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Rollings and Fields Rjck Chadwell advised. If he received $5,000, he should put $2,000 in a Roth IRA. Proceeds from that would be tax-free and could be used for a first-time home purchase up to $10,000. The money would be invested in a growth mutual fund. He should put $500 into a money market fund. That would provide liquid cash for emergencies or some larger purchase. And the remaining $2,500 would go into aggressive-growth and growth income taxable mutual funds.
If he received $10,000, $2,000 should still go into the Roth IRA, while $1,000 goes into the money market fund and $2,000 into the taxable mutual funds. The remaining $5,000 would go into a Variable Annuity. This would start a retirement fund for him, and would force him to leave it alone. If he tried to withdraw it before he is 59 1/2, there will be penalties and taxes to pay.
If Mike received $25,000, Rollings and Fields would advise the $2,000 Roth, $2,000 in the money market, $6,000 in the taxable funds, and $15,000 in the Variable annuity or an Equity Linked Annuity (ELI). The ELI would be similar to the Variable but sacrifices some upside potential by giving some downside guarantees.
If Mike received $50,000, the Roth and money market fund would each
See INVEST, Page 6
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