celebrity writers

Ric Edelman Show: Discussion Forum

The Ric Edelman show goes into national syndication Saturday January

Jan 8, 2007

Ric answers questions about retirement, geting out of debt; car leasing, mortgage loans, paying for college, understanding wills, trusts, estate plans and investing.

Visit our Ric Edelman Show Discussion Forum.

1/8/07

The Ric Edelman Show will debut in eight major markets on Saturday January 13, 2007

Excerpts from the PRESS RELEASE

ABC Radio Networks today announced the national syndication of The Ric Edelman Show. After 16 years on Washington, D.C.'s News/Talk WMAL, the award-winning Ric Edelman Show will be available nationally starting Saturday, January 13, debuting on eight of America's leading News/Talk stations: WABC New York, KABC Los Angeles, WLS Chicago, KSFO San Francisco, WBAP Dallas, WJR Detroit, KPRC Houston and of course the flagship WMAL Washington.

"It's an honor to bring the show to a national audience," said Ric Edelman. "But the program is not about money or Wall Street. It's about helping people achieve their goals -- buy a home, pay for college, prepare for retirement, care for elders, get out of debt, and enjoy financial security. This is a show everyone needs because, after all, money doesn't come with instructions."

Ric Edelman is a past winner of the Achievement in Radio award for Best Talk Show Host in Washington, D.C.

Edelman is one of the most highly acclaimed financial advisors in the country. Barron's has three times (2004, 2005 and 2006) ranked him among America's 100 top financial advisors, and Research Magazine inducted him into its Financial Advisor Hall of Fame in 2004. Bloomberg Wealth Manager named his firm, Edelman Financial Services LLC, one of the largest financial planning and investment management firms in the nation, managing $3.5 billion for consumers nationwide.

Ric Edelman is also a #1 New York Times best-selling author and syndicated columnist who has written five books on personal finance:

The Truth About Money a personal finance classic (January, 2004)
Discover the Wealth Within You: A Financial Plan For Creating a Rich and Fulfilling Life (April 2003)
What You Need to Do Now: An 8-Point Action Plan to Secure Your Financial Independence (April 2003)
Ordinary People, Extraordinary Wealth (Dec. 2000)
The New Rules of Money: 88 Simple Strategies for Financial Success Today (Feb. 1999)

Ric also wrote the forward to AARP Crash Course in Estate Planning: The Essential Guide to Wills, Trusts, and Your Personal Legacy (December 2004)

Each week, The Ric Edelman Show takes calls from listeners. Ric answers their questions, covering such topics as how you can retire in comfort; get out of debt; when to lease a car; why you should never pay off your mortgage; how to pay for college for kids or grandkids; determining if you have the right insurance; choosing a financial advisor; understanding wills, trusts and estate planning; and, of course, how to invest successfully -- and safely.

Discussion Forum For "The Ric Edelman Show"

What do you think? Ask questions about this article and discuss Ric Edelman In our Ric Edelman Show Discussion Forum.

Kirk Lindstrom: DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.

The copyright of the article Ric Edelman Show: Discussion Forum in Investment is owned by Kirk Lindstrom. Permission to republish Ric Edelman Show: Discussion Forum in print or online must be granted by the author in writing.

Comments

Jan 8, 2007 5:21 PM

peter norwest :

Anyone out there knows how this ric edelmans is?

Jan 10, 2007 3:23 PM

dave from santa rosa :

hiya kirk. now i know of two listenable shows for us bay areaites. this one sat ksfo 10a - noon. da brink sat and sun kgo 1-4p. any others that you like?

Feb 3, 2007 9:07 AM

Steve Thompson :

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I listened to Ric for the first time this morning and found it refreshing. He gives clear advice over a wide variety of financial topics. Edelman gives relevant analogies that are easy to follow. He seems well informed and didn't have to think twice for a question on a QDRO, I must say I never heard of it and when I looked it up I am glad it is something I have no experience with. http://www.dol.gov/ebsa/faqs/faq_qdro.html

He discussed why investing in stocks and bonds is just a starting place and the benefits of diversifying into several other asset classes as well. Another caller was thinking of switching her government thrift plan options from one that is lagging to one that is doing well. Ric did a nice job of explaining why this is not the best way to proceed. He said she did not pick the best fund when she picked the current fund so what makes her think she would do better this time. He went on to explain she has to get past thinking about how well she could have done and have a plan that will do well in the future.

Ric mentioned that nationwide some 80,000 home owners that got roped into exotic mortgages like zero interest or ARMs etc. are now behind on payments. The problem is they bought a house they couldn't afford and now they are paying the price.
Ric informed listeners a big tax headache is looming, corrected 1099s. Due to the tax bill being passed so late most brokerage houses were still figuring the actual numbers when the deadline to send 1099s, Jan. 31 was upon us. They went ahead and sent them out knowing full well they were NOT correct. Ric advised waiting until at least March to file your taxes. Go ahead and prepare them but wait and make sure your 10099s are right prior to filing to avoid the nuisance of filing an amended return.

Ric offered some ideas on college 529 plans. Don't over fund them because the money needs to be spent on college expenses. He offered parents the suggestion to balance out funding their retirement as well. If considering a 529 plan take a look at the Virginia College America Plan. It offers unlimited flexibility. One thing to be aware of you must be a resident of Virginia to deduct the contributions on state tax returns. Ric feels since state tax rates are low losing that deduction for non residents is worth the increased flexibility.

Another shocking item in the news, some 45% of folks spend their 401(k) money instead of rolling it into an IRA when they leave jobs. Those under age 30 t

Feb 5, 2007 10:59 AM

tjg911 :

I listened to this show 3 weeks ago and I liked it. Last week I heard only 30 or 45 minutes but this weekend I caught all of the 1st hour and about 20 minutes of the second. Thanks for alerting us about Ric, I never heard of him. I really like the fact he's on from 10am-12pm - no night static or fading of the am signal and NO interruptions due to college and pro basketball, college and pro football or pro hockey! Major problems with Brinker on 2 different am stations with these sports broadcasts.

I really enjoyed hearing Ric discuss the 10 reasons you WANT to carry a mortgage (fixed NOT an adjustable) and NOT pay it off prematurely. Dave Ramsey outta listen to Ric! The really amazing thing was (get this!!) that Ric sells a 90 minute video about why you want a mortgage yet he went thru all 10 reasons on the radio! Imagine Brinker giving away anything for free!

Tom

Feb 10, 2007 4:08 PM

Steve Thompson :

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Ric started the show this week relating a story concerning his new book scheduled to be released in October. He sent the manuscript for editing on Monday and called the editor Thursday about it. The editor hadn't received it. Immediately he checked with FedEx. They discovered the empty box in Newark NJ some six hours later and presumed it was stolen. On the bright side FedEx said if he filed a claim they wouldn't charge him the delivery fee. The good news is he had plenty of copies. He fears it will appear on the Internet.

Ric shared a warning about a mortgage redirecting scam that is circulating. It claims his personal CPA has seen this plan and explained it to Ric and he endorses it. This is completely FALSE. Ric has seen the ads and investigated them. He says they make no sense and he is NOT involved in anyway. If you see anything with Ric's name on it you are advised to call him and ask if it true.

As a follow up to the corrected 1099 issue from last weeks show Ric shared a corrected 1099 that stated the dividends on the original were expected to be 99.64% free of taxes. The revised 1099 said they were 100%. On a $million account the tax bite would be less than $100. But you still would need to file an amended return. So wait and be patient.

The next call is the one Kirk referenced earlier here it is:

Ric: Muriel welcome to the Ric Edelman show.

Muriel: Hello Ric

Ric: How are you?

Muriel: Hi. I have a question. I have some money sitting in a money market and I want to purchase a mutual fund. I heard on the radio yesterday the market might be making a correction and I am wondering if I should just wait awhile before I do that?

Ric: OK you were engaging in something that is known as market timing, Muriel. Which is a very dangerous dastardly way to invest. You can really set yourself up for loses and here is why. If you listen to the radio long enough or tune into enough television shows or read enough magazines you will find lots of opinions and lots of prognostications about what's going to happen next in the stock market. And anytime anyone anywhere tells you what's going to happen next they are lying. Because they don't know. Nobody knows what's going to happen next. And I want you to really understand that. Nobody knows. So anytime anybody anywhere tells you to buy an investment or avoid buying an investment because of their claim of what's going to happen next, they're lying. They are making it up. They are simply tr

Feb 18, 2007 1:40 PM

Steve Thompson :

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Ric started by saying as investors we have several decisions to make about where to invest & what to invest in but the number one most important decision is to answer one question first. Who are you? He went on to say are you a maximizer that is not bothered by volatility or risks and looking for a higher long term return. Or are you an optimizer looking to earn the maximum return relative to the risk you take? Once you have honestly answered that question the others become easier to answer.

Caller was approached by his financial planner to buy a private fund and was told it has the advantage of higher performance. Ric said he should get more information such as how much the fees and commissions are. Since all money managers are trying to get high performance you can't look to past performance for future expectations. By going with a private fund you can give up things like liquidity and may be taking on more risks.

Ric did invite listeners to call his office during the week just like they do for the radio show for the same friendly free advice. The number is 1-888 752-6742. A very nice service.

Caller asked if Ric has changed his view that the S&P 500 is something to stay away from. Ric still says to avoid the S&P 500 index. He went on to say it was never intended to be an investment but a measure of the economy. Ric doesn't condemn all indexes or ETFs. Ric doesn't care for the structure of the S&P 500 since it buys stocks after a big run up and sells them after they drop in price. He called it classic momentum investing. It is vulnerable to front running since they announce ahead of time when changes to the index will occur. It used to be the argument was active investing vs. the index. Now it has changed to active vs. passive. Ric instead prefers a blended approach to actively manage the stock selection and then passive hold it for a long period of time. This non churning tact reduces risks, taxes, and expenses.

Caller asked about taking out a mortgage on a paid for house at age 65. Ric said they could consider it if they had little other money and used the cash to improve their lifestyle and increase liquidity along with getting the tax deduction. In some cases this makes sense.

Caller has a handicapped daughter age 28 and wants to provider for her after the parents die. Ric said the best way to make sure his wishes are carried out is to establish a special needs trust. When the last parent dies it will trigger some taxes bu

Feb 25, 2007 9:52 AM

Steve Thompson :

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Ric was very distressed after doing an analysis of returns investors received vs. the reported returns the funds they invest in. He shared the findings of an organization known as Dalbar. http://www.dalbarinc.com/ They measure not only the average annual return of for example Mutual funds but the actual returns investors that own those funds receive. Ric concluded most investors are not buying and holding funds for the entire period the funds report their average returns. Instead they are trying to time the market and doing a lousy job of it. They are in many cases buying them after a period of strong performance. This often coincides with when then get lots of press on their returns and you may see the manager interviewed on TV or in magazines. On example is a fund (he didn't name any of them) over the last ten years returned an average of 15%. Not bad considering that time frame includes the three bear years of 2000-02. Over the same last ten years the average return of investors owning that same fund got 2.6%. In another case a fund returned 8% while investors that owned that fund made 0.6%. One of the worst examples is a fund that did 7% over the last ten years, somehow the folks that owned this one <b>lost 15%!</b> Ric went on to say Morningstar is starting to incorporate this information into their data.

Suze Orman is going to be feature NY Times Sunday magazine this week. In it she reveals she has about $1 million invested in equities out of $25 Million in wealth. Six months ago she was on record as saying most of the rest is in municipal bonds. She routinely tells folks to invest in stocks and be diverse but doesn't take her own advice. In the article she is upset over estate taxes at 50%. Ric said it is actually it is 45% and not all is subject to estate tax. She needs an estate planner to show her how to eliminate or reduce estate tax liability.

Caller age 70 has a fixed annuity paying low rates and has held long enough to avoid surrender charges. Ric said his options are to keep them and accept the low returns, sell and pay taxes on his gains and invest elsewhere, or a 1035 exchange into a variable annuity that could be invested into subaccounts, which are similar to mutual funds for a hopefully better return.

Ric warned about protecting the social security number of children. One way to see if anyone might be using a child's Identity is to pull a credit report and see if there is one. If there is for your three year old it could

Mar 4, 2007 9:02 AM

Steve Thompson :

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After the worst week in the past six years Ric revealed something to illustrate why so many investors do poorly. The Federal thrift savings board reported on this past Tuesday evening more than $400,000,000 was moved from equity funds into fixed income funds. Buying high and selling low is not the way to make money. Ric advises not to look at today but keep focused on the long term. Invest not to avoid loses today but to achieve long term goals.

A caller asked about retirement plan distributions and who makes the decisions. Ric said you can annuitize distributions but that is a bad idea because you can't later change it. If you keep control you can take regular monthly withdrawals or annual lump sums, or a mix and change anytime you like. The one thing is to make sure you don't run out of money before you run out of time.

Another caller bought and lost money in WorldCom stock and has been taking losses to offset gains. She got an $800 check as part of a class action suit. She is wondering if that is reported as income. Ric said to wait and see if she gets a1009-b, if she does then it is income to be reported to the IRS.

Caller has a 401(k) and one investment option is company stock that pays a dividend. They offer the option to reinvest the dividend or take it as a direct cash distribution. Ric has never heard of this and wonders what IRS rule would permit such a distribution. Even if you could take the money in pocket you would be better off keeping sheltered and growing.

A caller read in Ric's book "The Truth about Money" in it he thought it says Ric prefers CDs over muni bonds. Ric said actually it is he prefers taxable over tax free if you are saving and compounding the returns. Theoretically you may for example, get 6% taxable or 4% tax free. That 4% tax free may equate to 6.5% taxable and sound better. But if you are going to reinvest to grow by compounding the returns, would you rather compound 6% or 4%? Most people pay taxes out of their cash flow and not by dipping into the returns to pay taxes. Over 20 years this can amount to a big difference. However if you are spending the returns then tax free maybe the way to go.

Hour 2

Ric reviewed some insurance statistics. 56% of adults say they would be unable to pay their bills if they got hurt and missed work for a year. Only 13% say that is likely while the actual figure say it is more like 20% and for those age 20 the odds are 30% it will happen at some time in their careers

Mar 18, 2007 8:21 AM

Steve Thompson :

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During the week Ric had a call concerning tax free bonds. This caller had been for years buying tax free municipals bonds to avoid the taxes. Now she discovers reporting this tax free income is causing her Social Security monthly payments are being reduced. Now she is also stuck receiving a lower yield on her bonds. Ric says this is a mistake, your goal should not be to avoid taxes on your income. Your primary goal should be to gain a profit net of all taxes. The idea is to do a taxable equivalent yield comparison calculation that will tell you which is the better way to proceed. Ric went on to say the caller had it slightly confused, her Social Security wasn't in her case being affected but her Medicare premium is based on how much income you have, that is all income including tax free. Because this caller was earning a fair amount of tax free income she had to pay a higher Medicare premium. Ric said she is not necessarily stuck with those low yields and shared his opinion that bond buyers are never happy, this includes all types of bond buyers. Interest rates/yields either go up or down. When they go up you are not happy because the value of the bonds goes down. When yields fall you have to renew at the new lower rate.

<b>Ric announced the launch of a new TV show "Ric Edelman on Retirement Living" The hour live call in show premieres this Monday and Tuesday at 2:00 PM eastern on Direct TV channel 364. It will also be on Comcast cable CN8 (channel 8 in most markets). </b>

Last week Ric knew of no word to describe $100,000. A caller shared an Indian word that means exactly that, Lakh.

This week we had a couple callers asking about prosper.com. It is a site that instead of borrowing from institutions lines up individuals as borrowers and lenders, not unlike e-bay. Ric advises to go cautiously and be careful. It is OK if you are a borrower. You really don't care who you borrow from you are looking for reasonable terms. If you are borrowing be sure it is a loan that you can afford now and ten years from now. If you are a lenders that is a different story. For the most part borrowers on this site have been turned down by institutions. They are in the business to lend money, if they say no there is usually a reason. Do you really want to loan money to a stranger?

Ric warned people to check for identity theft of their children and a new twist. It seems now people are stealing the identity of the recently deceased. It is also a good idea to not

Mar 18, 2007 11:04 AM

tjg911 :

SteveT,

I really enjoy your weekly recap on Rick's show. I often miss parts of the show or can't hear the caller's comments when I am on the treadmill like this morning so it's great to be able to read your synopsis.

I was interested in Rick's TV show and since I have Direct TV I was curious about his description of channel 364. At first I thought this was a new channel because I am not aware of 364 having any programming. Sure enough there is nothing on channel 364 on Direct TV. It's not a pay cahnnel, it's just an unused channel. I tried 346, 264, 246, 464 and 446 thinking he mixed up the numbers but no luck.

Does anyone know what channel the show is on? Is it possible that on Monday and Tuesday at 2 ET Direct TV uses channel 364 for this show, ad hoc so to speak?

I went to Rick's website and did not see any info there.

Thanks,

Tom

Mar 18, 2007 12:21 PM

Steve Thompson :

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Thanks for the kind words. I just checked here.
http://www.directv.com/DTVAPP/epg/theGuide.jsp?d=78&h=14&tz=e&z=&fl=_d&x=14&y=6
By using the drop down windows you can adjust the date and time. It is listed there on 364. I am wondering if it is a new channel that starts tomorrow at 9:00 AM? Maybe tune in and check it out and get back to us? TIA
.

Mar 18, 2007 1:29 PM

tjg911 :

Thanks Steve.

I went to the link you provided and then used my zip code. I saw a lot of 'local channels' (defined as channels 2-99) that we don't here or that I don't get so I'm not sure what to make of that.

Channel 364 does show "Retirement Programming or Lifestyles" I forgot the wording. I am not home during the day so I can't check this. I think I'll set the VCR to record 364 from 9 am for 15 minutes, if this is a new channel perhaps they'll have some info. I'll also record it from 2-3 to see if Rick's show is on. I'll let everyone know what I find.

Tom

Mar 18, 2007 1:41 PM

tjg911 :

I just tried to program the satellite reciever to 364 and it will not accept channel 364, it changes my request from 364 to the next channel that exists 365!

I did program the vcr for 9 am and 2 pm. All I have to do is use the remote to set the receiver on 364 (which I can do) before I leave for work. This way when the vcr comes on the receiver will be on channel 364 and it will record whatever is on that channel.

Weird.

Tom

Mar 20, 2007 8:15 AM

tjg911 :

Apparently Direct TV has a new channel, 364 Retirement Living. I don't remember seeing anything about this, I wonder how many other new channeles are out there?

No Ric Edelman show nor was he on from 2-3. I taped that hour and watched it. I'm taping it today also.

Tom

Mar 20, 2007 8:51 AM

tom smith :

I see it listed on cablevision cable guide on channel 64 CN8 at 2PM EST.

Mar 21, 2007 8:23 AM

tjg911 :

No Rick, same show as yesterday. I'm done. Perhaps Rick will have an update for us on his radio show.
Kirk et al,
Anyone watch the show that was on? OK, anyone want to guess the age of the woman who co hosts with the man? I wondered, since this is Retirement Living channel she can't be all that young. But she sure does not look old enough to retire. Would they put a really young woman on? But she doesn't look 62 or 65. I was fascinated, simple things amuse a simple mind I suspose. Well yesterday she mentioned her age.
Anyone see the show? Hazzard a guess? She is quite lovely.
Tom

Mar 21, 2007 10:48 AM

tom smith :

Tom, I don't know what show you tuned into but the show I watched had Ric Edelman alone thru out the entire show; I though it was interesting.

One person called asking about RMD's at age 70, they both couldn't get the figure correct.

I though to my self, if he had log into Suite 101 and asked allancoleman the question he would haven gotten the correct answer:)

Mar 21, 2007 12:42 PM

tom smith :

All of the questions that are asked are not from retired people, but almost all the commercials are directed to retired people.

Mar 22, 2007 4:35 AM

tjg911 :

I'm on the east coast. I recorded channel 364 at 2-3 pm ET both Monday and Tuesday. It was the Retirement Living channel, the same show was on each day but Rick was not on either day. Monday I watched the entire hour while Tuesday I watched 10 minutes and used the fast forward 'view' on the vcr for the rest of the show. I was able to see the video without the audio. I saw a picture of Rick at his website and no one on the show Tuesday looked anything like that image.
.
Tom

Mar 22, 2007 6:58 AM

tom smith :

I'm not sure Tom, but I think CN8 goes into only 13 states on the east coast. ME, NH, VT, MA, CT, NY, PA, NJ, DE, MD, VA, D.C. and WV.

The show has a nice format, he gets right to the point with every question. Tom, try CN8.TV to see if your state is included.

I hope this will help.

Mar 24, 2007 10:01 AM

Steve Thompson :

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With housing being in the news recently Ric opened with a very well reasoned talk on the subject. He reviewed some of the reasons the subprime debacle has unfolded. What I thought was the key point, you need independent advice on whether your housing choices are appropriate for you. So many people involved in a real estate deal depend on the sale going through to make money. It is not necessarily in your best interests to listen to only them. You might say they have a conflict of interest. The real idea is not to buy a home but to own a home. Look for someone on your side who will represent your interests.

Last week a caller asked Ric about You first financial (sp?). She had been told it was endorsed by the President of the World Bank. Ric said he would call and find out if that was true. Ric was unable to get in touch with Paul Wolfowitz but did contact a spokesperson of the World Bank. He said they do not as a matter of policy endorse any private activities. They do often have people make claims of endorsement, one such is the Nigerian scam.

A caller stated home inspectors are one person on your team in the home buying process. Ric said that is true but interjected you can't count on appraisers. It seems some 80% of appraisers say they have been influenced by mortgage lenders to falsify the appraisal. Ric went on to give a tip on how much house you can afford. If you can comfortably afford the payment on a 30 year fixed loan then you pass.

Ric reviewed the you tube clip of Jim Cramer admitting to manipulation stocks. He rhetorically asked how do we know he is still not up to shenanigans? Ric advised anytime anywhere anyone is giving you tips be sure you get full disclosure otherwise it is just noise or financial pornography not educational.

Caller's mother-in-law passed away about a year ago She had instructed the bank to retitle stocks to joint ownership with her daughter. The bank failed to do it and they didn't find this out until after she passed. The caller wanted to know if they could get the bank to pay for fixing the error. Ric said it would be an uphill fight and he is skeptical if they would succeed. Ric went on to say it could be a mistake, they were focusing on avoiding probate and if they do resolve the situation they might be creating a big tax problem by losing the stepped up cost basis. The idea with all things financial is to focus on all aspects before you act.

Caller received a $50,000 windfall and wonders how

Mar 24, 2007 11:48 AM

permabear :

I've just begun listening to his show on Saturday mornings. He generally gives a lot of practical advice. One piece of advice he gave is going to be very controversial on these boards. He advised anyone in a tax bracket of more than 15 percent to avoid Roths because he said that you never know what legislators are going to do years down the road. He said that in a decade or more out they very well could make Roths taxable again.

Being the pessimist about the future financial condition of the country with the entitlement mess we are going to be in, I think it is a good bet that Roths may be tax deductable some day. The government is going to be desperate for tax revenue some day.

One money philosophy I couldn't disagree with him more on was maintaining minimal equity in ones home. He said he has an interest only loan. This philosophy is fine as long as real estate, stock and other assets are rising. But if they start falling (Robert Shiller is predicting a 20 to 30 percent decline in housing in the next decade or so), this philosophy could bankrpupt a whole lot of people, including Ric Edelmen. Reducing debt to a minimum is my philosophy and it is the safest philophy to have in the longterm. (I personally have a credit score of over 830 and I practice what I preach).

Mar 25, 2007 9:37 AM

Richard Cristaldi :

permabear, thanks for the information on Roths. I am considering moving our entire IRA funds over to our Roths. Taxable roths would certainly defeat the purpose of what I am trying to do.

Mar 25, 2007 3:39 PM

Richard Cristaldi :

Thanks Kirk. I tend to agree with you and am thinking that I will sit on my IRA's. We are in the 25% tax bracket, but exempt from NYS tax because of my retired teachers status. My advisor from T. Rowe Price basically said the same thing as you. Thought I would save my kids some tax money but the cost may be too high. I can't see Fed negating the Roth for those of us in right now, but could change for future generations.

Apr 15, 2007 8:20 AM

Steve Thompson :

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Ric Edelman proved his integrity this weekend. Last week he was asked if a person working two jobs both with 401(k) plans could contribute $15,500 to each. At first Ric said yes. My reaction was this is not the case. Before letting the caller go Ric was having doubts and said the guy shouldn't act on his first statement. He told the guy to listen this week and Ric would research it and get the correct answer this week. Ric did follow through on his promise. This is what he said this week.

"Last week on the program here I gave advice that I knew was wrong when I gave it. Well OK fine. What's worse than giving advice that's wrong? Not knowing that it is wrong. Well I knew that it was wrong and I warned you that it was probably wrong. And I warned you not to act on it and I would come back this week after verifying it in the office and indeed I have done that.

Here's the deal. You work for a company and you contribute to the 401(k) plan where you work. You then quit the job and go another company and you join their 401(k) plan. So you're contributing to two 401(k) plans during the year. What is the maximum you're allowed to contribute? The correct answer is the following. You're allowed to contribute a maximum of $15,500 for the calendar year. From all plans combined. Whether you work for one employer for during the year or several employers during the year. It is $15,500 per worker. If you're 50 years of age and older then you can add an extra 5 grand to that. That's called a catch provision to help older Americans closer to retirement save more for retirement. Bottom line is the rest of us who are not 50 years of age, I can say that for just a very short while longer. The rest of us that are not yet 50 years of age it's $15,500 whether you work for one employer or multiple employers. I am referring to 401(k) plans alone. Because if you have a 403(b) plan or 457 plan you can do $15,500 per plan not per worker"...

...In other words it is absurdly complicated which is why last week when I was doing it off the top of my head I said here's what I think the answer is but I'm not 100% sure about this let me go check. So I went and checked."

Time is at a premium this week so I won't be doing a full summary. I did want to get this out there for you all to review.

The show is begging to add new stations, here is an updated list. http://www.ricedelman.com/tunein/radio.asp

For those not in local coverage areas I have had my best luck streamin

Apr 22, 2007 12:27 PM

Steve Thompson :

.
Had lots going on in my personal life lately but I just wanted to let you know a few more radio program summaries are up including this weeks. The last few shows have had some really good calls and information. Hope you enjoy them as much as I do preparing them.

Fan club site
http://home.netcom.com/~fanclubs/Ric_Edelman/index.html

Show summaries
http://home.netcom.com/~fanclubs/Ric_Edelman/ShowSummaries.html
.

Apr 22, 2007 4:18 PM

Roope Ankka :

Thanks for your recaps.

A caller yesterday asked about the capital gains exemption. The caller thought that a couple had to be married to get the full exemption and Rick did not correct him.

It sounded like the caller was going to get married just to qualify for the exemption. I feel sorry for the guy if that's the case.

Apr 22, 2007 4:33 PM

Steve Thompson :

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I guys some folks will DO anything for money. :)

Apr 24, 2007 12:19 PM

Steve Thompson :

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From what I got out of the call the only way they could get a combined $1M is to get married.

Apr 24, 2007 12:43 PM

Dan Gibbons :

I agree, Steve. That's the way I understand the tax laws. Get married, live in one home for two years, sell it for a $500K exemption. Then move to the next home and reapeat the process.

Apr 24, 2007 1:49 PM

Roope Ankka :

"Get married, live in one home for two years, sell it for a $500K exemption. Then move to the next home and reapeat the process."

A couple could live in one house for two years, move to the second house for two years, rent out both houses for a year, and then sell both houses.

To qualify for the exemption, the rule is you have to have lived in the house for 24 months of the preceding 60 months.

I might have been wrong about the caller. He might indeed have to get married to take advantage of the capital gains exemption. I mistakenly thought the caller and his girlfriend could take the capital gains exemption by quit claiming half their houses to each other.

However, a couple does not need to be married if they buy a house together and are both on the title. Actually, if any number n of people buy a house together and are all on the title they can all use the captial gains exemption up to a total of n times $250,000.

May 28, 2007 11:12 AM

tjg911 :

I was out in the garden yesterday listening to Ric Edelman's show, I heard a caller talking about his mortgage and investing. I am pretty sure I heard this correctly, but I was also pretty sure Ric did not recommend investing with mortgage refi money, and to my shock instead of saying don't use a home equity or a second mortgage or whatever the case was, Ric told the guy to invest that extra money from some type of mortgage! No way would I consider it sound financial practice to obtain money for investing even over 20+ years by getting it from home eq or refi or a second mortgage, NEVER!
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So I think I heard Ric give this advice. The lousy am signal was marred by the weather and low batteries in the radio, the signal was weak, so while I tried to listen I could have missed something. But it sure sounded like Ric's advice (!) was to go ahead and use that 'extra' money to invest over the long term.
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Tom

May 28, 2007 12:39 PM

permabear :

I only listen to the Ric Edelman show sporadically when I'm out in my car listening to the radio on Saturday mornings. But I have heard him advise people to use mortgage money to use for other investments in certain circumstances. I agree with you and said so on the Brinker board.

It's one thing to carry a fixed rate mortgatge with a desirable rate to take advantage of the tax benefits and so on. But I also believe that maxing out leverage by taking equity out of ones home to reinvest works fine only as long as the stock market and other more risky investments are returning 10 plus percent a year. But if we ever do go into a bearish environment, or heaven forbid, an actual, real recesssion (which Americans haven't experienced in decades really) than this philosophy of leveraging to the max is going to bankrupt a lot of people.

Personally I continue to believe that minimizing debt is the safest way to go financially even if it costs me some returns in my investments. I practice what I preach as well having a house that is fully paid off, no car loans, pay off my credit cards monthly, and have a credit score of over 830.

Someday if my bearishness ever rings true, I will be prepared for the tough times, and all those folks enjoying the party today with leverage and margins galore are going to have a very hard time. And I wouldn't be at all surprised to see financial gurus, held in such high esteem today, such as Ric Edelman, to be joining those in the bankruptcy crowd.

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