Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
If you picked three....
Old 02-16-2010, 08:57 AM   #1
Dryer sheet wannabe
 
Join Date: Oct 2008
Posts: 17
If you picked three....

My 25 year old son lost his job. Today he opened an IRA account with Fidelity to do a roll-over; thinking he would get into a targeted retirement fund b/c he is a very inexperienced investor. However, there is a $2,500 minimum and he only has $1,200.00 in his 401K. He must either buy individual stocks or a CD if he sticks with Fidelity to do the roll-over.
This is what we were thinking: dividing his small sum between Duke Energy, PG, and Eli Lily and sticking with Fidelity to complete his paperwork.
He is reading Investing for Dummies....which is exactly what we both are when it comes to investments. However, I think we need a primer.....Investing for Real Dummies!
I would appreciate any thoughts or other alternatives before he makes this move.
__________________

__________________
Looking Ahead is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-16-2010, 08:58 AM   #2
Full time employment: Posting here.
 
Join Date: Feb 2008
Location: Indialantic FL
Posts: 944
I would stick it in a CD until he learns more about investing.
__________________

__________________
JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
jimnjana is online now   Reply With Quote
Old 02-16-2010, 09:33 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,474
Can't he open a Vanguard account and invest for less than $1200?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-16-2010, 09:55 AM   #4
Thinks s/he gets paid by the post
Leonidas's Avatar
 
Join Date: May 2006
Location: Where the stars at night are big and bright
Posts: 2,768
Quote:
Originally Posted by FinanceDude View Post
Can't he open a Vanguard account and invest for less than $1200?
There is no minimum amount needed to open an IRA at Fido, but I think all of their mutual funds require a minimum of $2,500 as an initial buy in. ETF's are another story though, don't think there are minimums on those at Fidelity, as best as I recall anyway.
__________________
There is no pleasure in having nothing to do; the fun is having lots to do and not doing it. - Andrew Jackson
Leonidas is offline   Reply With Quote
Old 02-16-2010, 10:05 AM   #5
Dryer sheet wannabe
 
Join Date: Oct 2008
Posts: 17
Yes, Leonidas....$2,500 is the minimum for mutual funds. He has already opened an account with Fidelity, he just needs to decide whether to stick it in a CD or buy individual stocks due to his low account opening balance of $1,200.
Any thoughts on buying Duke, PG, and Eli?
FinanceDude, good idea to check to see if Vanguard has lower minimum to purchase a targeted retirement date fund. He does need to use the targeted retirement date fund if he can qualify with his low investment due to his lack of knowledge and the ease and convenience of the targeted funds.
Thanks to all.
__________________
Looking Ahead is offline   Reply With Quote
Old 02-16-2010, 10:08 AM   #6
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Houston
Posts: 14,832
Quote:
Originally Posted by Leonidas View Post
There is no minimum amount needed to open an IRA at Fido, but I think all of their mutual funds require a minimum of $2,500 as an initial buy in.
Not done this with Fidelity but Vanguard allows less than the fund minimum if it is an IRA. When each of my kids reached 18 I opened a Roth IRA for them with $1,000 in a balanced fund which was below the normal limit. This was 10 years ago so the rules may have changed....
__________________
Retired in Jan, 2010 at 55
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 02-16-2010, 10:14 AM   #7
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Houston
Posts: 14,832
Quote:
Originally Posted by Alan View Post
Not done this with Fidelity but Vanguard allows less than the fund minimum if it is an IRA. When each of my kids reached 18 I opened a Roth IRA for them with $1,000 in a balanced fund which was below the normal limit. This was 10 years ago so the rules may have changed....
Apparently this has changed. I did a search on VG funds with a minimum of $1,000 and only the STAR fund came up. Oh well, times they are a changing...
__________________
Retired in Jan, 2010 at 55
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 02-16-2010, 10:31 AM   #8
Dryer sheet wannabe
 
Join Date: Oct 2008
Posts: 17
Son called Vanguard. Minimum to open targeted retirement fund is $3,000.00. They advised him he is eligible to roll it to the STAR fund. It has a -2.17 YTD.
__________________
Looking Ahead is offline   Reply With Quote
Old 02-16-2010, 10:35 AM   #9
Thinks s/he gets paid by the post
Leonidas's Avatar
 
Join Date: May 2006
Location: Where the stars at night are big and bright
Posts: 2,768
Quote:
Originally Posted by Looking Ahead View Post
Any thoughts on buying Duke, PG, and Eli?
I would be glad to give you my opinions on PG (which I currently own), and somewhat lesser informed thoughts on DUK and LLY. But, I re-read your first post
Quote:
Originally Posted by Looking Ahead View Post
He is reading Investing for Dummies....which is exactly what we both are when it comes to investments. However, I think we need a primer.....Investing for Real Dummies!
and that makes me reconsider your request.

I do invest in individual securities, which makes me different from many other members here as most prefer mutual funds. It is not for the faint of heart, nor for those who aren't going to spend the time to get the information and do the research necessary. Many other members here will tell you that mutual funds are a lot easier to do and pose less risk than individual securities.

My best advice to you would be don't commit that money before you have learned some more about investing.

As for getting around the obstacle posed by the $2,500 minimum, since you are going to open an IRA, can your son make contributions to the IRA equal to the $1,300 needed? If not, I would consider an ETF.
__________________
There is no pleasure in having nothing to do; the fun is having lots to do and not doing it. - Andrew Jackson
Leonidas is offline   Reply With Quote
Old 02-16-2010, 10:35 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 5,422
Star is the only $1000 min fund at VG.

Fidelity is probably a better option. you can now buy 25 different ETF's commission free at fidelity. For that small amount of money and given he is 25 years old, I'd put it in a single index fund, SP 500, total market or something.
__________________
Recently retired at 33. Loving it so far! Wife is still working for ~1 year. I'm secretly just a stay at home dad with 3 kids (1, 7, and 8) but don't tell anyone.

Money is the Root of All Good.
FUEGO is online now   Reply With Quote
Old 02-16-2010, 11:01 AM   #11
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,280
Given the small amount of money and your son's age, I'd go with an ETF.
Over the long term probably any of them would work out, but I think I would lean towards IJS (S&P 600 Small Value) or EEM (Emerging Markets)

I also like DUK for its div and steady performance, but I think the way for a small investor to hold it is through their exceptional DRIP program.
__________________
JPatrick is offline   Reply With Quote
Old 02-16-2010, 12:16 PM   #12
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Houston
Posts: 14,832
Quote:
Originally Posted by Looking Ahead View Post
Son called Vanguard. Minimum to open targeted retirement fund is $3,000.00. They advised him he is eligible to roll it to the STAR fund. It has a -2.17 YTD.
Sure - I wasn't suggesting that he put it in STAR, just interesting that STAR is the only VG fund that has a $1,000 minimum.
__________________
Retired in Jan, 2010 at 55
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 02-16-2010, 12:29 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
bbbamI's Avatar
 
Join Date: Dec 2006
Location: Dallas 'burb
Posts: 8,720
In regards to PG, I hold some in my 'hormonal' individual stock portfolio. I've always been happy with this stock.
__________________
There's no need to complicate, our time is short..
bbbamI is offline   Reply With Quote
Old 02-16-2010, 03:34 PM   #14
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 1,954
T Rowe Price will accept rollovers of $1200 or less
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is online now   Reply With Quote
Old 02-16-2010, 03:36 PM   #15
Dryer sheet aficionado
Eladio's Avatar
 
Join Date: May 2008
Posts: 38
Take a look at VTV.

It's an etf, exchange traded fund, that has three things going for it:

Value tilt
Low expense ratio
pays somewhat of a dividend

It's a good core holding, and I've owned it for several years.

Eladio
__________________
Eladio is offline   Reply With Quote
Old 02-16-2010, 03:44 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,487
My son's small IRA (he is a college student) is in VG Star fund. It has worked well for him I expect he will leave it alone for the next 40 years or so. Had this fund since his high school job 4 years ago.
If you don't have a lot of money the VG Star fund is actually a good choice as well as the default choice for low valued VG funds.
__________________
“There are only two ways to live your life. One is as though nothing is a miracle. The
other is as though everything is a miracle.” - Albert Einstein
yakers is offline   Reply With Quote
Old 02-16-2010, 04:08 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 5,422
Another plus at fidelity is the ability to automatically reinvest dividends for free on almost all ETF's.
__________________
Recently retired at 33. Loving it so far! Wife is still working for ~1 year. I'm secretly just a stay at home dad with 3 kids (1, 7, and 8) but don't tell anyone.

Money is the Root of All Good.
FUEGO is online now   Reply With Quote
Old 02-16-2010, 04:27 PM   #18
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,320
Quote:
Originally Posted by Looking Ahead View Post
Any thoughts on buying Duke, PG, and Eli?
I hope that's not in the spirit of "diversification". Another option would be to buy ETFs which hold those stocks, or their sector ETFs. Fidelity is in the process of going to commission-free trading on iShares ETFs, which would make them just as affordable as most of the mutual funds.

If you're not going to diversify then go for the ultimate in concentration: "B" shares of Berkshire Hathaway... and a library card to borrow a copy of Bernstein's "Four Pillars".
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 02-16-2010, 11:10 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Location: Los Angeles area
Posts: 1,330
PG is a long time favorite of mine, and is (by a small margin) my largest holding.
I have never been a fan of utilities - DUKs long term dividend growth is under 3%.
LLY is a kind of slow grower in its sector - I prefer JNJ or ABT for the long term.
__________________
learn, work, save, invest, fire
CyclingInvestor is offline   Reply With Quote
Old 02-17-2010, 10:42 AM   #20
Dryer sheet wannabe
 
Join Date: Oct 2008
Posts: 17
If you're not going to diversify then go for the ultimate in concentration: "B" shares of Berkshire Hathaway... and a library card to borrow a copy of Bernstein's "Four Pillars".
----------------------------------------------------------------------
Stating the obvious, my learning curve has been steep, and I know it is hard to believe but I do have a library card that I use for other purposes besides checking out the latest best sellers. Admittedly, my attempt to self-educate myself on the world of investments has so far been an embarrassing failure.

Thanks to all who have so graciously replied, your advice is sincerely appreciated.
__________________

__________________
Looking Ahead is offline   Reply With Quote
Reply

« CT | CAN SLIM model »

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Just picked up a nice LDC monitor Bimmerbill Other topics 11 03-20-2009 02:57 PM
Just picked up my old Atlas Shrugged book..... cardude FIRE and Money 40 03-07-2009 09:19 AM
My Pocket Just Got Picked boont FIRE and Money 31 04-09-2008 08:26 AM
Picked my own pasture Kitty Life after FIRE 92 04-04-2006 01:18 PM
Who picked age 65? mickeyd Other topics 28 05-25-2004 04:20 AM

 

 
All times are GMT -6. The time now is 02:03 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2014, vBulletin Solutions, Inc.

Early Retirement News right to your Email!

Stay up-to-date with all the latest news to your inbox!

unsusbcribe at anytime with one click

Close [X]