Financial planning chat:

Roy Komack, CFP®, is the founder and President of Family Financial Architects, of Natick, fee-only investment advisors and financial planners. He has been providing financial planning advice since 1988.

On Monday, Nov. 14, Komack chatted with Boston.com readers about money management and answered their personal finance questions. Below is the transcript from that chat.

Nick	Hello Mr. Komack. My wife and I really need help with budgeting and cost savings. Can you give advice on budgeting? Also, is this an area that a financial planner could help us out with?
Roy_Komack	Hi Nick,
Roy_Komack	Budgeting is definitely something that financial planners help with. It's not practical to do it live online, but you could screen some planners from the sites mentioned in the article and call a couple of them.
bob	Is there income parameters (max/min) to buy a Roth IRA
Roy_Komack	you have to have earned income of at least the amount you are going to invest (up to $4000 this year). If you have adjusted gross income over $100 thousand (single) or $160 thousand (married), you have to use an Ordinary, rather than a Roth ira.
ryan	i am thinking of buying a house. However, i am able to save a good deal of money annually. is there any way to figure out what is better, whether i can sve 50-60k in cash a yr or buy a house? i can make about 5-7 % on the cash.
Roy_Komack	Generally, the sooner one buys a house, the more years you will have for it to appreciate and for you to appreciate living in it.
credit_Lisa	I'd really like to know my credit score, but am skeptical about all of the offers online that say I can get my credit score for free. Are there any sites out there that really give you your credit score for free with no strings or hidden fees attached? What's the best way for me to find it out easily and effectively? Thanks.
Roy_Komack	YOu can get a free credit report once a year. Look for any of the three agencies, Equifax, Experian, TransUnion.
Poorpapa	I have been thinking about buying a zero coupon municpal bond instead of a 529 plan or Coverdall IRA for my children's college fund. It seems the returns are greater and their will be no Federal Income Tax and possibly no state income tax. What is the down side?
Roy_Komack	Over a period of three to five years or more, you should do much better with a 529 invested in equities or a blend.
NYCSoxFan	My wife and I are hoping to buy a condo or coop in New York City next year. Most places require 20% as a down payment. which translates to about $60K, minimum. We currently have only $10K saved, but plan on having about $20K when we begin to look next spring. Will banks loan us the remainder of the down payment as part of a mortgage?
Roy_Komack	You can generally NOT borrow to come up with a down payment.
abcmoney	I have a 403b at work which I contribute 11% of my salary. My employer contributes 5% of my salary. I would like to open a Rot h IRA. I can only afford to contribute 12% should I put 6% into the Roth and 6% into the 403b?
Roy_Komack	Splitting it is not a bad idea. Check out the maximums you are allowed for Roth contributions. In 2005, it's $4000.
MutFund	Hello Mr. Komack: A **local** money talk show host recommended the addition of Oppenheimer Global to my IRA. When placing the order, I could select from Class A, B, C or N. I assume the classes represent fees and loads. How do I pick the right one? Thanks.
Roy_Komack	I suggest finding a no-load alternative. The share classes are just different ways of paying a commission.
kmandn	I have just settled a personal injury lawsuit for about $2M. I have a mortgage on a $400k condo in Boston, $90k in student loans, a bit of credit card debt and very little savings aside from a 401k. I am really clueless as to what to do with the lawsuit money and am looking for guidance. How should I approach a financial planner in my circumstances?
Roy_Komack	You just took the first step. There are two organizations mentioned in the article. Our firm is listed there, as well as many other fine planners.
NYCSoxFan	As a follow-up to my down payment question, would I be imprudent in using my 401(k) for a loan for the down payment?
Roy_Komack	Although you are allowed to, we usually advise against it. This should be a "last resort." There's too much chance you will not follow through with prompt payback.
mobile79	I contribute about $300 to an IRA each month and my brokerage firm is charging 5.75% commission for every purchase. Does this fee seem excessive?
Roy_Komack	Yes. I suggest you find a brokerage firm that offers no-load funds. Try Vanguard, Fidelity, Schwab...
barney	Hi Mr. Komack. My wife and I would like to retire before we're 60 -- hopefully by the time we're 55. We're 46 now. Approximately how much money should we save?
Roy_Komack	A rough "rule of thumb" is that you can draw 4% of your retirement assets in the first year. So, if you need $40,000 per year, you should start with $1,000,000.
emc05	Hi Roy, My husband and I both max out our 401k's at work and do not qualify for a Roth. We own two homes. We have some savings in mutual funds mostly fidelity. What's the best next place for us to put money as an investment? Diversify to bond funds? tax free funds?
Roy_Komack	Building a portfolio of index or index-like funds with an emphasis on equities, rather than bonds, will probbaly serve you best over the long run.
Jim_T	Will the free credit reports (which you say are available from the 3 agencies) include FICO score?
Roy_Komack	Yes.
Jack	How do I overcome financial anxiety?
Roy_Komack	One step at a time. A good starting book is The Welathy Barber, by David Chilton. It is not intimidating.
abcmoney	Do you recommend opening a Roth IRA or other retirement fund through Ing Direct
financeq	Hello, is it always wise to maximize SEPP IRA contributions? We have about 700K in retirement, and 1.2M in real estate. My husband will retire in five years (61 now), while i am 39. Is it still vital for me to max out contributions each year?
Roy_Komack	ING's specialty is guaranteed accounts. The problem with that for retirement is that they are also "guaranteed" not to grow a lot. Index mutual funds might be a better alternative.
smr0530	I am 33 yrs. old and have $110,000 in a 401K. I would like to retire around 60 yrs. old. Should I continue to be aggressive in my investments or more moderate?
Roy_Komack	Dear financeq:
Roy_Komack	Maxing your available retirement plans is almost always the best course.
howdy	What do you think of immediately selling one's stock options?
Roy_Komack	This is too complex to answer quickly. It depends on your tax bracket, the prospects for the company, how much of it you own, etc.
Bostondotcom	smr0530, Age 33 is much too young to get more moderate. But "aggressive" should not be speculative. Stick with broadly diversified stock mutual funds.
duane	Hi Roy. Aside from paying bills on time, is there any quick way to improve my credit score?
Roy_Komack	1. Catch up on all old debt.
Roy_Komack	2. Rduce the number of cards you have. Stopping using thenm is not enough. You have to call and get them actually closed.
duane	What is the minimal credit score one can have to get a mortgage (without paying through the nose).
Roy_Komack	About 660 should do it.
DMB	How many months savings should I keep in my savings account and what should I do with additional funds?
Roy_Komack	About 3 to 6 months spending should be OK. After that, start maximizing your retirement plan options.
needtosave_	On average, how much savings does one need to retire comfortably?
Roy_Komack	A rough "rule of thumb" is that you can draw 4% of your retirement assets in the first year. So, if you need $40,000 per year, you should start with $1,000,000.
Talasker	Roy, my folks have started a Fidelity "college" fund for our new daughter. A friend says we would be better off putting the money in a regular mutual fund, because of the fees associated with the "college" fund. Could you clear up which one is the better place to park our money for the next 18 years?
Roy_Komack	The 529 Plan is almost surely better. The fees are not very high, generally under 1%. The tax deferral and tax-free growth are well worth the cost.
Talasker	When you say "maximize your retirement plan options" - what does that mean exactly??
Roy_Komack	Contribute the max you are allowed to your 401(k) or 403(b) at work. Contribute the max you are allowed to an IRA or a Roth IRA.
mobile79	Can we start a 529 college fund for a child that isn't born yet?
Roy_Komack	YOu can actually open one for yourself. Then, when the child is born and has a Social Security #, transfer it to the child.
Roger_Dodger	Hi Roy, great chat. I'm advising my daughter on savings and investing. What percentage should she be saving as a rule?
Roy_Komack	A lot of folks say that if you save (invest) 10% of your earnings for life, your retirement will be quite secure. She has to understand that saving does not mean building it up and using it for occasional splurges.
Frank_2	Hi Roy. I've got about $150,000 saved and currently have it sitting in a savings account that earns only 2 percent interest. But I'm reluctant to buy stocks or anything too risky. And CDs aren't offering much better. Any advice?
Roy_Komack	If this is money for the long term (5 years or more, retirement, etc.) try to overcome your reluctance. Our Web site famfin.com, has some pretty good books on our recommended reading list.
ade	What percentage of my monthly income do you recommend spending on renting?
Roy_Komack	The credit industry sugggests limiting your housing outlays to 28% of gross income and total debt outlays to 36%. , including those housing expenses.
Bostondotcom	This is your 10 minute warning. Submit any questions now and Roy Komack will try to answer them before the end of the chat.
JMA	Hi Roy, I have 39K in student loans at 6.2% interest for the next 20 years (5 years already paid). I also have 36K in liquid investments which are not doing that well. Should I take the money and pay my student loans or invest the money in hope to make more money in the long run? We could really use the extra money each month since my wife and I plan to purchase a condo soon?
Roy_Komack	Since you want to buy a condo soon, keep the money liquid. INGDirect is paying 3.5% now, and it's likely to go up a bit more.
cap23	I need to roll over a 401K from a previous employer, how do i do that??
Roy_Komack	First choose the institution where you will open an IRA (Fidelity, Vanguard, Schwab...). They will instruct on the procedure. You need a form from the administrator of the old 401(k) called a Retirement Distribution packet.
Talasker	I have a traditional IRA right now, but everyone says the Roth IRA is the way to go . . . can I transfer my regular IRA to a Roth? If not, should I even bother opening another account?
Roy_Komack	The "transfer" is called a Conversion. You have to pay taxes on the amount converted. Don't pay the tax out of the funds in the IRA, or you'll lose much of the power of the conversion.
Cass350	Hi Roy. College-age related question: A friend of mine recently inherited about $5,000 from a grandparent. She had asked me whether it was worth investing -- another friend of ours, who does some financial advising himself, said the sum might be too low. I suggested she put it in a savings account, where the growth would be slow, but not overly risky. Am I right?
Roy_Komack	No. It's not too low. There are several mutual fund fund companies with minimums lower than that.
curious	when is long-term care insurance a good idea? I'm 50, in good health, and considering buying a policy. My plan was to pay somewhat more than the regular yearly amount, then reduce payments to about half at age 65.
Bostondotcom	Thanks for participating in the chat with Roy Komack.
Roy_Komack	This plan sounds pretty good. The advisability of LTC insurance depends somewhat on income and asset level. Some LTC insurance specialists caution not to spend more than 6-7% of your income on the premiums. At your age, less than that should be possible.