Suggestions for a 35 year old

Q: I have been reading some of your articles online and they have been real eye openers. I am a 35 year old family man... with a decent career. I am pursuing a degree in business while also providing for my family and trying to build a financial future (strong, early retirement).

I recently took a business Mathematics class that put a more positive spin on annuities than your articles. In fact, I was impressed and have trying to learn more about them. They appear more (or just as) powerful than my 401K plan. Though, I see your point and apprehension with them and with the sales people who tout them. As I try to figure out what to do, I rarely get a simple resolution. Everywhere I turn, all the answers on how/where to invest are complex, solicited for more fees/products, or for a large investment. It has gotten to where I am afraid to talk to any financial advisors because I'll be pressured into more fees/products or asked for an investment larger than what I have.

In short, I'm a young guy every-so-often I have $500 - $1,500 to invest in something As everyone, I would like to receive the greatest, safest, possible return (I've read it is very possible to receive 10% apr compounded annually) What is the best investment vehicle? Any direction would greatly help me and many of my friends around the same age with the same question.

A: I understand your frustration. Let me help.

At 35 years of age, and with a family, you should place a high priority on flexibilty. You don’t expect to need the money you plan to invest but there’s no way of knowing what might happen tomorrow. That alone is reason enough to avoid an annuity where you would be subject to an automatic 10% IRS penalty if you accessed it prior to 59 ∏.

Also, you get some tax-deferral with an annuity, but then it gets taxed as ordinary income.

For those reasons, I would recommend that you find a high-quailty no-load mutual fund that will allow you to invest a smaller amount and add to it as you can. Looking out over the next 5-10-20 years, I would lean more toward and international mutual fund because the growth outside the U.S. will probably continue to be higher than the growth in the U.S.

I disagree that 10% annually is very possible. It’s not as easy to do as it used to be, but is possible. The key though is that you want your money to grow at a rate faster than inflation and taxes.

Your posted comments on this and other questions are welcome.
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