing to a retirement account? Here's a hint: Bruce from KY is there, while Chris is not!

We fielded Social Security questions from Bob in WA, Pete in WI and from the e-mail inbox. Here are two recent posts about Social Security:

Social Security: When to File

Social Security: File and Suspend

"1.25 percent doesn't hack it," according to Bob, a 75-year old who is trying to manage his retirement investments. Similarly, Anthony is in his early 70's and is seeking a home for his surplus income. Both may want to seek professional advice for the investments.

How to Choose a Financial Advisor: 10 Questions

Alphabet Soup of Financial Designations

Once you have an advisor, how do you know whether he or she is doing a good job? That's what Gene wants to know. When you are concerned about your advisor's performance, make sure that you are comparing your progress versus the relevant index: if you are an aggressive stock investor, then you can use the S&P 500, but if you are a balanced investor, use a blended index.

The best retirement planning starts early, which is why Chris and his wife get gold stars! They are in their early 30's, are maxing out their retirement accounts and still have extra money to invest in a brokerage account. Should they really be stock-picking? Should they pay down their mortgage?

Jim and Peter are both planning to retire within a year and need to know a "safe" withdrawal rate (I like 3.5 - 4 percent) and whether or not carrying a mortgage through retirement makes sense. One way to sail through retirement is to reduce expenses. That's what Judy and her husband are trying to do, but should they do so by reducing their long-term care coverage?

Finally, David brings up a great question for every investor: considering that the long-term capital gains tax rate is set to increase 2013, should people take action now?

Here are web sites and resources mentioned in this week's show:

-- Jill's Blog

-- How to Choose a Financial Advisor: 10 Questions

-- Alphabet Soup of Financial Designations

-- NAPFA: National Association of Personal Financial Advisors (fee-only advisors)

-- Best CD Rates

-- The ABCs of Annuities: 6 Questions to Ask

-- The Pros and Cons of Annuities

-- Annuity salespeople don't like me

-- Social Security: Manage your account online

-- Social Security estimator

-- When to take Social Security?

-- Social Security: File and Suspend

-- Social Security: Double-Dipping

-- Retirement Calculator

-- Retirement Plan Required Distribution Calculator

-- Long-term Care - US government web site

-- Long term care conundrum

-- NYT Rent vs. Buy Calculator

-- Re-Fi Calculator

-- Another Re-Fi Calculator

-- 529 plan info

-- College Loans: What you need to know

Thanks to everyone who participated and to Mark, the BEST producer in the world. If you have a financial question, there are lots of ways to contact us:

Call 855-411-JILL and we'll schedule time to get you on the show LIVE

Send an email: askjill@moneywatch.com

Tweet me: @jillonmoney