Jill on Money: Investing cash, mortgage pay down

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Ben, a 20-something 404 fan (here's a link to my more recent appearance on the404), called to discuss his girlfriend's debt reduction and retirement game plan and whether he should use a Roth alongside his current federal government Thrift Savings Plan. While many younger investors, it may be tempting to put 100 percent of your retirement assets in a stock mutual fund, but in the end, a well-diversified portfolio will get you where you want to go, with the high-highs and low-lows...just ask e-mailer Rick, who "would have taken a bath" had he heeded the advice of a finance professor in 2007!

For those who are interested in getting their 20-somethings up to speed, here are few tips:

1. Track of expenses: you can use apps like mint.com to help

2. Manage credit: request a credit report at annualcreditreport.com

3. Buy Jack Otter's "Worth It Not Worth It" (full disclosure: Jack is my pal)

This seemed to be the week when listeners asked the burning question: what to do with a pile of cash? No, there are not the Powerball winners, but investors who have diligently amassed millions and are not sure what to do next. Both Joannie and Charlie are spooked by risk and bad experiences with advisors, but sitting in cash and allowing inflation and taxes eat away at their nest egg is not the answer. Both should interview fee-based advisors at NAPFA.org. Meanwhile, "D" recently received a settlement and a so-called "financial adviser" recommended a life insurance policy and an annuity. Please, please go straight to NAPFA and find a real advisor who will put your interests first!

When is it prudent to pay down a mortgage versus investing the cash? That was the question from Rhonda, Rob and even from the Best Producer in the World. Each case is different, but there is one point worth remembering: when you pay off that mortgage, the money is gone and so too is your liquidity!

Both Bill and Don had a question about the new of 3.8% Affordable Health Care Act surtax, which goes into effect January 1, 2013. The tax applies to individuals, trusts, and estates that have income that exceeds specific thresholds ($250,000 for married filing joint filers, $125,000 for married filing separate filers, and $200,000 for all other filers),

The 3.8% tax is imposed on the lesser of:

(1) Net investment income for the tax year (includes interest, dividends, royalties, and annuities; rents and other passive activity income; capital gains from the sale of property (not used in an active trade or business) and trading of financial instruments and commodities) OR (2) The amount by which the modified adjusted gross income (MAGI) exceeds the threshold amount in that year.

"J" wrote in to discuss the sale/transfer of his closely held business. While many may be tempted to create legacies, are they willing to do so at their own financial peril? It is vitally important to secure retirement before making an emotional decision. If you need help in the process, CPA's, business attorneys and small business consultants can be helpful.

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

-- Jill's Blog

-- How to Choose a Financial Advisor: 10 Questions

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

-- Best CD Rates

-- E, EE and I Savings Bonds

-- The ABCs of Annuities: 6 Questions to Ask

-- The Pros and Cons of Annuities

-- Annuity salespeople don't like me

-- 529 plan info

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: [e-mail]

Tweet me: @jillonmoney

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