Leslie from Glen Mills asks: Should I open a Roth
IRA account?

Leslie, yes you should open and contribute to a Roth account
if you qualify for it.  The
contributions are after tax dollars and, as long as you own the account for at
least five years and wait until you're at least 59½ to take withdrawals, gains
on your investment are never taxed again. Plus, you never have to withdraw the
funds like you do with traditional IRAs. 
If you have children it is a wonderful inheritance for them that they
never will pay tax on! If you don’t have children the power of tax-deferred
growth will still work beautifully for you.

If you are single you can contribute up to $5,000 or $6,000
(50 years old and older) if your 2009 adjusted gross income is less than
$120,000 (you can’t contribute the full amount if your income is between
$105,000 and $120,000). And if you are married and filing jointly your 2009
joint adjusted gross income must be less than $176,000 (you can’t contribute
the full amount if your income is between $166,000 and $176,000.)

If you are working for a company that offers a matching
40l(k) or 403 (b) plan make sure you take advantage of it and first fund the
company’s matching plan before funding the Roth.

Linda from Chadds Ford asks: Now that Congress says that people who earn more than
$100,000 can convert their IRA to a Roth in 2010 is there any reason I
shouldn’t convert?

Linda, converting does not make sense for everyone. The
upfront taxes are a heavy burden and the Roth needs at least 20 years for the
conversion to make sense when you compare the traditional IRA and the Roth.  I look at the upfront taxes paid, the
opportunity cost of the taxes, and the required minimum distributions from the
traditional IRA. If you won’t need the funds for retirement and you have
children or grandchildren to leave it to, converting is usually a good idea.

Ken from Chadds Ford asks:I am so nauseated and scared by the huge federal deficit
spending and $12 trillion national debt level. Is the dollar going to collapse
and should I be putting all of my assets into gold and silver?

Ken, I get asked this a lot. It is scary and the dollar is
weak for good reason (reflecting our weakened balance sheet and budget deficit).  If you think that the dollar will
collapse you should not only buy gold and silver, you should buy a farm and
grow your own food!

But seriously, perhaps I am an eternal optimist, but I don’t
believe that the end is near. The dollar’s strength or weakness is
relative.  Our country absolutely
has problems but relative to the rest of the world we are doing better. You
won’t see a steady stream of Americans leaving the country to become taxi
drivers in Beijing or Bangalore any time soon.  And, though the Chinese make noise about selling dollars for
Euros or a new basket of currencies, the reality is that the U.S. dollar
remains the safest currency. Why? Because despite out economic deficiencies, we
still have an infrastructure of law and free movement and free speech and
possibility of advancement and sophisticated technology and economic efficiency
and environmental safety that is much better than most other nations.

Realistically, I can envision a basket of currencies replacing
the dollar to reflect the globalization of trade, but it will take several more
generations before it materializes. 

* I look forward to
receiving your questions about anything related to investments, retirement
planning, or the economy. Send them to: ellen@ascendinvmgt.com and write
“Chadds Ford Live” in the subject line.