Quote:
Originally Posted by JKnight
I'm going to keep my comments limited to a part of your post, but I'm hoping Greg or someone else will comment on the "really pushing" aspect of your experience with Baird.
If your goal/preference is to achieve a high level of diversification with your $20k portfolio, then yes, mutual funds will be good for that.
If your goal/preference is to buy a basket of best-of-breed stocks in various industries to achieve a lower degree of diversification, then stocks will be the better way to go.
This $20k from your prior 401(k) isn't likely to represent the lion's share of your retirement savings. Meaning, it's not the end of the world if you don't get this one right the first time, particularly if you learn something along the way. If you'd like to use it to get your feet wet with trading stocks or other investments, then that's something to consider. You might find out that form of investing isn't for you, but you will have learned something. If you'd rather stick the money in mutual funds and check your balance once per quarter to see how it's doing, that's ok too. Really up to your personal preferences.
Investing is not a one-size-fits-all game, so when I hear a company pushing you toward an option and saying, "that's the best way to go", I have to wonder if they are really listening to you, your ideas and your interests. Keep in mind that you can roll those dollars over to any custodian, it doesn't have to be the one your company uses. These are your dollars/employees!!....Jeff steps down from soapbox...
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Great points.
I'd be leary of any fast talking pushy people in this scenario. How do these guys get paid? My guess is they take a % off the top.
That's kind of what started my Journey and ended me up in here. I talked to a local rep (that I do some side business/IT consulting for) and he gave me his suggestion. The fee's were like 4% off the top. And the average returns were 7-8%. That got me thinking... I'm only making 8% return, and I'm giving them HALF? Thus i'm only earning 4%? I think I can manage 4% on my own, and anything on top of that is icing on the cake. Talking about this with an old member here (SolarGuy/Mike, hope he's doing OK) and he led me to this thread. At exactly the right time.
I didnt have a huge amount to start with. I couldnt do individual stocks in my 401k, so i basically had to start fresh with a Roth IRA to invest. (I did re-do my 401k after learning here, but I only had certain options to pick from. I just had a better understanding of how/why to pick what i did and not just throwing darts at it).
Am I doing better than the 4%? You betcha. Do i sleep better at night? You betcha. I'm much more comfortable with myself managing my money than relying on someone else who doesnt have my best interest at hand, but just getting their cut of the pie.
Now that doesnt answer about going Stocks Vs Mutual Funds. But, as Greg discussed way back when in the thread you can build your own mutual funds, and NOT have to pay them the fee's. Just make sure you have no more than 5% of your entire nest egg in any one stock. Personally, I bought in $1k increments and am up to about a dozen or so stocks in my own "mini mutual fund". Am I as diversified as a standard mutual fund? No, they're in 50-250 stocks at any given time. But, my best of breed's mini-fund will likely out perform them, as i dont have a bunch of lagging employees pulling my total return down.