Investing 102

[dhutton]

Originally Posted by captainofiron

Havent posted in a while, but I wanted to thank all the posters on here.

My Rollover IRA has been kicking butt in the past year. Im up 22% since rolling over (taking into account the dividends and reinvesting into my positions).

Right now I am accumulating dividends to make more significant buys and take less of a "hit" on the commission.

BUT how much cash on hand is too much?

Would it be smart to put that free cash into a low fee mutual fund so its not just sitting there earning 0.00000001% (exaggerating) interest?

Are you paying a percent commission on trades in your IRA? Or is it a flat fee? No way I would pay a percent commission. I'd move my IRA.

Don

[captainofiron]

Originally Posted by dhutton

Are you paying a percent commission on trades in your IRA? Or is it a flat fee? No way I would pay a percent commission. I'd move my IRA.

Don

no its a flat rate (Fidelity).

what I was saying is I like to make as large of a purchase/sale for each transaction so I only pay the $8 fee as little as possible.

[dhutton]

Originally Posted by captainofiron

no its a flat rate (Fidelity).

what I was saying is I like to make as large of a purchase/sale for each transaction so I only pay the $8 fee as little as possible.

Can't you select to have the dividends reinvested automatically and avoid fees altogether? I can in my Fidelity 401k.

Don

[MtotheIKEo]

Originally Posted by captainofiron

no its a flat rate (Fidelity).

what I was saying is I like to make as large of a purchase/sale for each transaction so I only pay the $8 fee as little as possible.

Exactly what DHutton said, you should be able to reinvest dividends for no fee. It is typically referred to as DRIP (dividend re-investment plan) and it will purchase as many shares as possible at market value when dividends are received, even fractions of a share.

Read the link below...
https://401k.fidelity.com/static/dcl...t_Domestic.pdf

[jkp41]

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!

[captainofiron]

Originally Posted by dhutton

Can't you select to have the dividends reinvested automatically and avoid fees altogether? I can in my Fidelity 401k.

Don

Originally Posted by MtotheIKEo

Exactly what DHutton said, you should be able to reinvest dividends for no fee. It is typically referred to as DRIP (dividend re-investment plan) and it will purchase as many shares as possible at market value when dividends are received, even fractions of a share.

Read the link below...
https://401k.fidelity.com/static/dcl...t_Domestic.pdf

AWESOME
Thanks guys, I did not know this was a no-cost option in my IRA. For some reason I had the idea in my head that if I did this they would charge me the purchase fee

[GregWeld]

Originally Posted by jkp41

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!

Kenny - WELCOME!

I'm on a road trip and posting is difficult and I want to be able to give thought to a response... so give me a few days to whip something up. In the meantime - hopefully others will see your post.

[ErikLS2]

Originally Posted by jkp41

I am changing jobs in September, and I am using this as an opportunity to step up my skills with my investing. I have been investing in a few relatively small posotions over the last few years with a Schwab brokerage account, but nothing near the money that is in my 401k that I will be moving into my rollover account. For simplicity's sake, lets round out numbers and say that I have $10k in my Schwab account right now, and will be moving $100k into a rollover.

My new job will have a 403b with a 3% match, and I will utilize that match. I filed for taxes for the first time since being married and found out that I can now utilize a roth rather than being over the income limit. I will max that out yearly. I'm 32, and would like to retire around 55

In my Schwab account, I currently have postions in:
MO - biggest position
PEP
XOM
F
T
MCD
EXR - very small position

So I have several questions about the best way to utilize the 401k money:

1. At this point should I be looking into bonds at all or is that something that should wait until I am closer to retirement and looking for stability rather than growth?

2. Should I be concerned with scaling into positions with this, or should I buy new/expand current positions with the majority of the money?

3. If I scale in, what strategy do you guys use in parking the money until you put it into a more permanent position?

4. After the Roth and 3% match for the 403b, I will have roughly $1000/month that I am designating to retirement. Should I max out the 403b or put that money into my brokerage account. I'm assuming the 403b will be mostly mutual funds, and I would have more control with the brokerage account.


Edit: I just realized that this was my first post here. I have been lurking too long!

Here's my 2 cents worth, but remember it's free and you get what you pay for

1) Personally I think you're too young and 23 yrs out at least is too long to even worry about bonds in my opinion. T pays more than most bonds just in it's dividend.

2) See answer 1 but I would favor strong companies you are comfortable with that have taken a dip based more on overall market conditions than their own individual fundamentals. Scaling in, or "dollar cost averaging" is never a bad idea. Also, read this article: http://www.marketwatch.com/story/how...rly-2016-01-25

3) Personally, I've learned to always have some cash on hand for when we have these sudden dips that really aren't based on much of anything concrete. I don't use it but HYG is a popular bond ETF for storing cash, it's not the most conservative though nor without risk. On the conservative side, T-Bills may or may not do much for you, depending on how much cash you are parking, to even be worth the trouble, but they are safe.

4) Max out any free money company match 1st, then max out Roth contributions, then go back to 403b and max that out (like most plans, it probably doesn't have very many or very good choices).

BTW, changing jobs is a perfect opportunity to swap out of a limited set of poor choices in a 401k and into a Rollover IRA with unlimited choices without paying a penalty. That was a great move and most people don't even know they can do this. My company was sold and I didn't change jobs but it allowed me to do this too!

You're just fine tuning at this point so don't lose any sleep, you're doing it right! Good luck!

[YAMATHUMP]

I am a long time lurker on this thread, and I just wanted to take the time to say thank you to all who have posted. It is funny how some of the most solid investing advice I have seen has been on a "car forum". LOL Another thing that's funny is how you go from "gambling" to "investing" and you feel so much more secure.
You know I wish I knew at 20 what I know now.......and I have always saved money, just sometimes made bad investment decisions (some good too!) Any how, I hope everyone who reads this thread gets out of it what I have! Thanks again and keep up the good work!
Brad

[WSSix]

Welcome Kenny. Erik pretty said everything I would have. You're smart to be doing this now. Keep up the good work. The only thing I would recommend is to further diversify. If you can continue to purchase more shares of what you own and diversify at the same time, great! If not, I'd lean towards diversifying as a priority over expanding current selections. Keep your eyes on your current selections though for any dips. Jumping in during dips isn't necessary but it's great when you can.

Glad you're getting a lot out of this thread, Brad. Good luck to you.