Difference between CDs & IRAs

What's the difference between an individual retirement account (IRA) and a certificate of deposit (CD)?


An individual retirement account (IRA) is a type of account.  A certificate of deposit (CD) is a type of investment.  Therefore you could open an IRA Account, deposit funds into this account and then buy a CD in the account.  If you have a CD at a bank or brokerage firm and want to use the money to make your deposit into an IRA, you would have to cash it out first, put the money into the IRA and then buy a new CD.

Q&A - Mortgage Debt

I've come into a large amount of money. Should I invest it or pay off my mortgage?


There are about 20 questions I would want to ask you before answering this question because based on what I know the answer is "It depends!"  In general, my experience tells me it is good to have a mortgage on a home when the interest rate is 5% or less. If buying, keep the loan at about 40% to 75% of the value. This way you start out with at least 25% equity and you borrow at least 40%. Having a mortgage has never been a concern for my clients who have investable assets and who know how to manage their budget to not spend more than they make. Even a conservative investment plan should net you at least 5% on an annualized basis over 20 to 30 years so the worst case is you break even on mortgage interest versus investment income.  Also, this does not take into account a potential tax deduction advantage from mortgage interest.  You also get to pay for a real (and appreciating) asset 10 to 25 years out in the future using todays' dollars.  Think about that.  It's more meaningful than you realize.  The fact of investing is that money makes money and it can help you make payments and deal with emergencies and opportunities.  Owning a home outright does none of that.

Q&A - Difference Between Savings Account and Roth IRA

What is the difference between a savings account and a Roth IRA?


A savings account is typically a generic term for any account that a person uses to accumulate funds for a future goal such as retirement, education or home purchase.

A Roth IRA is type of savings account that allows a person to save funds for a future goal but with a twist.  The earnings and growth on the savings are not taxed if they are withdrawn within certain guidelines.  The Roth IRA is an excellent savings account vehicle for anyone who qualifies to contribute to a Roth IRA. The first qualification is that you have earned income.  That is, income that comes from a job as opposed to an investment or pension.  The second qualification is that you do not make too much money. Check with a Federal Income Tax reference guide to see what the income limitations are for any year you are deciding to contribute.

Q&A - Inheriting a Significant Pension

How should my mother plan to secure and maximize her inheritance of a significant pension?


My brother in law recently passed away leaving a reasonable (~$250K pension) to his mother. He died before starting benefits. She is 76 years old. She has never had much money. Her family would like for her to enjoy the full benefit of this money while she is alive. She is also the beneficiary of a $225K life insurance policy. What are the best options available for the pension portion of the inheritance? My mother in law stated that she would like to be able to spend the money and leave the balance upon her death to her remaining living children. Any advice?



It sounds like your mother in law was well loved by her son. I will assume that by "pension" you mean a monthly benefit amount that is not a lump sum amount nor can be rolled into a lump sum amount.  If that is the case, your mother in law will be restricted by the rules of the pension plan as to how much she can take and how and when.  If the intention is to enjoy the money, then take it as soon as possible, withhold enough to pay the tax due so there will not be a tax burden for her come April.  The Life Insurance proceeds could be invested to leave for her heirs.

If by "pension" you mean a retirement account that can be taken as a lump sum then your mother in law will have more flexible options in how she takes the money.  She could cash it all in, pay the tax and then use the funds to pay off a mortgage, gift money to her other children or charities, go on a world cruise or anything she desires. She could also work with a qualified CFP certificant to determine how much monthly income she could take to enjoy an enhanced lifestyle, pay taxes and then have a nice balance to leave to her remaining children.

With the total amount of money your mother in law inherited, part of which is already tax friendly (Life Insurance proceeds), she could easily create a  $1,800 to $2,500 a month of income without sacrificing a nice balance to leave to heirs.

Financial Times Interview of Lee Munson

The Financial Times recently interviewed Lee Munson regarding the Department of Labor’s new fiduciary rule that is pushing ahead with a new share class of mutual funds called T-shares. 

T-shares are a hoax – I’m horrified that people are being put into these funds,” says Lee Munson, chief investment officer at Portfolio Wealth Advisors in Albuquerque, N.M., which manages more than $250 million.


Lee didn’t stop there, further on he told Murray Coleman how the flat-rate structure wasn’t cutting it.

This is like trying to charge the same price for a Honda Civic as a Lexus sedan.
It's still a Honda, folks

It's still a Honda, folks

Ultimately, this is a overt loophole that allows stockbrokers, or those that sell financial products versus providing financial advice, to circumvent the new rules.

How does Portfolio Wealth Advisors plan to address the new fiduciary rules that require advisors to work in clients' best interest when working with retirement accounts?

We don’t have to do a thing. Portfolio Wealth Advisors always acts as a fiduciary for our clients. So, while stockbrokers prepare for more regulation to protect their rights to NOT work in your best interests and charge high commissions for dubious so-called products, we continue to do the right thing for clients just like we have since the beginning. 

Fox Business Asks Lee Munson Why Markets Thrive

Portfolio Wealth Advisors CIO Lee Munson was asked to appear on top ranked Fox Business show, Countdown To The Closing Bell. Ashley Webster, guest host filling in for Liz Clayman, asked Munson why the markets continue to surge despite a disappointing 1Q GDP report. Click on the link here.

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Lee makes the following points:

1. Investors are moving shares forward, or merely sideways over the last few months in anticipation of tax cuts for corporations. This will immediately increase profits.

2. We don’t know if the short-term effect of tax cuts will translate into increased corporate spending and investment in people and equipment. That is the uncertainty that only time will reveal.

3. Don’t focus on dividends, focus on great companies and asset classes that you can buy at a discount. Usually those parts of the market already pay great dividends.

4. From cloud computing to advanced manufacturing, focus on profits.

5. History has shown that stocks that sell for less than their peers have higher performance than overpriced garbage. 

For Appearance Sake?

For many people, living paycheck to paycheck is a way of life but social media has made it even more difficult to live within our means when we are constantly blasted with post and pictures of our friends most recent purchase or the fabulous vacation they just returned from. So, how to we stop the madness?

1. Stop Comparing

Recognize and understand that living paycheck to paycheck is only a temporary stage. Give up the urge to "keep up with the Jones's" - it perpetuates and prevents you from getting ahead and achieving financial security

2. Remember The Why

Choosing a career is a major decision and often times the choice is not about how much money can be made, but what kind of change or difference you want to make in the world.

3. Know Your Priorities

Is stopping at the local Starbucks for your favorite cappuccino everyday worth $140 per month or is a fabulous beach vacation without credit card debt more important? It may seem like a small thing, but it adds up in a big way.

It's not an easy task, when all around us are enticements and temptations but you can avoid being another victim of FOMO if you stop paying attention to the candy coated world of Social Media and tune into your real life. Your reality.

Don't Fight the Tape!

There is an expression in our business - "Don't fight the tape"!

So, while it was a surprise to some, we ended Q1 on a positive note. This sets a tone for the rest of the year from a momentum standpoint.  Keep in mind though that the wide variety of potential policy outcomes will cause uncertainty for the year. Uncertainty may result in increased volatility and can provide opportunities for buying on dips and selling into rallies.  Global equities and inflation-resistant assets should do well, but a tilt toward smaller capitalization stocks both home and abroad are merited at this point in the business cycle. This is a time to keep a sharp eye on the ball for both opportunities and for protection.