In article <1140586208.283650.327380[at]z14g2000cwz.googlegroups.com> ,
"screenaccount[at]gmail.com" <screenaccount[at]gmail.com> wrote:

- quote -

You might consider rolling your 11K in the 401K to an IRA then
converting the IRA to a Roth, you'll pay taxes but in the very long run
you'll probably be better off. Try out some of the IRA conversion
calculators, that will give you an idea as to wether this is the way to
go.

As for what to invest the above in, I'd stick to a domestic index fund
with Vanguard or possibly with Fidelity. Since you already have a
Vanguard Roth account you may as well stay with them. For now stay with
one fund if you rollover, 11K is too small an amount to start thinking
about wider diversification, wait till your Roth accounts get larger and
max out on it every year, try to put in 25% plus in your 401K if you can
afford it...learn to live without it, it will pay off...it did for me.

Good luck.
--
Had It
I'm a hypocrite, I'm intolerant of intolerance.

"jIM" <noreplysoccer[at]hotmail.com> wrote in message
news:1140794196.528336.234950[at]u72g2000cwu.googlegroups.com...
- quote -

Well, suggesting that $2,000,000 is a MINIMUM for retirement is just
ridiculous. Sitting in my money market account, that would throw off
something like $80,000 annually. The majority of Americans are living on
less than that now. To suggest a _minimum_ retirement income far greater
than the working income borders on the ludicrous. One should be a little
more realistic when touting rules-of-thumb.

Elizabeth Richardson

<screenaccount[at]gmail.com> wrote
snip for brevity; please look back
- quote -

Yes and yes.

The long answer is that I think you're not quite clear on the vocabulary
here. You hold an account titled, for legal purposes, as a "401(k)." Being a
401(k), it has certain features attaching to it, like tax benefits and
restrictions on withdrawals. When one leaves an employer, one has the option
of changing ("rolling over") the account to an "IRA" (specifically, a
traditional IRA). "IRA" is another title for legal purposes. An IRA has
different features attaching to it. For your purposes, the major difference
is, like John and I and others in the past here have suggested, that you'll
likely have more flexibility regarding whether you want to put the money in
the account into stocks, bonds, ETFs, mutual funds, various money market
funds, etc., and you can probably invest within the IRA account for lower
fees.

Re an investment going down in the short term:
- quote -

AFAIC, that's a good start. Hit some of those books Bread recommended; be
open to googling and reading consumer sites on the subject of investing;
maybe try the _Millionaire Next Door_ for fun; remember that, if something
sounds too good to be true, it's probably false; and you'll be in good
shape.

Examples of online sources for introductions to fundamentals:
finance.yahoo.com , investopedia.com (for basic definitions) ,
morningstar.com (has some advertising), smartmoney.com , etc. Or start
another thread and ask people what are their favorite recommendations for a
relative newbie's reading. Suze Orman and Clark Howard and IIRC a guy named
Dave Ramsey do media shows (TV, radio) that, if you notice them, are worth
watching/hearing.

Lurk here often. The fundamentals of investing are repeated time and again.
Remember, assuming a certain amount of research or homework has been done in
advance, the only stupid question is an unasked one. (Though you sound
plenty smart enough to know this. You're going to do well.)

IMO misc.invest.mutual-funds is a place to get ideas for comparing mutual
funds and ETFs. Or if you're totally baffled at where to find a particular
type of fund. E.g. one can ask there what emerging market mutual funds and
ETFs people like. Caveat: My sense is folks at MIMF tend to believe in
chasing returns. Here at MIFP, most folks seem to have read enough to know
that chasing returns is a losing proposition.

You can take the point up at both groups and note the differences, if you
wish. Doing so does give perspective.

it a rule of thumb with a little more criteria than the original 2000*
age. Think that works for someone in their 20's and 30's and maybe in
their 40's. The table I presented adjusts for age. It's also easy to
adjust the overall goal and keep dividing it in half. Ages stay the
same...

I know little about posters income, standard of living, etc... but this
is less of a SWAG than the $2000*age rule of thumb, IMO.

"screenaccount[at]gmail.com" <screenaccount[at]gmail.com> writes:
- quote -

All of them, but the most comprehensive - the one which
is wider but not as deep - is Personal Finance. That'll
help you judge more than just your investments, but your
loans and insurance and other related matters. As important
as choosing the right funds might be, you need to look at
a broader picture as well.

Investing and PersFin both have chapters about choosing
a mutual fund, so, at least that much overlaps across
all of them. FWIW, he loves Vanguard for most of the
reasons we talk about here.

Head to a bookstore and browse all three. Browsing's
still free.


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Elle wrote:
- quote -

I might have been using the terms interchangeably earlier, but I
believe it's the emerging markets that interested me.

- quote -

Are you saying that money markets might be a good place to store the
money from my old 401k until I can get more educated on all this? Can a
401k be rolled over into a money market?

- quote -

I'd probably shrug it off. I don't really pay much attention as it is
to how well my investments are doing, because I figure that they'll go
up on average over the years.

Thanks!
Mike

BreadWithSpam[at]fractious.net wrote:

- quote -

Which one: "Mutual Funds", "Investing", or "Personal Finance"?
Although, I'm guessing they probably overlap a bunch.

Thanks,
Mike

"jIM" <noreplysoccer[at]hotmail.com> wrote in message
news:1140726038.749295.308210[at]v46g2000cwv.googlegroups.com...
- quote -

Why? What do you know about a person's expenses, their desired standard of
living, a pension, etc.?

Elizabeth Richardson

"2) It might be a bad idea to invest my retirement funds in the energy
and international markets. A totally novice question here, though: Is
it correct that those sectors are considered high-risk but potentially
high-profit? If so, aren't those the kinds of things I should invest in

while I'm still somewhat young (relative to retirement-age)? I had
thought that the further you are from retirement, the more aggressive
your portfolio should be. Or am I confusing "aggressive" and "risky"? I

had another question about this, but I'll create another thread to
avoid taking this one on a tanget. "

I would suggest thinking in "different terms".

100% invested in stocks is "aggressive". This woould be best suited
for someone with 20+ years to retire.

this 100% could be divided into:

domestic stocks and international stocks.

I might suggest a 75%-25% mix

within the 75%, have 20-40 large cap, 20 % small cap and 0-30 % mid
cap, large cap value or something else within domestic stocks. if you
want to take a risk with energy stocks, tech stocks, health care or
something else, do it with a percentage of the overall domestic
postion. Someone recomended 5%, I might go as high as 10%..

within the 25% international, I would suggest finding a good
international fund, such as the one listed. have 15-25% go to this
fund. if you want to get clever, find a small cap international fund
and maybe an emerging markets fund, and put 5% in each, with 15% into a
core fund.

If this is within an IRA, this is too many funds and fees might make
this prohibitive. If no ownership fees/ custodial fees are assessed,
there might be some merit to using 2-3 core funds and 2-3 others for
sector plays.

I use a 2,000,000 goal at age 68, then use rule of 72:

divide dollars by half and reduce age by 6 as the MINIMUMS needed.

age 62, $1,000,000
age 56, $500,000
age 50, $250,000
age 44, $125,000
age 38, $62,500
age 32, $31,250

this assumes 12% return (rule of 72 is 72/12=6), so it's MINIMUM for
sure. I have a chart which allows these numbers to get lower at
younger ages for lower rates of return.

The reverse of this is also true

age 68 $2,000,000
age 56 $1,000,000
age 44 $500,000
age 32 $250,000 (missed this point, so I cannot invest with a 6% return
and reach my goal). If I can save $400,000 more in 11 years, I might
hit next goal, but probably not.

"Elle" <honda.lioness[at]earthlink.net> writes:

- quote -

I don't think that's necessarily true. Many folks
recommend setting up a "core" portfolio - diversified and
with an appropriate asset allocation - putting some
substantial chunk of the assets into that core, and
leaving the rest for one to play or explore other
strategies with.

In the OP's case, he really doeesn't have enough assets to make
it all that easy to build a balanced core portfolio
unless he sticks to only a couple of funds. And certainly
not enough to make it worthwhile to put, say, 80% of his
retirement assets into such a portfolio leaving him 20%
to play with international, EM or sectors - unless he does
it by keeping the core portfolio very simple - until he
builds up more, his best bet may well be something like
the target retirement or lifecycle type funds.

As far as concern about "overlapping" by buying one
lifecycle fund when one already has another account fully
invested in a lifecycle fund, that's not really a problem
since both funds are fully diversified. The "overlap"
problem comes when one buys funds which are more narrow
asset classes and one *thinks* one is diversified when
one really isn't.

Meanwhile, I highly recommend that the OP take some time
to read, say, Eric Tyson's "For Dummies" books. The
time you invest in that will have a huge payoff. (There
are other books that folks mention from time to time, but
Tyson's stuff seemed exceptionally accessible - and his
core principles include things we've been talking about,
like low expenses).

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<screenaccount[at]gmail.com> wrote
- quote -

John and I said this, but I think googling the archives will
also yield the same result.

- quote -

I am not sure, but you seem to be conflating "international"
with "emerging markets." They're not the same. "Emerging
markets" (EM) may be said to be a kind of sub-category of
"international." EM is arguably more risky than, say, an
index of large value international stocks. To reinforce this
point, try some mutual fund and ETF screening tools. For
example, finance.yahoo.com 's mutual fund screener lists
"Any International Stock Funds" separately from "Emerging
Markets" categories.

Like Tad said, EM is high right now. So is energy. OTOH,
domestic stocks are a little high now, too. So I'd be
tempted to try to time purchases of any stock fund. But I'm
older and have been investing a little longer. You say
you're something of a novice and 35. I think you should keep
reading about investing and sit tight with your current
positions, more or less, until you have devised a master
allocation plan and have watched some fund prices for
awhile.

Money markets are returning around 4% right now. That's fine
for a one-year return for the short-term and may very well
beat many stock funds for a year.

In the alternative, as you say, you're young with a pretty
long time horizon. If you threw your retirement savings into
a carefully allocated mix of index funds (be they ETFs or
mutual funds) today and let it sit for 20 years, I doubt
you'll do poorly.

Definitely keep reading about investing. At some point, one
of your investments /is/ going to go down in value. How will
you respond? Do you cut bait and run? Or do you say, "Pfft.
It will go up after 20 years, and that's all I care about."

- quote -

Key word being "might," yes. There still might be an ETF
that better satisfies your needs than any mutual fund
currently being offered.

- quote -

Sure. Exactly what sort (large cap? small cap? mix?) of
international stocks you want right now isn't clear. I only
wanted to emphasize looking at expense ratios (seeking low
ones) and always avoiding loads.

- quote -

To be logical in one's investing reasoning, I think Total
Retirement Funds are an all-or-nothing vehicle. You either
trust the managers of such funds know how to allocate per
your desires, or you get out of such funds and come up with
your own allocation. Doing-it-yourself may result in higher
overall fee expenses, but not by much if you choose your
funds carefully.

Hi, all. OP here. Thanks much for all the comments. A lot of the later
comments started to go over my head, so I wanted to see if this is a
correct summary of things:

1) It's more or less agreed that I should move the old 401K money into
an IRA, to give me more control over it.

2) It might be a bad idea to invest my retirement funds in the energy
and international markets. A totally novice question here, though: Is
it correct that those sectors are considered high-risk but potentially
high-profit? If so, aren't those the kinds of things I should invest in
while I'm still somewhat young (relative to retirement-age)? I had
thought that the further you are from retirement, the more aggressive
your portfolio should be. Or am I confusing "aggressive" and "risky"? I
had another question about this, but I'll create another thread to
avoid taking this one on a tanget.

3) Regardless of sector, index or mutual funds might be better
retirement vehicles than ETFs.

4) The D&C International fund may or may not be better than some other
international funds.

If all that is correct, it's sounding like it might be best for me to
put the money in a new IRA, probably consisting of a few fundamental
funds. If I do that, though, will I be overlapping my Vanguard Total
Retirement fund too much? I'm guessing that fund puts money in the many
of the same areas that the typical beginning investor would (or would
be advised to).

Thanks,
Mike



screenaccount[at]gmail.com wrote:
- quote -

<BreadWithSpam[at]fractious.net> wrote
- quote -

The PAW yada formula identifies a rate of savings without
consideration for how much is actually needed. John's rule
of thumb gives IMO some consideration to how much is needed.

- quote -


They're apples and oranges, in my opinion.

Elle wrote:
- quote -

Those aren't quite comparable, assuming you meant Vanguard's Total-Int'l
fund (VGTSX). Both those funds are more growth weighted than D&C's and
some investors prefer to value-weight their international holdings.

The closer substitute would be Vanguard's International Value fund which
has expenses of 50 basis points. Still cheaper than D&C's fund but not
by all that much. Like D&C it's actively managed. Int'l Value is one of
the "weak spots" for Vanguard, if you're looking for passively managed
funds.

-Tad

"Elle" <honda.lioness[at]earthlink.net> writes:
- quote -

In an index fund or ETF, yes. Actively managed fund? Probably not.

As to whether or not indices are the way to go, that
is a whole different question. The OP seems more
interested in concentrating in certain sectors within
international.

One more thing about the Dodge and Cox fund - in order
to keep expense ratios low, it may not be available
in certain mutual fund supermarkets (brokerage accounts)
without a transaction fee.

Places like Fidelity typically charge the funds 25 or 35 bp
on an ongoing basis for no-transaction-fee funds purchased
through them. The consumer won't see that because it's
paid by the mutual fund, but it still comes out of the
expenses the fund pays. This isn't necessarily as nasty
as it sounds, because every fund share sold through a
brokerage is more assets in the fund and the brokerage
takes care of all the paperwork - large funds may have
low costs for managing such paperwork but smaller funds
often do not and a small fund paying a brokerage to
do all that may actually save the fund (and its investors)
some money.

Anyway, leaving aside the index versus active discussion,
yes, expenses matter. They matter a lot. And there may
be more to them than just the expense ratio (ie transaction
fees). So keep an eye out.

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"Elle" <honda.lioness[at]earthlink.net> writes:

- quote -

What, exactly, do you think they actually are?

And maybe you missed this:

- quote -

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<BreadWithSpam[at]fractious.net> wrote
snip for conciseness; please look back
- quote -

On my mind when I posted was that Vanguard and Fidelity's
international stock index mutual funds have expense ratios
that are much lower. E.g. VGSTX (0.31%) and FSIIX (0.10%)
(no loads too, of course).

I think the OP can do better than the Dodge and Cox fund, as
far as expenses are concerned.

Based on my reading of studies on the subject, I reject the
validity and usefulness of assessing mutual fund performance
based on only a few years of data.

Index funds have much to recommend them for a long-term
position. For a short-term position, it's a gambler's or
numerologist's game.

<BreadWithSpam[at]fractious.net> wrote
- quote -

How can you suggest the Millionaire-Next-Door PAW formula
and John's rule of thumb measure the same thing?

A person may be a Prodigious Accumulator of Wealth and have
hardly anything saved for retirement. Or vice versa.

John qualified his crude guideline as an indicator of "at
least" where one should be. I wouldn't read more into this.
The OP didn't ask specifically on this subject, so I thought
John was offering simply a quick sound bite; a guideline; an
impetus to increase the OP's saving-for-retirement rate.

If and when the OP wants more guidance, I would have him/her
do calculations of his/her annual cost of living, how much
of this s/he expects to need in retirement, factoring in
long term care and health insurance, then onto the person's
guesstimate of how much faith they have in stocks, then
perform a calculation of how much needs to be invested
annually for his/her timeframe.

Of course that's still crude and should be updated annually.
But forecasting the future with precision is a tough
business any way one slices it. Large margins of error
should be anticipated. Etc.

screenaccount[at]gmail.com wrote:
- quote -


Because you mentioned emerging markets and energy...be aware of the very
real dangers of chasing performance, it's a human-behavior problem that
can lead to poor investment returns. Not that you shouldn't invest in
foreign stocks or energy companies, but this asset class (emerging
markets) and industry sector (energy) have gone up a great deal lately.
Are you comfortable adding new dollars now? If you didn't buy Google at
$100/share would you buy it at $365/share? The danger, simply put, is
that you "buy high, sell low" by purchasing things that have run-up
lately. Sometimes "momentum" works in your favor, because recent winners
continue to do so, but you might get there after the train has left the
station.

And WRT energy, keep in mind you've already got quite a bit invested
there if you hold something like an S&P 500 index fund or really, any
broad-market US stock fund. At the moment, more than half of the
cumulative earnings on the S&P 500 are being generated by the energy
companies among the 500 companies included in the index. You might look
at your current investments to see how much you already have invested in
energy.

And to be direct: given your numbers you're suggesting a VERY risky mix
of investments. $11k to emerging markets & energy, after they've both
run up, and in a total retirement portfolio worth just $20k. You'd need
to be comfortable with risk, and shouldn't be surprised to see losses,
to take on such a concentrated portfolio.

RE: ETF vs. traditional mutual funds...ETFs make more sense for larger
purchases & sales, done occasionally. Their cost advantages might go
away if you'll be paying even $10 commissions on $1k-$2k purchases, or
if you'll be charged any annual or quarterly fees by the brokerage firm
where you keep your ETFs.

-Tad