 Email this  Print this License or reprint this articleASK KIM I want to give my grandchildren, ages 4 and 6, $500 each to invest in one of the American funds. Which one would you suggest? Are there better options? Because the minimum investment for the American stock funds is only $250, you can build mini portfolios. Two excellent choices are Growth Fund of America (AGTHX) and EuroPacific Growth (AEPGX). (Class A shares of these funds have a 5.75% front-end sales charge.) You can save on commissions by investing in no-load funds. Most no-loads have higher minimum investments, but here are three with good long-term records that let you start with just $500 or less: FAM Value (FAMVX), Excelsior Value & Restructuring(UMBIX) and Hodges Fund (HDPMX). Retirement plan contributionsIf you are working after age 70½, can you contribute to an IRA and 401(k) plan? Yes to both, assuming the IRA is a Roth. The rules prohibit contributions to a traditional IRA beginning the year you reach 70½. I know that a Roth IRA is funded with after-tax money, and a 401(k) is funded with pretax money. So, if I fund my Roth with money borrowed from my 401(k), the money in the Roth IRA will never be taxed. Is this a tax-law loophole or creative personal financing? Close, but no cigar. Becuase you have to pay back the 401(k) with after-tax money, the result is the same as if you used after-tax funds for your Roth. | |
