Questions About Roth IRAs, Paper Notebooks, Abandoned Desks, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Nervous about large investments
2. Buying a “new” car
3. Other cryptocurrencies
4. Best cheap notebooks?
5. Why a Roth IRA?
6. Handling extreme boredom at work
7. Low cost filling easy breakfasts
8. Finding inexpensive band instruments
9. Saving toys for grandchildren
10. Sources for old newspapers
11. Privacy concerns at local bank
12. Curbside desk etiquette

For Sarah and I, this week is a “stay-cation” of sorts (though we are driving a couple of hours to see a concert). Our children are visiting their grandparents, so our house is calm and quiet.

What are we doing with this time? We’re having meals that we love that the kids hate. We’re enjoying actual quiet evenings at home, but we’re going out a few times, too. We’re catching up on some hobby time. We both have big lists of things we want to get done.

After twelve years, children at home is the norm; it feels so different when they’re not here.

Q1: Nervous about large investments

We would be interested in an article on how to safeguard money earmarked for retirement without losing too much by essentially sticking it under a mattress. We recently sold our CA home of 20 years and will fund a significant portion of our early retirement with the proceeds (we are 55) and we need that money to work for us. Our credit union is FDIC insured only up to a smaller limit for a couple. It also offers a better interest rate than banks, but not nearly as much return as other funds we have with an investment firm and in a 401K. However, the investment accounts are not FDIC protected and we are nervous about putting all our eggs in one basket financially. We are also not savvy enough, nor interested in, playing the stock market daily ourselves. It seems like this topic is not covered much and we’d love some ideas.
– Anna

While investments don’t offer FDIC insurance, they do offer a very similar insurance called SIPC insurance. Virtually all investment houses offer it, and it’s very similar to FDIC insurance on your investments. I think you’re saying that you’re doing investing through your credit union; they may not offer SIPC insurance on their investment accounts, though you should check on that.

Most individual investors shouldn’t be playing the stock market daily for themselves. Instead, the best approach is to buy a very broadly based index fund with low fees, which essentially amounts to owning a tiny bit of everything all at once. These funds tend to match the overall market rather than beating it or falling behind it. Investing in individual stocks is pretty risky. In general, however, a long term investment in the broader stock market (long term being more than ten years) has historically proven to return an average of about 7% a year over the last century or so. The catch, of course, is volatility; stocks go up and down a lot on a daily and weekly and even yearly basis, so once you start getting close to your goal, you may want at least some of your money in something safer.

This is why many people use Target Retirement Funds. A target retirement fund is an investment offered by an investment house that basically manages that risk for you. If you’re a long way from retirement, it’s aggressive, with most of your money in broad stock market investments. As you get closer to investment, it gradually transitions to safer investments, like bonds and government treasuries. This won’t return as much on average, but it’s not nearly as volatile as stocks. This all happens automatically; you just put money into the Target Retirement Fund and then withdraw it later when you need it.

If your money is just sitting there in an ordinary account, you may want to start moving it into a Roth IRA (or an ordinary IRA if you’re a high income earner). If you move it into a Roth IRA, the earnings you make from your investment won’t be taxed when you withdraw it in retirement, and there are some other benefits, too.

I would strongly suggest that you pick up a good introductory book on investing. My top recommendation is The Bogleheads’ Guide to Investing, which I think is the best all-around investment book out there.

Q2: Buying a “new” car

My wife and I are in the process of buying a new minivan for our family of six. We are looking for a late model used minivan. What things should we be looking for and looking out for?
– Jason

This question was so timely because my wife and I are in the process of buying a late model used minivan for our family of five as I write this.

I am a very strong believer in using Consumer Reports data for making car purchases, both in terms of car brand reliability and in terms of their individual model reviews. If you’re aiming for a late model used minivan right now, they point strongly toward the Toyota Sienna and Honda Odyssey.

Figure out exactly what you want before shopping around. Is AWD a requirement for you, for example? Do you require a certain maximum mileage? Are you absolutely insistent on a certain model? Do you have an absolute maximum on what you’re willing to pay (the answer here should be yes)? Figure out what you want and shop around for specifically that car. Focus on finding a deal on what you want rather than compromising what you want for a deal.

There are pros and cons to going through a dealer. You’re probably going to pay more at a dealer, but you’ll also likely get a dealer warranty (and the option to buy a longer one, which I generally don’t recommend on a late model used). On the other hand, if you buy directly from someone, you’ll definitely pay less but you need to have a trusted mechanic look the thing over very carefully before buying it and you’ll want to be careful with the transaction.

My biggest advice? Just know exactly what you want and spend time shopping around until you find it, especially if you live in an area with a large number of reputable dealers, and don’t be afraid to negotiate (though negotiation isn’t quite what it used to be with online car listings, which have forced dealers to be somewhat more competitive with their initial price).

Q3: Other cryptocurrencies

I really enjoyed your article on Bitcoin the other day. I have heard about [this other cryptocurrency]… is it a good investment opportunity?
– David

“David’s” note here is an amalgamation of about a dozen different messages I received in the last week or so asking about a dozen different cryptocurrencies that people have tried to start since Bitcoin (and to an extent Ethereum) became so successful.

My answer to all of them: no. Don’t invest in cryptocurrencies, period. If you have to for some reason, stick to Bitcoin or maybe Ethereum.

My personal belief is that all of the new cryptocurrencies are the equivalent of penny stocks or Ponzi schemes. They’re “investment opportunities” that are extremely unlikely to pay off and mostly amount to you handing money to someone else for a virtual item that no one else will ever want to buy. It’s actually even worse than buying, say, an item in an online game, because at least with that item, you’ll get some personal enjoyment out of it.

If you invest anyway, don’t invest a dime that you’re going to actually need at any point in your future and view that money as essentially lost, because the odds of you making a good return are exceedingly small.

Q4: Best cheap notebooks?

What’s the best option for cheap notebooks? I’m looking for notebooks for an online class I’m taking and I hate the spiral bound cheapo notebooks.
– Karen

If you’re going for cheap and you’re going to use them for notes while taking a class, my preference is composition books. They’re usually 100 pages each, aren’t spiral bound (a thing I also dislike), and can be found pretty cheap if you shop around.

The only catch is that, like most school supplies, the time to buy them is in late August and early September. You can often find such composition books for $0.10 during that timeframe – I’ve certainly found them in that timeframe at that price in the last few years and purchased several.

I would check out any local dollar stores for composition notebooks and see what you can find. If you’re out of luck, you’ll find that you can buy them for about a dollar a pop on Amazon at any time.

Q5: Why a Roth IRA?

Can you explain why you would want to put money for retirement in a Roth IRA instead of in a savings account or something?
– Jim

A Roth IRA is an account specially designed to help with retirement savings. Compared to putting money in a savings account, if your goal is to save for retirement, using a Roth IRA is a vastly better choice.

For starters, if you earn money in a Roth IRA due to interest or investment income, you won’t be taxed on it this year. That’s not true in a savings account – you owe taxes on savings account interest. You can still take money out of the Roth IRA as you wish.

Furthermore, if you wait until you are of retirement age to take money out of the Roth IRA, you’ll never have to pay taxes on your gains. Ever. If you put $1,000 in there at age 40 and it doubles to $2,000 by the time you’re 60, you don’t have to pay taxes on the $1,000 your investments earned.

Another reason Roth IRAs beat savings accounts is that you have more options with your money. In a typical Roth IRA, you can put that money into stocks or bonds or real estate or other things. You choose what happens to your money as soon as it’s in that account. A lot of people choose to put their money in Target Retirement Funds, which are investments that are designed to maximize your money when you’ve reached retirement age by balancing the risk and rewards of stocks and bonds and other things all automatically for you.

If you’re saving for retirement and don’t earn an enormous income, you’re better off putting that money in a Roth IRA.

Q6: Handling extreme boredom at work

I have a job that I enjoy that makes a good salary with benefits. The only problem is that I work at most 8-10 hours a week. I sit at my desk ready to handle work as it comes in. I know I am more efficient at this work than my predecessor was.

I don’t think it’s the right call to go to my boss and ask for more work because that opens the door to being overloaded eventually. At the same time, I’m bored at work and I feel lazy and unproductive most days.

Suggestions?
– Tyler

Use that time to improve yourself, your career, and your resume. Take online classes toward certifications in your career path. Start a website on your career area and get involved in social media in terms of promoting it a little. Read lots of publications and books related to your career area. If it’s relevant, find side projects to work on. Organize a local group of professionals in your career path and get regular meetings going. You can even spend time deliberately practicing skills that will be useful to you going forward.

Basically, look for anything and everything you can do to fill those thirty hours that would look good on your resume and make you a more valuable employee in your workspace.

In my previous career, if I didn’t have anything explicit to work on, I would usually spend my time documenting my code or reading books related to my work or writing experimental code to figure out new things.

Q7: Low cost filling easy breakfasts

I am looking for breakfast foods that are cheap and easy to prepare and won’t leave me and my kids hungry at 10 AM.
– Mary

A lot of breakfast options either aren’t incredibly filling (many breakfast cereals, many fruits) or are expensive (things like prepackaged breakfast burritos) or take a lot of time. Finding things that manage to fix all three problems is pretty useful.

My first recommendation is oatmeal with a spoonful of peanut butter in it, which basically hits all of these notes. Buy some steel cut oats at the store, make it in the slow cooker the night before, and it’ll be ready in the morning. Look for recipes for “overnight steel cut oats.” I like to add a tablespoon of peanut butter to mine just before eating it.

Another option is scrambled eggs, which you can prepare in about ten minutes in a skillet. Scrambled eggs are really filling. I like to eat them with avocado – a few scrambled eggs and an avocado will leave you full for many hours.

Another option is a container of yogurt, perhaps with some granola mixed in with it. This is probably a little more expensive than the other options, but it’s very convenient and is filling.

Q8: Finding inexpensive band instruments

My daughter plays a rented flute for band and my son will be joining band next year. The rental costs are going to really add up! Where can I find cheaper band instruments?
– Larry

As someone with two kids in band, I studied this issue quite deeply for a while. I came to the conclusion that the best route was to simply buy a used or low-end new instrument for each child, depending on availability. We shopped around for a while for each child and found used instruments for both of them.

The reasoning here is that the total cost of buying an instrument now is much lower than a rent-to-own contract that many music instrument sellers offer, plus the instrument does retain most of its value (provided it’s not actively damaged) and can be resold later. Most used instruments come from people who bought them for their child to play in band and their child eventually decided to stop playing it.

This does take time. Your best approach is to watch carefully for online sales, both through general sites like Craigslist as well as music-specific sites like Reverb. It’ll take a while. Here’s some good advice for buying music instruments online.

Q9: Saving toys for grandchildren

What do you think about saving a few tubs of your children’s toys for potential grandchildren? Good idea or not?
– Amy

If you have space for it, it’s not a bad idea. We’re doing the same thing ourselves, actually.

The advantage of doing this is that you can be selective in what you save. Choose toys that are both fairly sturdy and were toys that your own children really loved. For example, the first toy we decided to save for grandchildren was our children’s beloved Magna-Tiles, which are their most played-with toy of all time. Our youngest still plays with them (and the other two do on occasion) and I have no doubt that they’ll have a smile on their face if the Magna-Tiles reappear for their kids to play with.

Naturally, there’s no guarantee that you’ll always have space for such items, nor that your children will choose to have children of their own.

Q10: Sources for old newspapers

Where can a person get ahold of old newspapers if they don’t subscribe? I want some newspaper for a few projects but I don’t subscribe to any nor do any of my friends!
– Nina

There are a number of ways to do this.

The first thing I’d do is contact a local recycling center and see if they have any available. Some recycling centers collect unsold newspapers in bulk and are willing to give away big bundles of old newspapers to people who ask (or, in some cases, sell them for a small price). This isn’t true of all recycling centers, however.

Another approach is to contact local newspapers and ask what they do with old newspapers. Some newspapers will give away old papers, while others will sell them for a pittance.

If they don’t do this, sometimes newspapers will sell end rolls of newspaper. Imagine a really thick roll of wrapping paper, except the paper is blank newspaper instead. Papers will often sell these rolls for just a dollar or two. I bought one for $5 once and our family used it for literally years for packing projects and childhood art projects.

Another approach is to stop into a convenience store early in the morning and ask if they have any extra papers that they were about to throw away. Again, this is a very hit-or-miss approach, but I’ve scored newspapers this way in the past.

Q11: Privacy concerns at local bank

Recently, one of my old high school classmates was hired at a local bank. She was an extremely nosy gossip-y type in school and I felt really uncomfortable just seeing her at a teller window at the bank. I know she can just pull up my accounts and see what I have. What can I do?
– Janet

If you’re deeply concerned about your privacy but don’t have any direct evidence of this person accessing your account, you can always switch to another bank, but you can’t realistically expect your current bank to do anything about this employee if they’ve done nothing wrong just because you had issues with this person in the past.

So, your options are to switch banks now, or to wait it out and see if anything occurs. I can’t tell you which is the right path to choose.

If I were in your shoes, I’d stay put. It’s very likely that this employee has grown up a lot since their high school days and likely has little or no interest in looking at your accounts. Furthermore, there’s not actually much you can do when it comes to bank employees looking at your account information, as it’s up to the bank’s internal policies.

Q12: Curbside desk etiquette

Let’s say someone has left a desk out by the curb outside of their house. Is it okay for me to just drive by and take it? My girlfriend and I argued about this for an hour.
– Daniel

The thing is, different cities actually have different regulations regarding this. The correct thing to do would be to contact the sanitation department in your city – or city hall in general if your city doesn’t have a sanitation department – and simply ask them about it.

In many cities, there are some restrictions on doing this to prevent people from simply driving around to collect things and then reselling them as some kind of a “business.” Trust me – there are definitely people who do this kind of thing, and some cities are fairly wary of that practice.

On the other hand, most cities don’t care if individuals find abandoned items and keep them for themselves.

How does the city define the difference between the two? That’s why you’re calling. Just call and ask what the rules are regarding someone picking up a desk left along a roadside. In most cities, I think you’ll be in the free and clear, thus settling your argument.

Hope you find a good desk out of this!

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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