Ok, I have 2 separate scenarios and would like your opinion on:

1. My father in law has some money saved up - he doesn't earn any interest in his account, so he was thinking of getting something secure, safe, and easily redeemable. I told him the following:

- CD: but dividend/interest earned are not tax free
- Savings account: low low low interest, dividend/interest earned are not tax free
- US Treasury Bill: dividend/interest earned are tax free (Federal and State), but need to invest in increments of $1000

Any other suggestions? I think US Treasury Bill should do it for him, but he's hesitant.

2. I'm currently maxed out on my 401K (in terms of % contribution, NOT the annual total which I think is $15k??)

- Can I still invest in traditional IRA? $2k is still max per year, right?
- Should I invest in Roth IRA?
- Should my wife invest in some kind of retirement plan (her work doesn't offer it)
- My son will be born in August, can I start a tax deferred college savings fund upon his birth?

 

I don't think I'm in the position to give investment advice, so I won't. But here are some facts (I hope they are facts ):

US Treasury Bills aren't federal tax free, AFAIK. State/municipal issued bonds are though (federal and, depending on what state you're in, state tax free).

http://www.fool.com/school/basics/basics05.htm

I believe you can, but you'll have to verify that. I'm maxed out on both 401k, and Roth IRA. I don't see why it should be any different for traditional IRAs. The max for Roth IRA since last year is $3000. I think it's the same for Traditional IRAs, but I could be wrong.

As for Traditional vs. Roth, there are various calculators out there that help you determine what's best for you.

Here's a good source of info: http://www.fool.com/ira/intro.htm

I think so, the only bad thing I've heard about this is that it might make it difficult for your son to get financial aid in the future.

http://www.fool.com/college/college02.htm

 

Schools will hold any unused college funds "against" you when applying for financial aid. If you do establish a college savings account, make sure you use it exclusivly until it runs dry.

 

if you're consider yourself young and think you're more than say 15 years from retiring, i'd go with the roth. tax-free dividends.