Steve Stanganelli CFP®, CRPC®'s Answers and Guides

Regardless of the type of advisor you select, you really need to spell out the type of advice you're looking for as well as your expectations. Then ask the advisor how they approach dealing with a client in your situation. Ask if they've handled the kinds of things you're asking about.

Too often the public and those in the industry simply thing that financial planning is synonymous with investing. Not every client needs investing help. Not every client has assets to invest. And regardless of how much and whether or not you are investing, true financial planning can benefit you and anyone else.

Generally, someone with a financial planning designation ascribes to a certain set of standards for ethics and professionalism. And they follow a certain approach to planning engagements. The CFP Board outlines this (see www.CFP.net). But many other professional designations do, too: ChFC (more insurance focused), CPA/PFS (the financial planning side for accountants). When interviewing an advisor, you may find the checklist and questions on the public site of the Financial Planning Association of use here: https://www.fpanet.org/FindaPlanner/ChoosingaPlanner/ .

What it sounds like you need is a combination of cash flow management, tax planning (key for small business owners), help creating an Investment Policy road map (to add structure to your investing process and take the emotion out of it - especially useful if you are a DIY investor) and estate plan. You may find that one adviser has these skill sets or works as part of a team or a larger firm with access to these resources. But you first need to ask and be clear of what you expect for your fee.

You may find it best to work with a fee only or at least a fee-based advisor; someone affiliated with a Registered Investment Adviser firm that offers planning. Some may even offer investing help as needed.

The general approach that the adviser you're looking for should take is leading with the plan and not simply trying to lead with an investment or insurance product. A good adviser focuses on solutions and does not lead with products. Remember the old adage about the carpenter: When the only tool in the box is a hammer, then all problems look like a nail.

In addition to BrightScope, you can also check out sites that list advisers based on certain pre-screened criteria: www.NAPFA.org, www.FPAnet.org, www.PaladinRegistry.com, www.NAEPC.org.

Before investing an inheritance, I strongly recommend waiting on any large commitments for several months just to get the grieving process settled.

After that I recommend setting aside some time to consult with a financial planner familiar with both areas of investing you mentioned. There are pros and cons to investing in the market as well as in an investment property. The best way to handle this is to work with someone who will ask you the right questions so that you may make a more informed decision.

Do you want to be a landlord? What experience do you have in running a business (rental property is a business if done right)? Do you have the time to manage the property and repairs or will you need to hire contractors or a property manager? What resources do you have beyond the inheritance for repairs or capital improvements or carrying costs during vacant periods?

Do you have an emergency fund for your personal household? What are the plans for college for the kids? (Investment real estate ownership can have an impact for financial aid but there are also strategies that may lower your Expected Family Contribution and increase your chances for other financial aid, for instance).

What is your risk profile like? What experiences have you had with investing (good or bad) that have shaped your outlook on the approach to investing as well as the types of assets owned? Is there a chance that you'll be relocating in which case you may become a long-distance landlord which offers its own set of challenges?

What is your motivation for one or the other type investment that you mentioned here? I realize that mortgage interest rates are down and many property markets are firming up while rental demand has been very good but whether or not buying a property makes sense really depends on evaluating not just the numbers but what's behind those numbers. Not everyone is or should be a landlord just like not everyone is or should be a homeowner.

You should talk with a financial planner who can outline your options. There is more to paying for college than just saving for college. The reality is that when it comes to college there are two sets of prices: the ones paid by those who are informed and the other (higher) price paid by everyone else.

Recognize that you may not likely cover the whole cost of college yourself. In fact, the share of costs covered by parents has dropped in recent years. According to Fidelity & Investment News (8/29/11), parents were paying 16% of the tab in 2011, down from 24% in 2007.

And recognize that you don't have to pay sticker price for college. Only a small proportion of students actually pay the published rate for college. And believe it or not, it may actually turn out to be cheaper to go to a private school that has a higher price tag than an in-state public school. This is because private schools tend to cover more of a student's need than state schools which have more limited resources.

Regardless of how old your kids are, there are numerous strategies to lower the cost of college. While 529 Plans are an option for accumulating savings, they are not your only option. You need to consider Coverdells as well. You can also find financial advisors and institutions that offer the SAGE tuition rewards program for earning points that can be used to discount the college costs at more than 295 private schools.

You need to look at options to lower your costs. You need to consider tax and asset strategies to lower your expected family contribution (EFC). These include numerous tax breaks for business owners (even those who own a small solo practice as a side line business). One hint: Don't give your kid an allowance when you can pay them to do work in your business which they then can use to fund a Roth IRA that may be used for their education as well. Whether this is a side business or your main source of income, this type of tax planning can work for you to lower your EFC and fund either college or retirement - a triple win.

You may have generous relatives who want to help. That's great! But you want to make sure that they set things up right to minimize the impact on qualifying for financial aid. This certainly applies to trusts and 529 Savings Plans. I'm a fan of www.SavingforCollege.com which will cover some of this but don't forget that a knowledgeable advisor is worth his or her weight in areas like this.

And let's not forget about tried and true strategies to earn college credit that may help accelerate your student's time to earn a degree. You can find out more at www.CollegeBoard.com and www.getcollegecredit.com.

While it may be early, you can also consider the role of scholarship money in your plan. Although things may change over time, it may be a good idea to get a lay of the land. Peterson's Guide is a great resource (www.Petersons.com) as is www.CollegeScholarships.org.

Looking for ways to build up the cash for college and trying to discourage relatives from giving lots of toys at holidays? Consider using a service that helps facilitate contributions from relatives directed toward your student's 529 Savings Plan or other savings account. This is done through the College Registry service of www.eRollover.com.

There are lots of choices and options. Confusing? Yes. But you have time. And you have access to qualified financial planners who can help you through all this.

Consider calling one of us. We're here to help. First phone consultation is free - at least that's my policy. And like many of us here, I offer long-distance planning services.

www.CollegeCashPro.com www.ClearViewWealthAdvisors.com

Time heals all wounds and sometimes it helps salvage a 401(k) as well. You may be able to replenish your retirement funds given the time frame you noted. It really will depend on a number of factors: how much you set aside, the amount of any company match, the mix of investments, and the performance of those investments over time.

If you are not saving the maximum or you have no company match or you are socking away the money in only a "stable value" or money market type fund, then you may not be getting the maximum return on your savings. If you are selecting the "best performing" mutual funds, you may find that you are chasing past performance. Last year's winners may not be the same for this year.

You need to consider your appetite for risk (which generally tends to be less as you age and try to recover from the beatings received from the market over the past few years). You may want to try the risk tools available at www.RiskProfiling.com. For a nominal fee you'll have a good measure of your risk that you can use in conjunction with your advisor.

Armed with that information you can then be better prepared to select investments that may help you rebuild your nest egg. Asset allocation is still one of the best ways to reduce overall risk in a portfolio (but it never means that your account will never lose value at any given time). To find an asset allocation that is appropriate for you, speak with an advisor (consider one from BrightScope). Or use the tools available at Morningstar.com or www.myplaniq.com.

What matters more than the amount of cash you'll have when in retirement but how much you'll need. This will depend on your lifestyle, your debts and your health. If you have low debts and no mortgage, you'll have more cash flow for living expenses. If your company does not provide for retiree medical insurance, you'll need to budget for that as well.

The other issue in this equation will be Social Security. By delaying retirement, you'll build credit for a higher monthly benefit. There are even specific strategies for when to claim Social Security that may improve and maximize your total benefits. (Check out www.SocialSecurityTiming.com for more information).

If you're looking to put hard numbers to your question, you can try the tools at www.FreeRetirementReport.com. A link to this is available through my company website.

If you're looking for stock-picking advice on this forum, I think you will be disappointed. Any stock investment has its merits and its risks. Whether or not these or any other investment make sense for you in your particular situation depends on so many factors. There is a saying that to every question there is a simple answer and the simple answer is usually wrong.

In your situation, you're asking about a "short term" investment. Well, what does "short term" mean to you? Every stock has its own firm-specific risks that you alluded to. What level of risk can you handle? What is your "risk capacity" (which is different than your risk profile and focuses on your total resource picture - income, debt, insurance coverage, emergency reserves)? So, given that, are you prepared to lose your investment? Because that is the mindset you need to have when putting money at risk. If not, then you should not be considering such an investment choice.

What's your time frame for holding period? Yes, you did say short-term but within that period are you looking to do "trading" versus "investing"? Important because there are tax implications for this.

You've obviously done your research so the next question is "What's your exit strategy?" No successful investor makes money without a firm idea of the exit strategy when going it. So what will be the target "sell" price? What will be your benchmark to know that this has been a successful investment worthy of the risk of your hard-earned capital? To be fair, you really need to count your "cost of capital," taxes and trading costs to get a good idea of the "hurdle rate" you need to clear to make this or any other investment worthwhile.

What is your investment process? This goes hand-in-glove with the exit strategy. It also takes the emotion out of the buy and sell decision.

If you are looking for specific stock picking advice, then here is my two cents: You really need to understand what's behind the numbers. This means diving into whatever information is available and getting a strong understanding as to the sources of revenue, the plans that management has, the kinds of risk exposure in the balance sheet and such.

I personally think that financials in general have too much exposure to credit and execution risks. Any bank that also does proprietary trading has the potential of a "London Whale" in waiting. And there are so may other great ways to get solid dividend yields from international stocks.

To help mitigate firm-specific risks, I tend toward Exchange Traded Funds because at least there is liquidity as well as exposure to multiple firms at a fraction of the investment needed to take a position in only one stock.

Your first step is to contact the plan administrator or the human resource department of the firm. They will direct you to the service number or website to initiate the process of withdrawing money from the account. You may choose to "roll" the balance to another employer's 401(k) or your own Individual Retirement Account (IRA). The IRA can be one that you direct yourself and choose the investments or you work with another broker (or preferably an investment adviser) who will manage the account for you based on your input, your risk profile, your age, and your timeline for when you may need the proceeds.

For additional information about your options and the benefits of IRAs, feel free to review previous similar questions here on BrightScope or on any adviser's blog as this is a common question that we all have addressed.

http://www.clearviewwealthadvisors.com/?s=rollover+ira

Generally, the rates for capital gains are based on your marginal income tax bracket as well as the length of time the asset is held. If you are in the 10% tax bracket, then the long-term capital gains rate is 0%. If you are not in the 10% marginal income tax bracket, then the long-term capital gains rate is 15%.

There are different rates for short-term gains (on assets held less than one year) and for long-term rates (assets held for longer than one-year). In the case of real estate assets, you need to consider that the first $500,000 in gain above your basis for your primary residence if owned jointly (purchase price plus improvements plus real estate sales costs) is exempt from any capital gains tax.

Now, what makes sense for you will depend on several factors as well as the type of asset (real estate versus non-real estate). If your income places you in the 10% tax bracket, then selling assets now to realize the gains may make sense since there is no capital gains tax. But beware of selling too many assets that then push you above the 10% income tax bracket because then you go from 0% capital gains to 15%.

And next year, there is the added surtax of 3.8% on those who have high adjusted gross incomes as well as a high amount from non-wage/non-earned income sources (like investment income).

You may be best served by engaging a qualified financial planner who may be able to help you sort out the tax planning issues specific to your situation.

Have you considered bringing this to the attention of the firm? While it has been a while and the firm has gone through several transitions, there are departments that handle "lost" certificates and may be able to trace the statement and the account.

While your plan offers you the option to borrow, you need to be aware of any restrictions put in place by the plan administrator. Such information may be found on the administrator website or in the plan's summary document available from the administrator or possibly your HR representative.

Generally, if the plan allows loans, the rule is you can borrow up to 50% of your vested balance to a maximum of $50,000 IF you had no other plan loan in place in the 12 month period ending on the day you apply for the loan.

In your case where you have a plan loan outstanding, then the new loan is limited. It is the lesser of 50% of the vested account balance or $50,000 minus the outstanding loan balance in the preceding 12 months.

In addition to the minimum loan amount noted previously, your plan administrator may restrict the reason for the loan to a list of approved reasons (for example, uninsured medical expenses, college tuition, purchase of a primary residence).

Just because you can get a loan from your 401k doesn't mean that you should. Sure, it is convenient, fast and relatively inexpensive. Yes, you are "paying yourself" for the borrowed money and not a credit card company or bank. Yes, the interest is tax-sheltered and there is no tax consequence for receiving funds as long as you pay it back.

But if you are nearing retirement, may be changing jobs or are facing a lay-off in the near future, need the proceeds for meeting daily living expenses (as opposed to some extraordinary or large capital expense) or are using your 401k like a piggy bank to buy luxury items or pay for a vacation, then the answer is simple: Don't do it.

To avoid being disappointed you really should have an idea of what you want the adviser to do for you. It also depends on the type of adviser you will be meeting. Some advisers sell investments. Others sell insurance. Some do both. Some will manage money. Some will do nuts-and-bolts planning with all sorts of number crunching.

A good resource of what the differences are in types of advisers, their designations and questions to ask as part of your due diligence can be found through the Financial Planning Association's consumer education site found at www.fpanet.org. You'll find a tab on the right "Financial Planning 101" that may provide you with some guidance. Under the "Find a Planner" tab you'll find a link to a checklist with the types of due diligence questions that you may want to use.

To find out if the planner is a good fit, consider asking about his approach to planning. Some advisers only do investing. Others will offer investing services but only after having completed a plan for a client. Most who do the latter here share the belief that you should have a road map to know where you're going before you go off and start throwing money around in the investing pool.

You can also ask about their investment approach and philosophy. Ask about how they charge (remember nothing is free so use the answers here to determine if there are any potential conflicts of interest). Are they acting as a fiduciary?

Regardless of the question, drill down deep by asking "Why." Why do they invest that way? Why do they charge that way? Why do they do what they do?

Armed with these questions and your own, you'll have a good idea about the type of adviser you'll be working with now and hopefully for a long time to come.