Investment advice (1 Viewer)

[Dave Poehlman]

Investments are funny.. everyone is looking for someone to tell them what to do with their money but no one wants the responsibility of telling someone what to do with their money.
Anyway.. my employer is splitting from it's mother company into it's own entity. Therefore, they will be paying out our pensions from the mother company and we'll need to roll it over into another vehicle. I've already got an aggresive 401K and was using it to balance the conservative pension. But, now it sounds like I can roll my pension $ into my 401K or into an IRA.
With the economy right now, I don't know if I want to go with the 401K, and I don't know much about IRA's are they a good return?
Any ideas would be appreciated.
(perhaps I should just take the lump sum payout and build a kickass HT! )

 

[Jeff Ulmer]

Based on my average investment returns, I'd take the payout and buy HT equipment...

 

[Denward]

With the economy right now, I don't know if I want to go with the 401K, and I don't know much about IRA's are they a good return?

A 401k and an IRA are not "investments" but "qualified accounts" (IRS jargon) which contain investments. A 401k is a corporate sponsored tax deferred savings plan. An IRA is just a tax deferred account that you can open at a bank or brokerage firm or mutual fund company. For rollovers, there's nothing intrinsically better about either one. If you open an IRA, you can choose where you put the money (Fidelity, Schwab, and countless other choices) and thus have many more choices about where to invest (or lose) your money.
Whichever you choose, I highly recommend you do a direct rollover (i.e. have the check sent directly from your old pension to your new qualified account). If you have the check sent to you, you have to make sure you deposit it into a qualified account withiin a certain time period (30 days??). If you don't do that, it's considered money withdrawn from your pension and you will pay income taxes and 10% penalty tax on your earnings (which is probably the entire pension since you probably did not make contributions to it).
As far as how to invest? Don't try and hit home runs by finding hot tips. Your strategy of balancing aggressive investments with conservative investments is sound. If you have many years (>20) until retirement, conventional wisdom says you can be more aggressive. However, 38 year olds like me sure don't feel too good about what's happened to our aggressive 401k money the last 2 years.:frowning: But, time is on my side.