Divorce money - How to invest it?

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trblemaker
Posts: 9
Joined: Tue Sep 05, 2017 4:12 pm

Divorce money - How to invest it?

Post by trblemaker » Tue Sep 05, 2017 4:31 pm

Emergency funds: Three to six months of expenses - yes
Debt: None
Tax Filing Status: Single
Tax Rate: 25% Federal, 0% State
State of Residence: NV
Age: 47

Current retirement assets

401k Fidelity
$10k
Fidelity 2040 Target Fund
Company match - yes

Roth IRA at Scottrade
$50 k in account
Don't know fund

Rollover IRA at Scottrade
$25k in account
100% Royal Caribbean stock

Contributions

New annual Contributions
$13,669/yr 401k (3% employer match I think)
No annual contributions right now Roth IRA
No annual contributions right now, Rollover IRA

Questions
1. I just got divorced and am about to receive low-mid six figures from his 401k (based on a qualified domestic relations order) that I need to roll over to an IRA - I don't know where to roll it over to and then what to do with it in terms of how to build a portfolio. My ex did all the investing.
2. My thoughts on the rollover is to leave it at Fidelity (where the money is sitting right now), move it to my Scottrade rollover account, or move it to a new Vanguard account - What do you think?
3. Based on my inexperience with investing and the 2 week timeline I have to do the rollover, I was thinking of investing for now in a target date fund, which is how I have my 401k set up - What do you think?
4. Should I hire a fee-only CFA or CFP to help me out right now?
5. How the heck do I learn enough to do this on my own? - I am reading the Boglehead Guide to Investing

I appreciate your assistance!

BanditKing
Posts: 534
Joined: Tue Oct 29, 2013 11:11 pm

Re: Divorce money - How to invest it?

Post by BanditKing » Tue Sep 05, 2017 8:12 pm

For now, I'd put it into a Target Retirement fund. Simple and clean.

I'd also merge the IRAs together for simplicity and once merged, put them all into the same Target Retirement fund. Can you roll them to your 401k (assuming it's a good plan). I also don't like that hugely concentrated stock position and I'd liquidate it and put it into your TR.

The next step is to develop your Investment Policy Statement and then you can modify your portfolio per that.

I don't necessarily see a need to keep anything at ScottTrade unless you want specifically work with them. Move it all to Fidelity.

Simplicity, especially in this time of change in your life, is a good thing.

sambb
Posts: 1920
Joined: Sun Mar 10, 2013 3:31 pm

Re: Divorce money - How to invest it?

Post by sambb » Tue Sep 05, 2017 8:33 pm

Rollover into vanguard target 2030 or 2035, and look at it at age 60-65, you will be fine.

Elbowman
Posts: 456
Joined: Tue Apr 03, 2012 2:25 pm

Re: Divorce money - How to invest it?

Post by Elbowman » Tue Sep 05, 2017 8:33 pm

If all of your retirement money is in tax-advantaged accounts (Trad IRA, Roth IRA, 401k, etc.), Target Retirement funds are great options. They are a diversified mix of stocks and bonds, which is important. The other important factor is cost, which you want to keep low. To this point, Fidelity offers two versions of their Target Retirement funds, one active and one passive. In the 401k you may not have many options, but in the IRAs be sure to get the passive one! Unlike what you've been taught in the rest of life, in investing you get what you don't pay for.

aristotelian
Posts: 3399
Joined: Wed Jan 11, 2017 8:05 pm

Re: Divorce money - How to invest it?

Post by aristotelian » Tue Sep 05, 2017 8:45 pm

It doesn't matter where the money came from - his, hers, divorce, whatever. It is now your money. The question is whether you are willing to take the time to learn to manage your own money. The fact that you are coming on this site is a very good sign.

Fidelity and Vanguard are both good. Target date fund is a great idea.

You might start with reading William Bernstein's "If You Can", a great little intro to DIY investing.
http://efficientfrontier.com/ef/0adhoc/2books.htm

I think your first move should be to liquidate the Royal Caribbean stock and invest the Scottrade IRA in a diversified mutual fund.

delamer
Posts: 3456
Joined: Tue Feb 08, 2011 6:13 pm

Re: Divorce money - How to invest it?

Post by delamer » Tue Sep 05, 2017 8:52 pm

You may only have 2 weeks to do the rollover, but you can take as long as you need to educate yourself about investing.

Your idea to roll it over into an IRA at Fidelity makes sense, since that where the money is being held now. It should make the process easy. You can always move it later once you are better informed.

Using a target date fund also is fine for now, as you said. You could just put the money into a money market fund for now too. You can move the money to a different fund at any time within an IRA with no tax consequences, so it doesn't matter so much where you start out as where you end up.

You really don't need a professional to help you, as long as you are willing to take the time to educate yourself. However, if you'd prefer some help for now, Vanguard has an inexpensive advisory service you could check out -- https://investor.vanguard.com/financial ... ce?lang=en

If you decided to use the Vanguard service, Vanguard will handle all the paperwork to move your money from Fidelity (and any of your other accounts) to them.

trblemaker
Posts: 9
Joined: Tue Sep 05, 2017 4:12 pm

Re: Divorce money - How to invest it?

Post by trblemaker » Wed Sep 06, 2017 11:39 am

Thank you all for your great advice! Much appreciated for this newbie!

neilpilot
Posts: 1266
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: Divorce money - How to invest it?

Post by neilpilot » Wed Sep 06, 2017 11:51 am

BanditKing wrote:
Tue Sep 05, 2017 8:12 pm

I don't necessarily see a need to keep anything at ScottTrade unless you want specifically work with them. Move it all to Fidelity.

Depending on the amount, you would get $300-$1000 in cash bonus if you move it to Scottrade. The bonus, if it goes into a new or existing IRA, will be tax free. You can check, but I don't think Fidelity has a similar bonus.

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djpeteski
Posts: 351
Joined: Fri Mar 31, 2017 9:07 am

Re: Divorce money - How to invest it?

Post by djpeteski » Wed Sep 06, 2017 1:09 pm

trblemaker wrote:
Tue Sep 05, 2017 4:31 pm
2. My thoughts on the rollover is to leave it at Fidelity (where the money is sitting right now), move it to my Scottrade rollover account, or move it to a new Vanguard account - What do you think?
I would consolidate at Vanguard or Fidelity. Most on here prefer Vanguard being that the namesake ran the company. However, I prefer Fidelity. Both are really great companies and have no fees.
trblemaker wrote:
Tue Sep 05, 2017 4:31 pm
3. Based on my inexperience with investing and the 2 week timeline I have to do the rollover, I was thinking of investing for now in a target date fund, which is how I have my 401k set up - What do you think?
As others have said, that is a perfectly acceptable choice. The target funds do what this site teaches: Asset Allocation.
trblemaker wrote:
Tue Sep 05, 2017 4:31 pm
4. Should I hire a fee-only CFA or CFP to help me out right now?
Please don't.
trblemaker wrote:
Tue Sep 05, 2017 4:31 pm
5. How the heck do I learn enough to do this on my own? - I am reading the Boglehead Guide to Investing
Target funds for now, read the book then make a decision from there. Check in here before you make a move if you need more confidence.

Bonus:
I really dislike that you have so much tied up in Royal Caribbean stock. Right now it is over 25% of your portfolio and after the influx it will still probably be too high. I am not sure what
trblemaker wrote:
Tue Sep 05, 2017 4:31 pm
low-mid six figures
is in actual dollars, but assuming it is about 250K, it will still be around 7%. If it was me, I'd sell all but a couple of hundred shares and put the proceeds also in a target fund.

I'd keep the 200 shares as you get some nice benefits of sailing with RC and being a stock holder.

mhalley
Posts: 5316
Joined: Tue Nov 20, 2007 6:02 am

Re: Divorce money - How to invest it?

Post by mhalley » Thu Sep 07, 2017 10:21 am

If you decide to go with Fidelity and a TR fund, remember Fidelity has two types, the Freedom Funds (relatively higher expenses, actively managed) and Fidelity Freedom INDEX funds (low expense, passive management). Fidelity makes it a little harder to find the INDEX funds, which are the ones you want.
https://www.fidelity.com/fund-screener/ ... Type&exp=1

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