No. of Recommendations: 0
Greetings, Mastevens, and welcome.

<<Since my current employer doesn't have much of a retirement plan, I'm going to rolling over my 403b from my last one into something. I'd also like to continue monthly contributions, even if they're not deductible.

After reading the book and searching the site I'm left with the question of how to do this. Do I make monthly cash deposits then buy securities only once a year? Quarterly? If I buy monthly (or quarterly) do I keep buying the same stocks, or do I buy whatever the current 4 are then review each purchase a year later? Thoughts?>>

First, you've left your old employer with whom you had a 403b plan. As you know, those can only be invested in an annuity or mutual funds. Therefore, to invest in stocks such as those in the Foolish Four, your first step is to arrange for a transfer of your 403b funds to a self-directed IRA. Any discount broker and your old benefits administrator can guide you through this process. You want to arrange for a custodian-to-custodian transfer to avoid any tax problems. That means you do NOT want to have the 403b money sent to you in a check made out in your name. Don't worry, both the broker and your benefits administrator will know how to set this up.

Once the self-directed IRA is set up and the money is in the account, you are free to trade. If you add money to the account, as you pointed out, it will be on an after-tax basis, but any earnings can accumulate tax free until withdrawn. However, because this account is now an IRA, you can only contribute up to $2K per year. For that reason, it won't make much sense to try to purchase a new Foolish Four each quarter. We believe that portfolio costs should never be more than 2.5% of your investment each year. At a discounter, that means (depending on which one you use) you need between $2K and $4K per Foolish Four portfolio to start. Accordingly, IMHO your best bet is let your monthly deposits sit in your broker's money market account until you reach your annual trading date for your first FF portfolio. It will earn interest, and will reduce your costs of investing in the long run.

Regards......Pixy
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement