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All this time I have been waiting for my 401k to be transferred into a self directed IRA with me as the director.
I've been studying and studying almost every given moment and I have learned that I don't know much.
I'm frusterated and confused about everything.
Now the money is in and I feel paralyzed with fear.
Now Mister Hotshot it is time to commit to something that you know you know very little about.
I have a very, very high 5 figure amount to invest so I'm lucky. But the pressure is overwhelming.
Thanks for your ear. I just needed to get that out.
Steve
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This is exactly the way I am feeling; SCARED TO DEATH!!!
I am just getting comfortable with investing small amounts but to have a large amount to invest is overwhelming. I know our future retirement is going to be determined by my decisions. I understand why people usually let the someone else do it. The freedom to make your own decisions carries a lot of responsibility.
Addie
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No. of Recommendations: 1
Option 1 is to chicken out and re-invest the money in the same funds that were in your 401k.

Option 2 is to be Foolish and invest a portion if not the majority in an Index Fund. The Fidelity Spartan U.S Equity Index and Vanguard S&P 500 Index both have expense ratios of 0.18%. You may want to consier a broader market index. Fidelity Total Market Index will cover this for you. This index fund covers over 3000 comapanies. Most fund companies offer brader Index funds.
You may also wish to invest some in an index fund and have some cash to invest in some individual stocks. You should not take individual stock recommendations from any one person. Do the research yourself, and be comfortable with the compan, its history, and so on.
You may also want to follow different investment strategies such as the Foolish Four or Dogs of the Dow, etc etc.
I know this probably didn't help much, but if your really worried about investing the money in stocks or stock mutual funds, then maybe the risk involved is more than you can stomach. You have to remember that this is for the long haul andshort term fluctuations will be part of the ride.

Bill

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No. of Recommendations: 2
Be Foolish, and be comfortable with your risks. What did you have the money in at the old 401K? Was that any better than what you can get with the IRA? Probably not. Index investing for the long-term is the most risk averse stock strategy there is. Maybe you should start with that - pop it into an index fund. A previous poster mentioned the Vanguard and Fidelity funds - good choices.

Maybe keep a couple thousand out of the index and try your hand at the Foolish Four. This would only be a small amount of the money, but would introduce you to some of the more riskier and more profitable mechanical investing styles. You might want to look at the Fool's Rule Maker strategy - invest in good, high-quality companies that are leaders in their sectors and that have long track records. Whatever you do, it sounds like you should start small and work up to more risk and higher potential returns. Some people, however, just stick with the index funds and are happy with the returns of the total market, rather than risk anything else on things like the Foolish Four, etc.

If you are frightened to death, then you should probably do a bit more reading. Be comfortable with your investing style. Don't take on more risk than you are comfortable with. Sleep at night! Some good suggestions are to read the 401k info here at the Fool, and read about index funds.

Hope this helps,

Taylor
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No. of Recommendations: 1
Steve

I believe that investing is a scary process. In my younger years and had my company retirement monies to invest because of a company buy-out. I never gave it much of a thought when I split up these monies into different mutual funds. About five years ago I had the opportunity to direct my company savings plan (401K) to a managed investment account (read more mutual funds with more fees) again after another company but-out. This was scary also. When I got tired of the bad mutual fund returns, I started to read the Fool. This was when I really got scared and felt I had to take even more control of my IRA or I would never get to fulfill my dreams. One year ago, I transfered all my mutual funds to a discount broker. Was questioning myself all the time, "was I doing the right thing?" Started making buys of stocks into my Foolish portfolio. After two day of my first buys and gains of $1000 in a couple of my stock picks, I never again questioned if I had made the right decision. Though even now my stomach churns when I make my monthly buys but always settles when I'm done because I know that I have done the right thing. I will keep control of my portfolio for as long as my mind can keep up and it is still FUN.

Steve - Have fun and good luck and follow the screens.

Vagabond
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Greetings, Addie, and welcome. You wrote:

<<This is exactly the way I am feeling; SCARED TO DEATH!!!
I am just getting comfortable with investing small amounts but to have a large amount to invest is overwhelming. I know our future retirement is going to be determined by my decisions. I understand why people usually let the someone else do it. The freedom to make your own decisions carries a lot of responsibility.>>


Yes, that freedom does carry responsibility. And because of that, we all felt somewhat terrified when we began to control our own investment futures by making the decisions ourselves. You're doing the right thing by getting comfortable with investing small amounts. The big stuff can come later. There's no super rush because the market won't go away. As you gain confidence (and you will) and as your decisions prove themselves (and most of the time they will, too, assuming you do your homework), then you won't have a big problem maintaining the courage of your convictions. Keep on learning and reading, and it will all get easier and easier. Fear not, you'll get there.

Regards..Pixy
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Some thoughts for Steve and Addie, who started this thread. You've already heard the advice I'd give from others. Many of us were in your shoes a year or two ago. I started by rolling a good chunk of my 401(k) dollars into an outside IRA where an financial counselor put them into some mutual funds. My goal had been to diversify out of my company's stock, where so much was tied up while it was in the 401(k). So what happened? The company stock, which had been moribund, took off on a several year vertical climb; the money I'd rolled over into an IRA sat there........

Two years into that adventure I picked up The Motley Fool Investment Guide, started timidly, cautiously trying out the Foolish 4 strategy. Bought another stock because I knew it was doing well, had heard a lot about it (CSCO)..... then another. Started reading about the small cap market, looked into the Foolish 8 screen of small caps and rejected most but bought one of those small caps after very careful research. That was POWI. In one year it has quintupled in value. I'll credit beginner's luck.

This is now about two years since reading TMFIG. 10 months ago I rolled that IRA out of the financial counselor's control into my own. I invested the funds in a few stocks I'd read about here in the TMF Workshop screens and strategies, again researching them to make sure I was comfortable........ that IRA has grown in those ten months by about 98% (i.e., it has nearly doubled)........

Not everything has gone up; a few companies I picked have done little or nothing (PSFT, for example, which I bought more of thinking it was more risk-free than some of the small caps -- which is one way I've learned that there are different kinds of risk.......)

All of which is to say, start slowly, read a LOT.... and really try to understand that not all risk is bad. Small caps are inherently more volatile than large caps, but they're not all bad investments, not by a long shot. Pick carefully, don't do anything you aren't comfortable with.

Investing is an adventure; adventures sometimes expose you to danger, but overall I think you'll find it to be very satisfying journey.

mathetes
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Been reading about 1929...."The Crash"...the following
depression. This ,I believe is the root of this 'fear'
we all have committing our hard earned dollars to the stewardship of others. We all think this system will collapse in ruin, now that "WE" have joined in. We ask
"Is this a bubble?" On Black Thursday in '29, it read,
"Stocks that sold at $100 at the open, closed at $2.00.
Geez...that happens every day now but that is the nature of the (our) beast and nobody runs screaming
in the streets. I remember in 1987...there was more
a sense of wonder about that pullback,than panic. It was dramatic
and impressive to those who only heard of '29 and never seen anything like it, but it was the greatest
proof of long term investing.
Be prudent but don't lose that fear..it keeps us healthy....and find out all you can about your money.
I can't believe the number of people at work who are
handing over their money to managers, whose first
question is, "How much do you want a month?" And,
they pay them upwards of 2% a year to plug their money
into the 'Strategies'...that the Home Office designs.
They say to me "I don't know anything about and I don't
want to worry about it, I just want a check every month.
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No. of Recommendations: 1
One of the things it has taken me several years to fully appreciate is that the decision to "do nothing" or "keep doing the same thing" is just a much a decision as the one that says follow a Foolish strategy.

It doesn't seem as much a decision, and it certainly feels somehow safer, but the reality is that just keeping on doing the same thing *is* a decision. And the cost, in lost opportunity, can be much greater than you realize.

Right now my investments amount to several year's salary, and they certainly earn me more money than my salary. They deserve a reasonable amount of time and study.

Dave
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ToesUp Date: 12/17/99 2:47 PM Number: 16485
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<<I'm frusterated and confused about everything.
Now the money is in and I feel paralyzed with fear.
>>

Frightened is good to a certain extent and may help you to be conservative.

Frustrated and confused is natural and can be changed into something more positive.

Paralyzed with fear is usually not so good, but at least it may prevent you from early mistakes.

Until you find a clearer path for yourself, please seriously consider a combination of DIA, SPY, QQQ, and cash at relatively short term interest.

Simplicity, effectiveness, and efficiency in one package! You may learn more, however you may well become quite comfortable not doing anything more than periodic appropriate rebalancing.

.02

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1Vagabond Date: 12/17/99 4:38 PM Number: 16506
----------------------------------------------------

<<I believe that investing is a scary process.>>

It need not really be all that scary if you are comfortable with what you are doing and why you are doing it.

<<Though even now my stomach churns when I make my monthly buys but always settles when I'm done because I know that I have done the right thing. I will keep control of my portfolio for as long as my mind can keep up and it is still FUN.>>

I have found that I experience much less stomach churning and have even more fun if I have added to my portfolio a combination of DIA, SPY, QQQ, and cash at short term interest.

.02

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