Black Enterprise Financial Fitness Contest

Winner #3, Laurie A, Henry

retirement plan. “Under her current plan, AT&T will match two-thirds of every dollar she puts into her 401(k), up to 6%,” says Netter. “She shouldn’t let an opportunity like that slip away.”

  • Scrutinize her investment options within her retirement plan. Netter says Jones needs to make sure that she is investing in the right mix of funds. Because of her time horizon and tolerance for high risk, Jones will need to be aggressive in order to reach her goal. He suggests that she structure an aggressive stock or mutual fund portfolio. If Jones commits $3,366 annually to her 401(k), she will have a balance of $83,449 in her account by 2011, assuming an 11% rate of return.
    To achieve this, Netter suggests that she diversify her 401(k) holdings. Currently, 40% of her portfolio is invested in AT&T stock, 40% in Fidelity Aggressive Growth Fund and 20% in international funds.
  • Establish a Roth IRA. In addition to maximizing the amount of money Jones can put in her 401(k), Netter says, she can use a Roth IRA to accumulate money tax free and withdraw it tax free at retirement. Since she is already enrolled in an employer-sponsored program, Jones is able to contribute up to $2,000 a year. With a Roth IRA, she will be able to withdraw contributions tax free at any time, but, generally, earnings have to remain untouched until she’s 59 1/2 and at least five years have expired.
  • Jennifer Jones

    ASSETS
    Checking: $ 214.00
    Life insurance (cash value) 90,000.00
    Stocks 640.50
    401(k) 2,300.00

    TOTAL $93,154.50

    LIABILITIES
    Credit cards $ 3,381.00
    Car loan 13,200.00
    Mortgage 104,500.00
    Debt-consolidation loan 4,700.00

    TOTAL $125,781.00

    NET WORTH $ -32,626.50

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