What the experts say
Tapping an IRA to buy a house
Money stashed in an IRA can be used to buy a house, but you have to pay close a ttention to the rules to avoid penalties, said Kimberly Lankford in Kiplinger.com. If you have a Roth IRA, you may withdraw up to $10,000 in earnings before you turn 59½ for a first-time home purchase without paying a 10 percent early-withdrawal penalty. If you’ve had the Roth for at least five years, you don’t have to pay taxes on the earnings, either. The rules are different with a traditional IRA. You can withdraw the same amount, “but the money is taxable.” The cash can be used for a down payment for you or your kids, grandchildren, or parents, but there is a lifetime withdrawal cap of $10,000 per person. And the money can be used only for a first-time home purchase.
Dow 20,000: An opportunity?
Now that the Dow Jones has hit the historic 20,000 mark, many investors are asking themselves, What’s my next investment move? said Anne Tergesen in The Wall Street Journal. “The simple answer that many experts give is that most investors should do little to nothing.” If you are well diversified and keeping your costs low, sit tight. But you should take the opportunity to engage in “some basic but often neglected moves that typically enhance returns over time.” If you’ve missed much of the market’s recent rise, feel free to move more money into stocks so long as you take into account your age, goals, and “emotional capacity to ride out the market’s ups and downs.” This may also be a good moment to sell a few equities, depending on their valuation and on “how close you are to retirement.”
Getting serious about credit card debt
“If you binged on gifts and entertainment in December and your card balances are higher than you were expecting,” now is the time to make a repayment plan, said Ann Carrns in The New York Times. If you have good credit, you probably have access to zero percent balance transfer offers, so think about shifting your balances to a low-interest card. You must make payments on time, though, or risk losing the promotional offer. Personal loans from online lenders are also “becoming more common,” but be sure to research upfront fees and what your monthly repayment schedule will be. To keep card balances from getting out of hand in the future, use text or email alerts that let you know when you’re approaching your credit limit.