What to do with my older 401k's?

[Wolf359]

Originally Posted By: Bandito440
The Fed is planning to raise rates. I didn't predict that... they said so.

When rates increase, bond fund values decrease. Also not a prediction. So, why not remain in equities for a while longer? Bogle's theories are very useful, but not always gospel.


The only advantage to a bond fund is to reduce some of the volatility in the market. When stocks are up, bonds usually are not, but when stocks are down, bonds are up. So while it may cut into your gains somewhat, it will also decease some of your losses if the market drops.

Anyway, I prefer Fidelity. For me, it was just easy to walk into one of their offices, meet with someone and they do all the forms for you. They initiated the rollover of my 401k into an IRA. I think in general, it's good to get your money out of a 401k unless they have access to some special funds that are no longer open to the pubic. There's many stories of small companies blowing or stealing 401k funds, not as likely with a large company. Fidelity also has little perks too, a 1.5% cash back credit card and I think you can meet with an advisor for free if you have a certain dollar amount, forget what the threshold is.

 

[cashmoney]

Originally Posted By: Bandito440
The Fed is planning to raise rates. I didn't predict that... they said so.

When rates increase, bond fund values decrease. Also not a prediction. So, why not remain in equities for a while longer? Bogle's theories are very useful, but not always gospel.



The Fed is planning to raise rates. If and when that happens it may be a big surprise that equities may go down significantly more than bonds do. Or some other external event will trigger an unforeseen change in equities versus bonds. Predicting how markets will react to external monetary and financial events is simply put a fool's errand. Again the smart retail investor picks an allocation between equities, bonds, real estate, etc based on age and risk tolerance and sticks to it while adjusting the mix over time to compensate for age/risk time horizon.

Fortunes have been made in the bond markets in the last 10 years while others sat on the sidelines predicting that interest rates have no where to go but up.

 

[Bandito440]

Sure, but over the long term, equities have always been the investment for gains, and bonds for greater security. With 20 years to go, and this as his secondary retirement account after the pension, I don't see a need for 10% of it to be in bonds. Closer to retirement, of course, and a greater percentage as time goes on.

Fortunes may have been made in bonds over the last 10 years, but more people made more money with equities. The 10-year annualized gains in Vanguard's Total Bond and Total Stock Market funds are something like 4% and 8%. I just don't see the need for that extra security this early. I'm not suggesting he buy a timeshare or annuity here, just maximize his potential gains while he's so far off from retirement.

His greatest risk now is not maximizing his gains.

 

[Mr Nice]

Because of ObamaCare, healthcare and pharmaceutical industry will do well.

Total Stock Market fund and reinvest dividends for the next 30 years.

 

[cashmoney]

I certainly understand your perspective. It is good for forums to have folks express different points of view on multiple topics. Folks can learn more by reading different viewpoints and then doing some research if they are interested.
Suggest researching basic portfolio theory and asset allocation strategy. Instant bedtime reading material : )

 

[Brian Barnhart]

Some things to keep in mind about retirement accounts. I believe these are true, but I'm not a financial adviser so you need to check them out yourself.

1) In general funds invested in IRAs are not available before age 59 ½ without paying a 10% penalty on withdraws. There are a few specific exceptions, and you may be able to get some of your IRA funds without penalty before age 59 ½. But if you plan to withdraw from your IRAs before age 59 ½ be aware of the limitations and penalties that apply.

2) The above includes any pensions you cash out of and roll into IRAs, and any former employer 401K funds you roll over into IRAs.

3) As with IRAs, funds invested in 401Ks are generally not available before age 59 ½ without paying a 10% penalty. There are exceptions here as well and it pays to be aware of them.

4) Most 401K plans that employees have with their current employer have an important exception to the 59 ½ age limitation. With most 401K plans an employee who retires after age 55 can take distributions from that employer's 401K plan immediately without paying the 10% early withdraw penalty. This only applies to employer 401K plans where you leave the employer (retire) after age 55. If you have a 401K plan with a former employer where you left before age 55, you must wait until age 59 ½ to withdraw from that 401K without paying the 10% penalty.
If you leave an employer after age 55 and roll that 401K over into an IRA, you must wait until age 59 ½ to avoid the 10% penalty on withdraws.

I'm not familiar with Roth retirement accounts, so I don't know how they might differ.

 

[Mr Nice]

This is kind of Off Topic:

Any BITOG members plan on touching some of those investments at age 59.5 ???