If a 401K is a stock fund, does the principle of buy low apply? In other words, is there any difference as to when one rolls money over to a 401k?
That's very strange, but possible I suppose. All my IRAs allow me to invest in stocks, ETFs, mutual funds, CDs, and whatever. You can switch your IRA to a different custodian.I like the 401k because it is like a mutual fund account. I don't want to invest the money in individual stocks which is the only option i have in the IRA.
Since this is the same question you asked in November and again last month:
http://www.early-retirement.org/forums/f28/stock-ira-rollover-79597.html
I get the feeling you're just sitting on the fence. Not a very comfortable position IMHO.
Maybe some greater level of detail would get you better responses here?
Samclem, I really like my 401k (actually have 2) in that over the long term, they have increased significantly in value. I would be interested in another IRA that has a great rate of return. any suggestions? Thanks.
You are confusing IRA with the investments in an IRA. A 401(k) or an IRA is just a bucket or container for investments. You could probably buy in your IRA the exact same investments that are found in your 401(k).
So more details:
1. What are the possible investments allowed in your 401(k)?
2. Where do you have your IRA at right now? What financial institution?
3. What is your asset allocation plan?
4. What does your Investment Policy Statement say?
Just to clear things up, an IRA is not a thing you can invest in. It's just a type of account that has special treatment under our tax code. You can have an IRA account in your local bank that has CDs in it that earn 1% per year guaranteed interest, you could have an IRA account at a stock broker that invested in very risky Tunisian stocks, etc.
If a stranger on an elevator asked me for advice on setting up an IRA and I had 30 seconds to talk, I'd tell them to call/get online with Vanguard and establish an IRA account. I'd suggest that they use their money to buy a Vanguard Target Date Fund for the year closest to the year they intended to retire (e.g. Target Date 2045), and then leave it alone.
It's hard to explain, but the investment results of your company 401K may not be a good indicator that it's really a good 401K, and that the investments you're in are really a good fit for you. You'd need to know how well it has done compared to other alternatives, how high the costs are within that 401K, and what type of risks they were taking in order to get those results. I would >strongly< suggest that you find out a little more about that before putting >any< of your IRA money into your 401K, because you may not be able to get it back out again until you leave that job (it depends on the wording of your 401K agreements, but it;s usually the case that you cannot get it back out unless you terminate employment with that company). Don't jump into this move--folks here can help you understand if it is a good idea. But we'd need more information on your 401K plan.
Trust me--most people who have looked at this want to get their money >out< of their 401K plan and into an IRA once they understand the situation.
Roll money over to a 401(k)? Where is the money coming from? What is the money invested in now?
If the money is in cash, then buying equities (stocks) now is not a bad idea.
If the money is in stocks, then transferring into stocks is a very good idea.
If the money is in stocks, then selling to cash is a very bad idea I would think.
Basically, figure out an asset allocation and stick to it.
Same IRA account; different question. Yes, the sitting on the fence is painful, and I need to get off the fence sooner than later.
What kind of detail are you looking for other than what has already been provided?
Thanks.
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The biggest risk you have is you rollover, the market gains 10% and never retreats again. If it gains you could wait for some more volatility to invest lower and decrease your losses during the transfer/rollover settlement time period[/B][/B].
Youngster,Emphasis in Bold Added.
I guess the bolded portion I emphasized answers my original question, and says that buy low principle applies to a 401k stock plan. Thanks.