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Subject:  Re: Please Help me Optimize! Date:  12/11/2001  9:34 PM
Author:  JLC Number:  32802 of 88498

Sounds like you've given much thought and have a good plan. Here's my $0.02 on some things I know a little about.

<<<2) Should I actively look for a house for the tax benefits? My girlfriend is a home owner and I will likely be living there 18-24 months from now. Premarital cohabitation is not an option (her father is good with a gun).>>>

I wouldn't look for a house unless this is the place you will live after you're married. It's big risk to try to turn around and sell after only two years. Housing market could tank and you'd take a loss, not a good way to start a marriage. Plus, the closing costs, etc., would offset any "tax benefit" unless you stayed in the house for about 5 years, as a rule of thumb.

<<<3) Should I pay off my car loan at 13% instead of making an incremental equity investment in my taxable brokerage account?>>>

Yes. Debt is bad, especially high interest debt.

<<<4) One big expense is insurance. I pay about $200 a month, despite a clean driving record (more a function of age). I'm very happy with the quality of service of my insurance provider and would rather not switch, but for a $500 annual savings, I might. Any thoughts on how I can get this rate down?>>>

It wouldn't hurt to shop around and then tell your agent you've found a policy for $X. They may or may not match you. There are about four things that will help drop your rate: be accident free, your next birthday, getting married, and having multi-car-house-boat insurance with the same carrier. Of course when you have kids, the rates go back up.

<<<6) Am I getting the diversity I need through multiple mutual fund holdings?>>>

You're probably over diversified. Plus, you're paying multiple expenses and most of the time gettting market loosing returns. I'd stick to either index funds (cheap expense ratios with market returns) or pick my own stocks.

<<<7) At what age should I start looking for yield in the stocks I select? When should I start allocating funds to fixed income holdings?>>>

Essentially you're asking asset allocation. To me, you should either hold equities or CDs. Money you need in the next 5 years, put into CDs or moneymarket account. That way, principle is protected and it's easily accessable, but most of all, you won't have to sell anything during a market down turn and loose principle. The rest of the money goes to equities. This strategey would hold for any time of life and any situation.

Hope this helps.


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