Financial Q&A: Readers' money questions answered

Don't read too much into an upcoming stock split.

Q:
A friend wants me to purchase stock in a company that she says has made her millions. She is pushing me to purchase now before the company's stock splits 3 for 1 in October. Is this good advice? Or should I purchase after the split?

R.R., via e-mail

A: Taking tips from friends on stocks can be a great way to ruin friendships and lose money at the same time. There is no getting around the need to do your own research, says Robert Wasilewski, a certified financial planner in Columbia, Md.

In general, though, he says that extensive research shows that the timing of purchases on the basis of splits is futile because the market is efficient in terms of this type of data. Think in terms of trying to get in the shortest line at the grocery store. Because everyone else is trying to do the same, it means that on average no advantage is to be gained.

Instead of timing the purchase on the basis of the stock split, it's more important to focus on the underlying value of the company, Mr. Wasilewski says.

Lastly, he observes that if the stock truly has made your friend millions, the big money in the stock may have already been earned.

Q:
At what age are you not penalized for continuing to work after drawing Social Security?

D.T., via e-mail

A: Jerry Blakely, a certified financial planner in Lancaster, Calif., says that the answer used to be easy when the Social Security Administration's "Full Retirement Age" (FRA) was 65 for everyone. FRA is important because that's the age at which you're no longer penalized for continuing to work after beginning to collect Social Security payments.

But several years ago, Uncle Sam changed the definition of FRA so that it may now be between ages 65 and 67. For a person born in 1937 or earlier, the FRA is 65. It increases gradually until FRA reaches age 67 for people who were born in 1960 or later.

For a full description of FRA, and to find out exactly how many years and months old you'll need to be to hit that magic number, go to www.ssa.gov and search for "Full Retirement Benefits." Or just go to www.ssa.gov/pubs/retire.htm. Find your FRA, based on when you were born, and that's when you'll be ­penalty-free if you continue to work after drawing Social Security.