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Author: cindych Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: First timer trying to rollover in IRA! Date: 6/9/2000 12:13 AM
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I've been trying to set up an IRA to rollover my 401k to, but I'm getting bombarded and terribly confused with all the services that are out there! So please help! My questions are as follows:

1. Should I use a full-service firm like Vanguard, or use a discount brokerage like Ameritrade? Any suggestions?

2. I'm 24, and I have about $2000 that I probably won't touch for the next five years or so... A friend of mine suggested I invest in tech., biotech and telecommunications mutual funds. Is this too risky? Or is it ok?

That's all for now. Thanks in advance!!!
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Author: Ringfinger Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22460 of 75340
Subject: Re: First timer trying to rollover in IRA! Date: 6/9/2000 9:21 AM
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1. Use Vanguard if you want Mutuals. Use Ameritrade if you want to buy stocks. I use Vangiard for my Index 500 and Suretrade for my stocks.

2. If you need the money in five years, I would put it in a money market account. Those other choices you mentioned are too risky for a short term investment. If you need the money in five years, those funds you mention could greatly decrease and cit into your principal, then you are sol if you needed the money. They are fine for a long term approach, which five years is not.

I hope this helps.

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22469 of 75340
Subject: Re: First timer trying to rollover in IRA! Date: 6/9/2000 5:42 PM
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Cindych,

Welcome, first-timer! Hope you can find some friendly advice here on the site. Yes, it is confusing - don't make a decision until you're comfortable.

1. Vanguard is not a full service firm. It is a mutual fund company that has a discount brokerage attached ($40/trade). Ameritrade is a "deep-discount" broker ($10/trade). Neither of them give investment advice, which is the hallmark of the full-service broker.

2. You cannot get money out of a traditional IRA. Well, actually there are a very few reasons why you can (e.g. buying a first home) but the IRA is not a savings account, it is a retirement account. You won't be able to get at money in your IRA for another 40-plus years. So think long-term in your IRA. Money you need in 5 years or less (short term) MUST NOT be in an IRA, and should not be invested in stocks.

1. You should decide what you want to invest in first, and then afterwards, choose the best place to purchase it. So you first need to find out what you're investing in. Vanguard is the best place for getting low-cost, market-tracking diversified mutual funds. Ameritrade is a decent place for getting the ability to research and buy individual stocks. [BTW: You need to buy 12 individual stocks to be properly diversified.]

2. It is extremely risky to invest anywhere on the advice of a friend, without doing any research yourself. How much do you know about tech, biotech, and telecomm? Who are the major players? What is in store for the future? These are things you should know before you invest in a sector.


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Author: bmgw Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22503 of 75340
Subject: Re: First timer trying to rollover in IRA! Date: 6/12/2000 12:10 PM
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As a Retired fool, I would suggest that you stay away from "FULL SERVICE BROKERS". I myself use a Discount Broker,and they are'hard enough' on your account on trades, but at least you can trade when you want too, and for what you want too. I have oppened an account with Buy and Hold.com, it only costs $2.99 a trade and you make all your own choices. I think I am going to like IT.
Hope this helps''
Bobby

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Author: whsw Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22507 of 75340
Subject: Re: First timer trying to rollover in IRA! Date: 6/12/2000 4:18 PM
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If your only 24 and rolling into an IRA, I should hope you would not be touching the money until way after 5 years. If that is the case, then your time horizon is a lot longer than 5 years and risk factors change.

As to brokers, use a cheap one that still lets you buy no-load funds or even no transaction fees (ntf).

Your friend's suggestions are okay. Many funds let you buy amaller tranches if they are purchased within IRA's, vs. a larger minimum if purchased into other type of accounts.

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Author: WinifredCraig Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22512 of 75340
Subject: Re: First timer trying to rollover in IRA! Date: 6/12/2000 9:39 PM
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Hi Cindych,

Suggest you contact TRowe Price at www.troweprice.com or at 800-541-7871 and fill out an application for an IRA Rollover Account. Check out the various sector funds (all no-load) and pick one you like. All the info you will need will be on the TRPrice website. Minimum accounts are $2,500 except for IRAs. TRP will send you the paperwork to fill out and send to your 401K Plan administrator. Do a Trustee-to-Trustee rollover to avoid tax issues. If you don't like the selection at TRP, try TD Waterhouse Bank. They are an on-line discount broker that offers some mutual funds but also will let you open a self-directed IRA. Again, let TDW send you the proper forms to fill in and send to your 401K plan administrator. Once the money is deposited in your Rollover IRA you can buy individual stocks or a mutual fund on line, by phone, by mail, or in person. Discount rates apply to online transactions only. Good luck.

Disclosure: I own TRPrice Science & Technology Fund (for past 10 years) and have been investing with TD Waterhouse for 9 years. Shout if you need more info.

Sincerely, streetsmarty @yahoo.com

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Author: skating1girl Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22514 of 75340
Subject: Re: First timer trying to rollover in IRA! Date: 6/13/2000 1:13 AM
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I rolled over $40,000 of a 401k plan into a self directed IRA at Charles Schwab. It's really simple--I just went to one of their offices and filled out the paperwork; then I directed the administrator of my 401k plan to mail me a check made out to Charles Schwab with my IRA as the beneficiary. I brought them the check and started doing some homework on investing. I now have bought 6 companies,giving me $30,000 in stock and I still have about $15,000 in cash in that IRA. But I was in all cash from January until May---when I was ready to buy, all I had to do was log in to their site one evening and put in an order: it was executed first thing the next morning. So just do it--it's easy--but remember, unless you really want to be hit with a big tax penalty--IRA and 401k $$ can't be touched until the age of 59.5

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Author: Arlyne Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22541 of 75340
Subject: Re: First timer trying to rollover in IRA! Date: 6/13/2000 5:59 PM
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<I've been trying to set up an IRA to rollover my 401k to, but I'm getting bombarded and terribly confused with all the services that are out there! So please help! My questions are as follows:

1. Should I use a full-service firm like Vanguard, or use a discount brokerage like Ameritrade? Any suggestions?>
Hi! Great you are investing young, congratulations! You can open an IRA with either Vanguard or a discount broker...I started with and recommend Vanguard for mutuals and have added Scottrade (online Scottrade.com and office) for stocks. I think Vanguard charges me $10 annually to maintain my IRA account and Scottrade charges only $7 per trade for stocks and was free to open an account (more per trade for mutual fund purchases)and they have been very helpful, no long busy signals in the office, etc. I filled out rollover paperwork in their office in 5 minutes. Decide if you want to roll over into mutuals or stocks.

<<2. I'm 24, and I have about $2000 that I probably won't touch for the next five years or so... A friend of mine suggested I invest in tech., biotech and telecommunications mutual funds. Is this too risky? Or is it ok?>>

I'm understanding this to be separate money from your 401k and I personally at your age would consider a money market account if I wanted the money within 5 years or might NEED the money within 5 years. If you absolutely know that you want to invest it for at least 5 years or more and will not need it in 5 years and are willing to risk that $2,000 investment, then and only then, would I consider putting it into mutual funds. Basically, I like your friend's suggestion but you need to know that risk is involved and perhaps consider an index fund instead of sector funds if you want less risk. I have made more mistakes with mutual funds and lost more money with some of them than with stocks.

Another thought on mutual funds: AT YOUR AGE, an advisor of my employer's had me put my life savings of $1,000 into a Putnam fund which promptly dropped 25% in value. My next employer's Merrill Lynch advisor recommended the Dragon Fund (Pacific sector fund)which also dropped and stayed low after I invested. I was emotionally burned and had myself to blame but learned about short term risk and blindly following advice without research. Now, I am just a regular person and you need to do what feels right for you. But looking back, if I had $2,000 to invest "longterm" at your age today, I would put it into Vanguard S&P Index fund until I had some savings cushion, then I would try to save up an additional investment for a good solid Rulemaker or two to start. I would not use mutual funds except index funds unless I really researched them as much as I researched a stock purchase. 90% of mutual funds underperform the market. An index fund is not going to underperform the market by much. I have never had good luck knowing when to get out of a mutual fund gone stagnant or going downward. A mutual fund can be doing great for years and then BAM, they go way down and I didn't know why or could not forsee the market effecting my fund that way. I can't keep up with all the purchases in my mutual funds or see the fall of the Japanese economy or of value stocks before other investors. Janus Fund is the only one that has always done well for me (besides Vanguard index funds). (I've had the above mentioned advisors through employers and mutuals funds on my own in Vanguard, Janus, Gabelli, Invesco, Putnam, Merril Lynch, and Strong over 8 years.)

In stocks, you can't be instantly diversified but it is likely that after you learn how to research one or two companies/stocks and invest in them, you will be even more motivated to save up for your next investments, and more able to follow your companies.

You might start looking for good companies in the sectors you were interested in. I guess I think of Nokia for telecommunications, for example, as a company that is not going to go away in 5 years and should be even stronger than it is currently. But picking any one or two stocks is risky because it is not diversified. And picking (non-index) mutual funds for me has been risky even though they are supposedly diversified!

I guess my bottom-line message is that (for me), being diversified in mutual funds has created losses because when they dove down, I had no confidence to hang onto them for years at a time (and in retospect, I still feel, rightly so). And I didn't know how hard they were to research and follow. When I picked my one or two starter companies, however, and invested in stocks, I had done the level of research to feel I had good companies and that the market had depressed the stocks or the comapny was reconfiguring itself, and I knew I wanted to ride out the bumps and I have been rewarded by the good companies I selected. I have peace of mind in my long term investments. If you can research enough to make your purchase with that kind of confidence and knowledge, I think it is more likely that you will be rewarded than if you pick a sector mutual fund without knowing an awful lot about THE FUND you chose and have to keep studying that fund, its advisors, that industry, the economy, etc.

Hope this helps. Just a humble opinion and you are going to get many good opinions! You are doing great to be saving and investing at your age! CHEERS and Good Luck!
Arlyne

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