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Thanks Pixy, I really appreciate the advice. After reading most of the Motley Fool Investment Guide, it seems as though my best bet would be to roll my old 401(k) into a Rollover IRA and then use the Dow Dividend, or better yet, the Foolish Four strategy with the money.

Another thing I'm having trouble with.... If someone only has a small amount of money to get started, say $2,000, and wants to do the Foolish Four strategy -- is it possible to just purchase a few shares of each company?? I thought most brokers required you to purchase round lots of 100 shares, otherwise you pay more per share or something like that. The reason I ask is because I'm starting my first online brokerage with $2,000 (with E*Trade), and I'm trying to figure out how all this stuff works...



<<Greetings, Dave, and welcome to Fooldom.

<<Hello! I'm probably one of the newest up and coming Fools. I've been investing in mutual funds for 8 years, and recently started getting the 'itch' for more...then I discovered Fooldom. I've opened a new brokerage account with E*Trade, and I have an existing account with I'm ready to start some *REAL* investing (as soon as I finish learning a little more. I'm halfway through the Motlley Fool book).

Anyway, that's not my problem. My wife and I each have an IRA with Invesco Funds group (over $7,000 each). I have a $10,000+ 401(k) from an existing employer that's been sitting in funds since I quit the job, and my current employer just started a 401(k) offering 8 fund choices from The Enterprise Group.

My plan is to move our IRA's over to Schwab so I can do more with them. However, I don't know what to do with my old 401(k). Do I move it into a Rollover IRA with Schwab so I can do some Foolish investing with it? Do I roll it into my current employers new 401(k)? I'm told that if I put it into a Rollover IRA, I can't contribute any more to it or I won't be able to ever roll it into any other retirement plan.

What is the best thing to do? I did start my new 401(k) with 10% of my pay and employers 5% match. Might as well get those deferred dollars in there, right? What to do with the old one is the question...

Any help, from anyone, would be GREATLY appreciated. I'm still learning the Fool's way, and I'm somewhat overwhelmed right now. I've also been reading some stuff by Wade Cook. His strategies seem VERY agressive, and I don't know if they would have the Fool stamp of approval on them! :-) >>

You have been advised correctly concerning your Rollover IRA, called a 'conduit' IRA. If you ever want to move those monies to a new employer's qualified retirement plan (such as a 401k), then that IRA must be composed exclusively of money from an old employer's qualified retirement plan (plus any earnings thereon since the IRA was established). Put any other money into that IRA, and it loses that eligibility. Therefore, until you're absolutely sure you never want to do that, your best bet is to keep tha
t IRA segregated from all other accounts.

Should you transfer that IRA to your new employer's plan? Only if you want to and only if you think that's the best place for the money to be. If you are reading the Gardner brothers' book, you already know Fools believe they can do better for themselves than the vast majority of fund managers. But we pay attention to our investments and select them with care. For investors who are unwilling to do that, then funds (and particularly a good index fund like the Vanguard 500) may be the best place for the m
oney. Remember, though, that once the money goes back into an employer's plan, you won't see it again until you change jobs or retire. That means you want it invested in funds until that time.

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