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What is the best way to rollover a 401k from a previous employer so that I may invest in both mutual funds and individual stocks? Should/could I:
rollover the full amount into a money market fund, ie. Vanguard Prime Portfolio. Then, transfer within Vanguard into other funds I choose; then, write a check from PP to open an IRA account at, say, Ameritrade; then, with those funds, I may buy and sell individual stocks.

IMHO, the best route would be to select a discount broker that meets your trading/investing needs AND also has the ability to purchase a broad array of mutual funds, particularly the ones you are interested in at little or no transaction cost. The two the come to mind are Fidelity & Schwab; however, I am sure others can meet your needs as well. In this manner you can move fluidly between stocks, bonds, & mutual funds without worring about which dollars to be invested are in the wrong account for your desired next investment.



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