Jill on Money: Hurricane Irene, Stocks, Funds, Mortgages

Last Updated Aug 28, 2011 10:59 AM EDT


As Hurricane Irene blasted up the East coast, "Jill on Money" listeners from all over the country helped us put together another great show.

We started with Aaron in WA, an investor in his late 30's, who asked about automatic reinvestment of dividends into his individual stocks. That seemingly straight-forward question led to a larger question: why buy individual stocks in the first place?

E-mailers Randy and Arch were looking for exchange-traded funds that focus on dividend-paying stocks. Two examples are: HDV (iShares High Div Equity Fund) and SDY (SPDR S&P Dividend ETF). The conversation allowed me to explain the difference between mutual funds and exchange-traded funds (ETFs).

Mike in NC needed some guidance on target spending and savings amounts. Here are some good rules of thumb:
  • Mortgage Payments: less than 25-28 percent of gross pay
  • Total debt service payments (including mortgage): less than 36% of gross pay
  • Savings: 15-20 percent of gross pay (though I would take 10 percent, especially for those just starting out)
Steve in MD is about to retire with a terrific nest egg: $500K in pension, $480K in 401 (k) and a $100K retirement bonus. Someone at New York Life is trying to sell him an annuity, but I'm not so sure that an annuity is the best bet for him. I suggested that he is in a perfect position to seek guidance from a fiduciary financial advisor. (For more, here are "9 Questions to Ask a Financial Advisor").

It seems that lots of financial salespeople are pushing annuities as the antidote to the gyrating stock market. But as I told Fran in CA, why would she lock up her money in an annuity, when the 5-year guarantee is only 1.6 percent?

Mark, WA and Jeff in CT and e-mailer Jim all had questions about their mortgages. There is no exact rule of thumb about whether or not to pay down a mortgage, because you need to incorporate your liquidity needs in the calculation. But, check out this handy Re-finance calculator that I found on line.

Judy asked about the rules surrounding her Required Minimum Distribution (RMD) from her retirement accounts; Ajit wondered about cashing in EE US savings bonds and how to qualify for the the education tax exclusion; and Cindy wanted the 4-11 on reverse mortgages. I have provided links below on all of these topics.

Here are web sites and resources mentioned in this week's show: 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:
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    View all articles by Jill Schlesinger on CBS MoneyWatch »
    Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.



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