Naive Investor - help

I'd prefer someone who admits that they are a novice as opposed to someone who is a broke day-trader. If you were the day trading type, I doubt that you would be in the great position that you are in right now.

Take the advice of that rabbit and don't leap before you look. Holding off for 3 or 6 months isn't going to make that big of difference. With that kind of money, you want to make sure that you do the right thing once you make your move.

I am not hearing anything about retirement accounts here. That is job number one -- contact your HR people, TODAY, and set up your retirement options, and fully fund them. If you don't have retirement options at work, then see your banker or broker.

My suggestion is to read the book Financial Planning For Dummies. Despite the name, and hey - you are not a dummy - it is very good book written by someone who is top notch in this field. The bottom line is that no one cares as much about your money as you do, and pretty much everyone else just wants to take it away from you. You have to be able to tell what makes sense, and what is a rip-off.

Once you have this background, then we can talk turkey.

-john-

I agree with John.

Frank

John Weeks gave some good advice.

Issue 1) learn your retirement options

such as a) 401k b) 457 c) 403b d) SEP IRA e) Roth IRA f) traditional IRA

My preliminary advice is to "save 10%". Meaning set aside 10% of your gross income to a retirement account. If you work for a private company, this is often a 401k plan. If you work for the government, it would not be a 401k.

Regardless of employer you qualify for a traditional IRA (whether or not contributions are deductable is another issue). If your income level is less than 150k, you might be eligible for a Roth IRA. Pros and Cons to each, but choosing one or other to help you save for retirement is a good thing.

Part of issue is knowing what choices are in a 401k... and how to choose among those choices.

[prettymuch, "what John said"]

Except that I'm pretty sure he means "Personal Finance for Dummies" by Eric Tyson. Which I recommend here all the time.

In short, there's nothing wrong with cash in the short term. Take your time, do some reading and then, only then, pull the trigger and invest it.

BTW, if your cash ("savings account") is not earning 5%, move it to a bank that pays decently, or to a good money market mutual fund.

First, I agree with what everyone else has said.

As to the two choices you've presented above, well, there's no easy answer. Rental property can be lucrative, but I think it takes more knowledge and time to be successful at landlording than it does at buying a few mutual funds or something. I've tried being a landlord myself, and personally I hated it. It was basically another job. You could hire a management company - however, that just eats up return. But that's just me - others here have had a good go of it.

-Will

well it depends. If you are in a short term CD getting a little over

5% that may not be that bad.

Buying a rental property is also investing. Which is best depends on a lot of factors.

You are not going to get specific advice here that's good. There are just not enough information here. So I would suggest spending a little money on some education. Start with a general financial planning book. Jane Bryant Quinn is a good writer in this area.

Thank you guys a LOT..

As for the company 401k, I participate as much as I can, however because the company breaks some qualifying 'rule' they are severly limiting my 401k contribution... only about $5k a year... that's why I want to find the best 'route' for the other money which I'm doubting is my regular old bank savings account's interest...

JACK

PS. are the 3 mutual funds I listed any good? (thanks for the advice on the book... I will definetely get it)

Thank you guys a LOT..

As for the company 401k, I participate as much as I can, however because the company breaks some qualifying 'rule' they are severly limiting my 401k contribution... only about $5k a year... that's why I want to find the best 'route' for the other money which I'm doubting is my regular old bank savings account's interest...

JACK

PS. are the 3 mutual funds I listed any good? (thanks for the advice on the book... I will definetely get it)

Simplest is "target year funds". Decide what year you may need money for house, childrens college, retirement, etc. Then let the fund determine appropriate asset mix for safety. They may be buying more stocks than you would predict.

Note that the "target retirement" funds really are directed at saving towards retirement, where you will be withdrawing the money over a long period of time after the target date, than for saving for other purposes and withdrawing the money all at once on the target date. Such funds might indeed be buying more stocks than you would predict (or that you'd consider prudent), if you are trying to use them for shorter-term savings goals instead of retirement.

-Sandra the cynic

Particularly if you are under 40, the increase in life expectancy is also something you have to think about. Life expectancy has been increasing at a torrid pace of late (I don't have the exact figure, but at the moment, a British male of 65 is gaining something like 2 months of life expectancy, every year he lives).

Your life expectancy could be as much as 5 years longer than what you might think, now. Inevitably, this means as a society we are going to have to retire later, on average. Symptoms of this include lower annuity rates available now than a few years ago (also because interest rates are lower, but that too might be a sign of aging in the developed world-- an increased preference for 'safe' assets).

So definitely don't target retiring before 65, and I would argue for someone in their 30s now, who is in good health with no life- shortening conditions, 70.

The difference between having a portfolio last 30 years and 35 is minimal in terms of withdrawal rate or conversely, the targeted lump sum needed. With the OP being 37, and having a decent start (although his profile is incomplete, no mention of 401(k) or his income level), I'd suggest his goal be a 'normal' retirement, early 60's. FWIW, on a log scale, with level investments (as a percent of income) and a goal of 20X final income saved, at 37, one would have 4X their annual income in their savings/retirement accounts. I posted this spreadsheet at

for those who wish to download. It's pretty rudimentary.JOE

In one of his responses on this thread, he says he does participate in his

401k. However, he appears to be one of those highly compensated employees (?) and is limited to annual contributions of $5k. I believe this is why he's looking for direction on his post-tax money.

Elizabeth Richardson

FPPTX is FPA Capital, calling itself a small value fund, it has 37% in cash and 3.5% in bonds so