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Subject:  Re: Investing ideas for rollover 401k into ira Date:  8/26/2012  7:50 PM
Author:  RShewmake Number:  70893 of 88543

I think many gave you good advice. Some encouraging. Some harsh. Regardless of your experience or financial condition, compared to theirs, you are where you are and I believe asked for both information and opinions. Answers such as "you're not ready financially or knowledgeable enough" do not mean that you are not trying to obtain both.

1 year ago this month, my wife was given the opportunity to take 1/2 of her 401k and invest it in a self-directed IRA. Her previous choices included bonds, Small, Medium and Large Cap funds (both value and growth), International and Emerging Funds and a tech fund. Also were three composite funds supposedly Conservative, Medium, and Aggressive.

In August of 2011, after splitting the two funds in half, the original funds have grown 13.1%; the independent IRA has grown 61.3%. The independent IRA began with a 50% position of AAPL and a very large position of the "Dogs of the Dow" strategy. Currently those holdings would be equal positions of GE, PFE, INTC, T and JPM. Some DoD followers would exclude the GE position. (JPM was not one of the holdings a year ago. The other four have returned between 26-34% in the past year with dividends reinvested). Of course AAPL has been amazing and has returned 65.5% with subsequent investments on pull-backs (The original positions in AAPL from Aug '11 are 82.68% and 69.67%).

Many will criticize such a large portion in one stock. But when you are first beginning, what is a large portion compared to the portfolio you will have over time. If you're not going to initially concentrate your holdings into a few individual positions UNTIL YOU GAIN more knowledge and a larger portfolio, what is the purpose of an independent IRA? You could just leave the money in the traditional 401k and get Fund and index choices.

I am still a believer in AAPL as a disproportionate amount of a portfolio until it reaches the 750-800 range. The Dogs of the Dow theory is easy, passive and the returns speak for themselves.

Although long, I hope this has helped you. It is just one of the thousands of choices you have (just like your independent IRA). A beginning portfolio of $3,000 in each of the Dogs of the Dow stocks and a sizeable portion of AAPL would be an excellent starting point (IMHO).
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