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Hey all, I could really use some advice.

I currently have a traditional IRA with an investment company I'm not totally enamoured with. It was set up with the help of a friend who was a financial advisor there at the time and is 40% stocks and 60% mutual funds. Also, I will be getting laid off at the end of the month and will need to reinvest my 401(k) - only around $5k or so. I can't remember how the 401(k) is distributed and don't have the paperwork with me at the moment.

My plan is to transfer the IRA to Vanguard and then rollover the 401(k) to the IRA after I get laid off. My question is, should I keep the 40% stocks/60% mutual funds distribution, or switch it all to one or the other? I'm fairly conservative and hands-off at the moment - and 32 years old so quite a way off from retirement.

Any other ideas?

thanks!
Lisa
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My plan is to transfer the IRA to Vanguard and then rollover the 401(k) to the IRA after I get laid off. My question is, should I keep the 40% stocks/60% mutual funds distribution, or switch it all to one or the other? I'm fairly conservative and hands-off at the moment - and 32 years old so quite a way off from retirement.

Any other ideas?

thanks!
Lisa


How many stocks do you have with $2000 ? How have your stocks performed relative to your mutual fund ?

g2w
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The IRA is larger - right now there's a little over $5k in stocks (only 2 stocks) and a little under $9k in the mutual fund. From what I can tell, they're performing about the same. I am a TOTAL rookie though, so I could be missing something...

thanks!
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The IRA is larger - right now there's a little over $5k in stocks (only 2 stocks) and a little under $9k in the mutual fund. From what I can tell, they're performing about the same. I am a TOTAL rookie though, so I could be missing something...

thanks!


The Mutual fund gives you excellent diversification (I'm assuming a Total Index fund or some sort) and your two stocks give you very little. If one stock suffers a major decline that will put a real dent in your total worth, whereas if that stock was part of an index fund, you probably wouldn't even notice it.

Should you sell your stock ? Personally, I wouldn't. But, I'd put any new money into the Index fund. It's fun to see if you can beat your mutual funds and picking stocks is a lot of fun too. And deciding when to sell is definitely a learning experience everyone should go through especially after the last monster Bear. (I still have JDSU in my portfolio)

Good Luck.

g2w
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Lisa...

Maybe a previous post I made on another board might be of help:

http://boards.fool.com/Message.asp?mid=19817012

I think that you may have your allocation terminology a little mixed up. Usually, we think of a diversified allocation as an appropriate mix of stocks and bonds (Basic allocation) - not stocks and mutual funds. The mix is determined by your age, tolerance to risk, and your long-term goal/s. A mutual fund could include stocks or bonds or a combination of the two (say a balanced fund or something similar).

I guess I'm a little prejudice, however, I tend to like Vanguard and it's low expense, no-load, passively managed index funds. A good place to have a Roth IRA. (I'm beginning to sound like a broken record - sorry).

Good luck to you! Read as much as you can about investment options and you are bound to do the right thing. Only you can ensure your retirement decisions will keep you secure in your later years.

Regards,
Bill



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The IRA is larger - right now there's a little over $5k in stocks (only 2 stocks) and a little under $9k in the mutual fund.

Could you specify what your mutual fund is? "Mutual fund" tells us that it is a special investmet corporation following certain rules, but it tells us nothing about what that mutual fund invests in.

Mutual funds run the gambit from money market (money market mutual fund) to bonds to stocks, and they vary quite a bit on management ("index" or "passively managed" to "actively managed"), and they vary quite a bit on expenses and loads. They also vary quite a bit in how diverse they are, from "focused" stock funds (investing in, say, only 10 individual stocks) to very broadly diversified stock funds (e.g., a "Wilshire 5000" or "Total Stock Market" fund that invest in a variety of stocks sampled from across the various industries and capitalizations to mimic the overall return of the domestic stock market).

So I, for one, am uncomfortable making comments without knowing exactly what your "mutual fund" invests in.
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Adding my 2 cents and worth almost what you are paying for it --
My suggestion is to sell the individual stocks and to put all of the money into a balanced index fund with a 20-30% bond portion. You might look at the new targeted retirement funds just introduced by Vanguard or one of their Life Strategy funds.
Reasons for the suggestion:
1. For an account of this size, individual stocks will cause you to lose diversification.
2. A small bond exposure will reduce risk at a small reduction in return.
3. The balanced index funds are ideal for the hands-off approach. Even rebalancing is taken care of by Vanguard.

Bob
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After doing some research (yeah, I know I should have done it a long time ago), my mutual fund is mostly stocks.

It seems that it would be best for my needs and knowledge level at the moment to put everything into index funds. I'll probably leave this IRA for a bit and concentrate on funding a Roth next year. In the meantime I clearly have a lot of reading to do.

I'm assuming Vanguard will help with selling the stock and transferring the mutual funds? Obviously I need lots of help :)

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I'm assuming Vanguard will help with selling the stock and transferring the mutual funds? Obviously I need lots of help :)

If you have stock to sell, I would advise against Vanguard and suggest you go with Scottrade. I consider Vanguard expensive, particularly when compared to Scottrade's $7 a trade. I have accounts with both and in the past few years have been significantly underwhelmed with Vanguard's customer service - my account there started in the mid-80s.

rad
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I'm assuming Vanguard will help with selling the stock and transferring the mutual funds? Obviously I need lots of help :)

Yes, Vanguard will do the actual transfer. All you have to do is fill out the forms they ask for. Go here:

http://www.vanguard.com/VGApp/hnw/PersonalHome

And select Transfer Assets to a Vanguard IRA.

BTW, Vanguard does have some hefty minimums (e.g., $25000) on some of the premier funds and they do close them periodically as well; they also will charge a back-end fee if you transfer your funds out of a fund and into another Vanguard fund before 1 year (I'm not sure about the time period)

g2w
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