5 Questions: IRA Migration, Financial Gifts, Establishing Credit

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Table of Contents  
  1. Show Notes

Five listener questions answered, establishing credit, monetary gifts, Betterment security, IRA migration, and the pros and cons of renting out a room.

1.  What is the best way to establish credit?  A secured credit card is a good start.  You give the bank a set amount of money and that amount is the card limit.  So it’s a bit like a debit card but it helps build credit.  It’s no risk to the bank because they have your money. Getting a store credit card is usually pretty easy and will build credit.  If your landlord uses something like Cozy.com to collect rent, you can build your credit by paying rent this way.

2. What is the best way to give my children financial gifts?  You can still buy savings bonds but no one knows what the hell to do with them.  A better idea might be to set up a trust account in something like Betterment.  You can set parameters, like the beneficiary can’t withdraw the money until they reach a certain age or the money can only be used to pay for college.

Take your savings bonds to Wawa and buy a breakfast burrito.

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3.  How secure is your money in a Betterment account and how difficult is it to access the money in the account?  As a broker dealer, Betterment is required to keep their money separate from yours.  If they went under, the money would just move to another brokerage company.  If they were doing something illegal and lost your money, the money is insured up to $500,000 per customer through SIPC.  The money in the account is easily accessible.  You could have it back within a few days with no transaction fee.

4.  If I own securities in an on-line Roth IRA brokerage account and want to transfer them to Betterment is there a transfer fee?  And because Betterment has less flexibility with securities would I pay a fee for each security transferred?   If you move to Betterment, the securities don’t come with you. You’re buying into their strategy.  You would sell the securities with the original holder, the transfer itself to Betterment does not have a fee.  Betterment is recommended for those who want to be more hands off with their IRA’s.

5.  Pros and cons of renting out a room in your big house?  Extra money is a big pro.  The con is that you have a stranger in your house.  Just make sure to be safeguards in place if the situation goes south so you can get rid of the renter quickly.  Maybe give Air B&B a try to see if you don’t mind having someone living with you or if you just hate it.  This way you aren’t locked into anything.

Keep sending in your questions and we’ll answer them during the show!

Show Notes

Build Credit without a Credit Card:  Andrew’s article for those new to credit.

What Happens to My Money if Betterment Closes:  If you’re worried, read this and set your mind at ease.

Tool Box:  Everything you need to manage your money.


Candice Elliott - Senior Editor
Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.

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