The Best Way to Invest Money You May Not Ever Need

(TNS)—Having money sitting in an individual retirement account that you won’t need to spend anytime soon—or maybe you’ll never want to spend—is a First World retirement problem.

Yet financial advisers have answers for the well-heeled retirees who find themselves in this fortunate situation.

If you are in that lucky group, consider these strategies on the best way to invest with your IRA or other retirement accounts when you don’t really need the money.

Take a Bigger Risk
If your primary goal is maximizing what you leave behind to your heirs or charity, you have more freedom than most.

If you don’t need the money right away, you can be more aggressive with your investing, says Jamie Hopkins, a professor at The American College of Financial Services and co-director of the New York Life Center for Retirement Income.

While the conventional wisdom for retired investors is to stick to a mix of about 60 percent bonds and 40 percent equities, if you won’t need to spend the money, Hopkins advises putting 80 percent in stocks and 20 percent in bonds.

If your money is in a target-date fund with a target set at the year you retired or were scheduled to retire, at this point it is probably mostly invested in bonds. If you like the set-it-and-forget aspect of a target-date fund, Hopkins suggests that you simply move your money to a target date 2050 fund, which will have a bigger allocation to stocks.

Consider a Roth Rollover
Beginning at age 70, the IRS requires you to take required minimum distributions, or RMDs, from your traditional IRA and pay taxes on the money. Instead, consider converting your traditional IRA to Roth IRA, on which RMDs aren’t required.

Do it over a five- to eight-year period, says certified financial planner Leon LaBrecque, CEO of LJPR Financial Advisors in the Detroit area. “You’ll still owe the IRS taxes when you convert, but you’ll have more strategies to manage—and lower—the bill.”

If a Roth conversion doesn’t seem like the right idea for you, LaBrecque suggests that you ask your accountant to estimate how much you’ll owe in RMDs over the next five to 10 years and invest that amount conservatively, so you’ll have it when you need it. Then you can safely be more aggressive with the remainder.

“After you have dedicated money to the RMD, I’d invest the rest in equities,” LaBrecque says.

Choose a QLAC
Qualified longevity annuity contracts, or QLACs, can be purchased within an IRA or other tax-advantaged retirement fund. These are a type of deferred annuity that will provide you with a regular income later in retirement. You don’t have to start taking the money until you are 85, and, in the meantime, the amount used to purchase the QLAC is sheltered from RMDs.

“I like them,” says Hopkins. “Put $125,000 (the maximum allowed by the IRS) in a QLAC, and you are protected from RMDs for the next 15 or 20 years (until you turn 85).”

What if you don’t make it to age 85? “Buy it with a return of premium so if you die earlier than expected, your heirs get the money back. It’s a good longevity hedge,” Hopkins says.

The return on investment isn’t great, he adds, but wealthy people tend to live longer than others, making it a better investment for them.

Think Really Long-Term
When determining the best way to invest money you don’t think you’ll need, consider the risks that everyone else needs to worry about: inflation and longevity.

“You might be retired for longer than 30 years,” says Maura Cassidy, vice president of Retirement at Fidelity Investments. “You have to keep ahead of it; you need inflation coverage.”

In other words, someday you may need that money. Cassidy says that while you might invest less cautiously than some people whose margins are thinner, you shouldn’t go crazy.

If you have more than you need, consider delaying the day when you invest more conservatively, she says.

“Our research indicates that retirees should be at 60 percent bonds, 40 percent stock allocation at age 65. That’s a good allocation for 15 or 20 years. Then you should sell off even more equities, so that by the time you are 80, you’re at 80 percent bonds and 20 percent equities.”

But if at age 80, you still don’t need the money, she says, “Slow it down. You might wait until age 90 to go to 20 percent equities.”

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How to Avoid Flying in the Dreaded Middle Seat

(TNS)—Flying in the middle seat is rarely a pleasant experience, but it’s considerably worse when you never saw it coming. While many airlines allow you to select a non-middle seat ahead of time, even that strategy isn’t fool-proof.

After all, somebody has to sit in the middle, right? When a flight is overbooked, people are moved for any number of reasons. If something goes awry, that someone stuck in the middle could very well be you.

If you hate the middle, however, you can minimize your chances by planning ahead. Here’s how:

Select Your Seats Early

Most major airlines allow you to select your seats on many paid fares and award fares. If you don’t select your seat when you purchase your ticket, you can generally log into your account (or search for your flight using your confirmation number) and select your seats later.

If you want to avoid a middle, your best bet is exercising your choice as early as you can.

Don’t Book Basic Economy

Some fare types don’t allow you to select a seat—specifically, the basic economy fare. These fares are marketed as “bare bones,” and they are.

Take the American Airlines basic economy fare, for example. With this low-cost fare, your seat is assigned at check-in, or you can pay extra to select a seat.

If you want to avoid the middle, avoid basic economy fares or be willing to pay a little extra for a seat assignment.

Book Early Boarding

If you have an assigned seat, you’re probably safe. But, what if your airline doesn’t assign seats at all?

Yep, I’m talking about Southwest Airlines, a carrier that boards by groups instead.

If you want to make sure you sit where you want, you can pay $15 per leg for early boarding. This will get you in the “A” group, which means you’ll have your pick of seats before others board the plane.

Check In Early

Southwest Airlines gives preference to people who check in early, as well. If you check in 24 hours early, for example, you’ll get in the earliest boarding group. Those who check in last are typically part of the “C” group, which gets the remaining middle seats that are left.

If you want to give yourself the best shot at a seat you like with Southwest, checking in exactly 24 hours before your flight is the way to go.

Still, checking in early with other airlines is smart, even if you have a confirmed seat already. By checking in and printing your boarding pass as soon as you can (typically the 24-hour mark), you can solidify your claim on your chosen seat and ward off any shenanigans (like a flight attendant moving you to accommodate someone else).

Pay for an Upgrade

Last, but not least, paying for an upgrade is one of the best ways to sit where you want on a plane. You don’t have to upgrade to a different fare class, either. Many times, you can pay extra for “premium seats” with extra leg room or a preferred spot on the plane.

When you pay for a seat, you can almost guarantee it’s yours. So, try not to balk at the idea of paying an extra $15 or $40 for a seat of your choosing. If you wind up in the middle against your will, $15 or even $40 might seem like an amazing deal.

©2017 Travelpulse

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Real Estate Q&A: What Happens When the Home You’re Buying Can’t Get Insurance Coverage?

(TNS)—Q: We are buying a home and had a “four-point” inspection done for the homeowner’s insurance. The insurer declined to cover the house due to the brand of the electrical panel fuse box. What gives? -Dan

A: Most insurance companies require a “four-point” home inspection before insuring a property. The inspection focuses on the four main causes of most insurance claims: HVAC (heating, ventilation and air conditioning); electrical wiring and panels; the roof; and plumbing. This inspection doesn’t concern itself with cosmetic or other issues outside of the four listed systems.

Certain brands of electrical panels, particularly those installed before 2000, have been found to cause problems and not perform as they should. A fuse is supposed to trip when there is a problem in order to prevent a much larger problem. Many home fires are caused when fuses or panels malfunction.

If the insurer is denying coverage due to a suspect panel, the worst solution, in my opinion, would be to try a different insurer. Just because another company will give you the coverage doesn’t make the panel any safer.

If you are faced with this situation, speak to the seller about replacing the panel before the deal goes any further. If the seller won’t budge, your best bet is to find a different, and safer, home.

Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar.

©2017 Sun Sentinel (Fort Lauderdale, Fla.)

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5 of the Best Cities to Flip Houses In

Flipping a house can be a profitable endeavor—especially in cities where flips thrive. The best cities, according to recently released findings from a study by WalletHub, boast a combination of a desirable quality of life, cost-effective renovation expenses and prime market potential.

The following cities, based on those criteria, are best for flips:

  1. El Paso, Texas
    El Paso earned the No. 1 ranking in WalletHub’s study, with a total score of 69.6. El Paso has the third-lowest bathroom remodeling costs, on average, of the 150 cities evaluated.
  1. Sioux Falls, S.D.
    Sioux Falls earned the No. 2 spot in the ranking, with a total score of 69.52.
  1. Fort Wayne, Ind.
    Fort Wayne earned the No. 3 spot in the ranking, with a total score of 67.38.
  1. Peoria, Ariz.
    Peoria earned the No. 4 spot in the ranking, with a total score of 66.6. Peoria has the fourth-lowest whole-home remodeling costs, on average, of the 150 cities evaluated.
  1. Oklahoma City, Okla.
    Oklahoma City earned the No. 5 spot in the ranking, with a total score of 66.56. Oklahoma City has the fifth-most real estate agents per capita of the 150 cities evaluated.

Source: WalletHub

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