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Learning, Sharing, and Teaching => Investor Alley => Topic started by: bigair360x on March 15, 2019, 01:34:45 PM

Title: Investing Decisions
Post by: bigair360x on March 15, 2019, 01:34:45 PM
I currently have a decent amount of money in legacy 401k's that I need to move to a more long term solution. I have personal capital trying to get me to move my money to their firm to invest but I see that their returns on their aggressive index don't even meet total stock market returns. What is the ideal thing to do with this money 200k+? Pay an adviser? Invest in total stock market index funds? Any input good or bad about putting money with Personal Capital?

Also, I plan to FIRE long before I'm eligible to pull from my 401ks. I just read how to pull that money in 5 years so I want to take that into consideration.

Thanks for any advise!
Title: Re: Investing Decisions
Post by: EvenSteven on March 15, 2019, 01:49:05 PM
Do you have a compelling reason to move the money in those old 401Ks, like poor fund choices or high expense ratios? If not, there is nothing wrong with leaving them be.

If there is I would roll it over to an IRA at Vanguard, Fidelity, or Schwab. Choose an asset allocation that you are comfortable with between equity and bonds. Invest in low cost, broadly diversified index funds and accept market returns till you kick the bucket.
Title: Re: Investing Decisions
Post by: MustacheAndaHalf on March 15, 2019, 07:27:49 PM
If you haven't learned about "expense ratios" before, and consider yourself to lack experience with investing, I'd recommend Vanguard.  It's very hard to make a bad choice at Vanguard, which makes it easier to invest.  If you check each mutual fund's expense ratio (which you should do, even at Vanguard) then Schwab and Fidelity are good choices with many low expense ratio funds.

Two reasons why it's important: first, expense ratios consume your money - silently.  You won't see it on an account statement, so a fund could take 1% of your money without you knowing.  Usually stock market performance is much more significant than the expense ratio - but over time, it matters.  Second, total stock market funds (like you mentioned in OP) have low expense ratios because they don't try to spend money beating the market.  Usually that doesn't work, and a passive approach of accepting the market return actually beats most funds (80%-90% depending on time frame).

If you don't like your old 401(k) being scattered around and dealing with notices and changes regarding them, you could consolidate by "rolling over" to Vanguard, Schwab or Fidelity.  Those big three also have low cost funds - the selections might not be as good elsewhere.  Make sure you elect a "trustee to trustee" transfer - getting a check in the mail is bad news, since they have to treat it like a withdrawal and send 20% of your account to the IRS to cover taxes.  If they send you a check, you'll have to dig up that 20% from savings and deposit it in your new IRA... and then get your money back next year at tax time.  Painful and not worth it: just let your 401(k) go directly into another account.  Since Vanguard/Schwab/Fidelity will be receiving your money, and will want to help you, that's the place to fill out a new account form.
Title: Re: Investing Decisions
Post by: RWD on March 15, 2019, 07:50:12 PM
You should definitely read the stock series: