The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing


Subject:  Re: Where to begin? Date:  3/23/2000  4:53 AM
Author:  TMFExRO Number:  20418 of 88535

<< If this question is posted to the wrong board, please tell me where to go......but please be gentle, I bruise easy. >>

Good place to ask.

<< First, my experience with investing is non-existent. My tax guy instructed me to go out and set up a SEP and deposit 7,600.

I currently have an IRA (rollover from terminated job) sitting in a Schwab money market fund and earning essentially nothing. (I know, I know, I'm hanging my head.) Not knowing what else to do, I called Schwab and asked for their SEP info. It arrived today ... now I have more questions that before.

The forms seem easy enough but then what happens to the $$ I give them? Do I select individual stocks to purchase? >>

You can.

<< Who holds/owns the stock, me or the SEP or Schwab? >>

Schwab holds the IRA assets for your benefit. That's why it's called a "custodian."

<< Do I buy into a fund of some kind? >>

You can.

<< Can I invest that money in a DRIP? >>

Ask Schwab whether they can handle this. You wouldn't be able to cut a check yourself to get a DRiP started and then move it into the IRA, but if it could be done from within the IRA, sure.

<< Does that make sense? >>


<< Then, I noticed the following statement on the form: "The assets of the plan shall be invested only in those investments available from time to time through Charles Schwab & Co......" but there's no indication what exactly those "investments" are/might be. In another place I find: "You may seek to have the cash balance in your account swept daily into a Schwab Money Market Fund of your choice and earn daily income.." Does this make sense? >>

What they're telling you is that with Schwab as a custodian you can only invest in things that Schwab can buy for you. I assume there's a wide range of mutual funds in addition to individual stocks. The "sweep" business deals with the uninvested cash that will inevitably be in your account periodically.

<< Does Schwab have any investments that would be considered Foolish? Should I be looking elsewhere to set this up? If so, where? >>

Schwab can probably handle whatever you want to do. What I'm not clear about is whether you know what you want to do. (See "hanging head" above.) If you're not the Foolish 13 steps are a good place to start.

Don't get too hung up on the IRA aspect. Investment procedures and decisions are pretty much the same as they would be in a taxable account. The only thing special about the IRA is that you must leave everything under the IRA umbrella until you begin taking distributions.

Phil Marti
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us