Where should I do with 15 K sitting in my IRA? Taking into account current volatility of the market, should I just sit on the money? Thank you.
Printable View
Where should I do with 15 K sitting in my IRA? Taking into account current volatility of the market, should I just sit on the money? Thank you.
what type of IRA ? If it's tax deferred, you seriously need to calculate the taxes and penalties that will be immediately due and payable if you remove the money from your IRA.
Also, does your IRA allow for 'self-directed' investments ? If not, you may want to consider rolling your current IRA into a new one that does !
It's a tax deferred traditional IRA. I don't plan on removing the money until I retire. I hope I won't need to. I plan to "forget" I even have it available and let it grow for years ahead.
I am not sure I know what "self-directed investments" are. I understand I can buy and sell securities myself? I bought and sold stock within my IRA in the past.
I also want to start contributing into a non-tax deferred account. Will I need to open a new one then? I'd guess I am not supposed to "mix" tax deferred and non tax-deferred accounts?
What fund company do you have your IRA with? If I know what your choices are I can probably help you choose. Basically you'd want a well rounded portfolio with some large stocks funds, small stock funds and possibly medium stock funds. You'll also want to balance value and growth stocks. I'd make sure you're at least 30-40% international too. There are also some lifestyle funds or target date funds that may interest you.
Assuming you don't have that many selections in your current IRA it's fairly easy to transfer to another company. American Century, Putnam, Fidelity are a few names that I like. Give me some more info and maybe I can help you.
my account is with Ameritrade
I browsed around the Ameritrade website and found that they have access to quite a large number of mutual funds. My advice would be to go with either a target date fund or a target lifestyle fund. The advantage of one of these types of funds is that you don't have to worry about rebalancing, or moving money around or watching 10 different funds. Also, typically their fees are quite low.
The lifestyle funds allow you to pick a style, like aggressive or balanced or whatever you feel comfortable with. Then the manager picks stocks within that fund that fit that description. Obviously with aggressive you can gain a lot more but you take a higher risk. With your self described risk style of forgetting about the money for a long time, that is probably your best bet. Just don't panic if the market goes down for a year or two or three or more! IF you are worried like that then aggressive is not for you, maybe balanced would be better.
A target date fund is similar to the lifestyle funds except that it begins as aggressive and then slowly becomes more conservative as the target date gets nearer. This is seen as a safer way to protect your money as you get closer to retirement. You do give up some potential return but with the added protection.
Browse on over to the research & ideas tab of the Ameritrade website. Then go to mutual funds and then finally lifestyle funds. AS you can see they have quite a large number of choices although they are mostly target date funds. If you like or are comfortable with Ameritrade then you can purchase them through Ameritrade. Personally I'd select a fund company like Fidelity or American Century and roll the whole IRA account there. There should be no fees or whatever and a simple phone call will get you started. Just make sure you explain that you are rolling from one IRA into another IRA so that they don't 1099 you as a distribution and make it taxable. All these companies know how to do it but make sure you explain to them carefully what you're trying to do so there is no mistake.
Also, a little side note on buying and selling stock within your IRA. Personally unless you're sophisticated I'd think buying individual stocks is a bad idea. Too much risk and volatility. That's why I believe that mutual funds are a better choice. They diversify your risk while still giving you a potentially good return. The mutual fund companies I listed (and there are many others) have enough different funds to satisfy all your needs from money markets to bonds stocks, sectors, international, etc. Still, I'd prefer to see you in a lifestyle managed fund with your $15k. If you had $150k then I'd say mix it up but then you probably wouldn't be looking here for advice.
Robertjordan, may I ask you why you prefer Fidelity or Am. Century to Ameritrade? Thank you.
Ameritrade is simply a discount brokerage. You can buy and sell almost anything, they hold your account.
My favorite fund families are Van Kampen, Oppenheimer, Columbia, and Fidelity (sometimes). Oh, and Franklin-Templeton.
For a "target allocation" fund, I use OAAIX because I'm lazy. But I'm not that impressed for its performance/fees. It works for a small amount of money though.
Oh, and if your AGI is less than 100K, I'd consider a Roth conversion depending on its tax implications for you.
All of which you can buy through Ameritrade.
Hefty front end load on that one Kat. A quick search of the Ameritrade site shows a whole slew of funds that are available with no transaction fees (http://www.tdameritrade.com/research...funds/ntf.html)
And no, I do not work for Ameritrade.
IMHO there are now enough ETF's operating that one can achieve exactly the same advantages as purchasing mutual fund shares by purchasing ETF shares ... without load, without fat management fees, and without being limited to trading only at the end of the day. IMHO the latter constitutes a MAJOR additional risk factor in a volatile market situation.
Re Kat's post - I also am a big fan of Franklin Templeton - almost all of my clients get something managed by them in their portfolio of funds. Their reputation has always been excellent and the returns are usually pretty respectable too.
ETF's are just fine. I like iShares. But I also like to mix it up with some managed funds. Let's say her porffolio was $100K and she was aggressive. This is for a qualified account that she can't touch until 59.5.
BTW, this isn't financial advice I'm giving. Its my day off and ppl usually pay me for these recommendations. I know that seems ridiculous to some of you educated individual investors, but not everyone wants to do this work on their own. And its fun! This is just a guideline allocation. Some will find it too risky, some will find it too diversified. I'm not here to please. :P
25% U.S Large-cap. One ETF and one solid managed fund (I like UMBIX, no load, but prob. a trans fee to buy)
25% Global Large-cap (17), Global Bond (5), Emerging Markets Debt (3). I can recommend half a dozen managed funds that beat the MCSI. No-loads too, but they obviously have management fees.
25% U.S. Mid-Small-Cap/Global Mid-Small-Cap, Emerg. Markets Equity. Same as above. I really like Pacific and Eastern Euro funds here to mix things up (JFESX, but its kinda 'spensive)
6% Commodities. I really like ETF's here. Its hard to find a good managed commodities fund. (PHO, IAU, etc...)
10% Bonds: U.S. High-Yield and LT Corp Bond For shorter-term investments, I'd include a higher stake in fixed assets, but this isn't going to be touched for a while. (MGFIX, use an ETF, whatever, can't remember my fave HY funds right now, lol)
9% Real Estate, diversified
***A note about management fees: if you have a solid managed fund with 10 years plus of consistent beating of its category index, consistent or above its peers, and a solid experienced fund manager, who cares if you are paying a 1% management fee?
If the index can get you 8%, and a managed fund can get you 12% gross with 1% going to mgmt, you still net 11%. Which return would you rather have? ***
Ok, looking back, this is definately too much for 15K. Really, my recommendation would depend on how much she plans to add to that porfolio over how long. If she just wants to let it ride, I'd do something allocation. If she's going to add, then we can start having fun!
What do you ladies think about Goldman Sachs Growth and Income Strategy Portfolio (GOIBX) ? Back-end load. My Edward Jones advisor had me investing $44K in this portfolio for my 401(k) last year: $29K in regular 401(k) and $15K in Roth 401(k). Should I invest more in this portfolio or choose another one this year? By the way, do any of you have an account with Edward Jones?
^^^ the fund's approximately 2.5% expense ratio is pretty stiff ...
additionally, this is a 'fund of funds' ... all of which are other GS offerings ...
on the other hand, PPT conspiracy theorists would probably tell you that, given GS involvement at the early stages of stock IPO's, mergers, bond offerings etc. that any GS fund manager is more likely to have great 'advance market intelligence' to assist in turnover decisions !!!
For the sake of consolidation. If you have several funds from several fund familes, and are receiving statements from all of them, its a pain in the arse. But aside from that, there is no real advantage. All brokerage houses will require you to pay something to the custodian to maintain the account (unless you have enough assets), and trade fees. Ameritrade is one of the least costly discount brokers I believe, but don't quote me on it.
Thanks, Melonie.
Katrine, you wrote "Really, my recommendation would depend on how much she plans to add to that porfolio over how long. If she just wants to let it ride, I'd do something allocation. If she's going to add, then we can start having fun!"
From what I know, I can only put up to 4K per year max in a traditional Ira being self-employed. I plan on making a maximum allowed contribution to my IRA at least for the next few years. I would like to invest this money aggresively since I won't be paying tax on returns until my retirement age.
I also have a money market account also where my money is earning 4,5% currently. I'd love to invest it as well, trying to figure one which way is best to go.
Nice asset allocation Kat, fairly close to my own except I'm at 30% in each of the large three.
I like Vanguard Index Funds. Extremely low expense ratios, no upfront fees. There's nothing "get rich quick" or "sexy" about index funds, but over the long-term, and once you factor in all the fees and expenses everyone else is paying that you're not, you can expect to outperform about 66% of everyone else.