Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.



Retired and strapped for cash!

Karen Gibbs

Help!  I’m retired and my pension is deposited directly into my checking account.  Now my bank wants to charge me a monthly fee if I don’t carry a large daily balance.  What can I do?

-Strapped for cash in Maryland

Drawing of Dollar BillDear Strapped, you’ve identified one of the reasons that banks are so disliked, but they may have done you a favor.

Financial reform laws enacted after the financial collapse of 2008 robbed banks of easy trading profits.  Now, they are looking for ways to replace those lost profits and have turned to fees, fees and more fees.

One major money center bank will soon start charging $25 a month if customers don’t maintain an average daily checking account balance of $5,000 or even more in CDs, retirement savings, outstanding installment loan balances or brokerage accounts.

These are large amounts for many of us and charging fees for not maintaining the above balances will generate a lot of money for this bank, with little or ...

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Getting into the Investment Mix

Karen Gibbs

Karen, what’s the best investment mix for me?  I’m a 62-year old single woman with a 401(k) and some personal savings.

- Courtney, Cecil County

CaluclatorCourtney, conventional wisdom used to be that your portfolio should consist of cash, bonds and stocks, with your stock percentage calculated by subtracting your age from 100.  In your case that would be 38% stocks with the rest of the portfolio divided between cash and bonds.

However, we’re living longer now and, to account for that, we need to invest in assets that will grow, not just protect our principal or generate income.  The new rule of thumb is to subtract your age from 110 or 120 to get to the percentage of stocks.  That would put your stock position to somewhere between 48% and 58%.
But there’s more to investing than return.  At this stage of the game, investors need to consider just how much risk they are willing to assume in exchange for return.  Will you be able to sleep ...

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Trust Funds vs. Trust Accounts

Karen Gibbs

Hi Karen, what is a trust fund or trust account?

- Curious in Columbia

credit cards and budgetingCurious, thanks for your question.  A trust fund or trust account is an account set up by the grantor and managed by a trustee for the benefit of the beneficiary.
Most people think of trust funds as accounts set up by the wealthy to shield their assets from probate or taxes so that their children are well taken care of after one’s death.

A trust can be revocable, also known as a living trust, allows the grantor to control the assets of the trust during the grantor’s lifetime.  If the grantor’s wishes or circumstances change, the grantor can change or dissolve the trust.  Upon death of the grantor, the trust becomes irrevocable.
An irrevocable trust cannot be changed by the grantor once it is established.  The grantor loses control of the assets and cannot change the terms of the agreement once executed.

You can place most any asset into a trust; cash, stocks, bonds, fine ...

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What to do with your tax return

Karen Gibbs

Hi Karen, I’m working on my 2015 Federal tax return and it looks like I’m going to get a sizeable refund.  How would you suggest I use this windfall?

- Anna, White Marsh

BudgetingThanks for your question, Anna, and congratulations on the windfall.  Not knowing much other than you’re getting as a refund, I’ll give you some generic advice.
If you’re carrying a balance on any credit card(s), I would target some of the refund toward paying off that debt.  Credit card annual percentage rates (APR) average more than 17% annually.  On a $1,000 balance, that amounts to $170 in interest.  Paying off that $1,000 will save you $170 – money that you can use elsewhere.

Do you have an emergency fund?  Conventional wisdom says you should have six months of expenses saved in case you encounter an emergency such as job loss, illness or divorce.  You should have money saved to cover fixed expenses such as rent, car note and ...

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Making the Most Out of a Bonus

Karen Gibbs

Hi Karen, I may be eligible for a $5,000 bonus in January.  What would you recommend me doing with my windfall?

- Adam, Baltimore


women using a laptop and phoneCongratulations Adam!  What a great way to start the New Year.  I’m not sure about your overall financial situation or where you are on the age spectrum, so let me throw out a few suggestions.

First, if you don’t have one, set up an emergency fund.  I would start with $1,000 in a bank savings account.  It won’t earn much interest (current average savings account interest rate is 0.01%).  You can access it in case of emergency but it’s out of reach for everyday purchases.

Are you carrying any debt?  Compare the rates on your car loan and credit cards and put an additional $1,000 to the highest interest rate debt.  That will lower your interest charges and give you more available credit.

Do you have any short term goals such as taking a vacation or making a big-ticket item purchase (e.g. ...

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