What to do with old 401k

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grosx2
Posts: 2
Joined: Mon Feb 12, 2018 11:30 pm

What to do with old 401k

Post by grosx2 » Mon Feb 12, 2018 11:46 pm

I'm new to the board, and investing in general. I have a 401k with Vanguard from my first job that I left almost 3 years ago. There's a little over $60k in the account.

Been reading up on my options for this money, wondering if anyone has some advice. Robo apps like Wealthfront and Betterment seem popular, any thoughts on those? I would prefer a hands off approach to investing. I could roll over the 401k into an IRA with one of them.

Or I've seen suggestions to leave your old 401k where it is, in which case I could open a new investment account somewhere. The traditional and Roth IRAs have a low annual limit, but it sounds like I may qualify for a SEP IRA? I am a 1099 employee that works for a small company with no employee retirement plan. Would a SEP be my best option?

A little more about me that may be relevant, I'm early 30s single guy, earned about $110k in 2017.

Thanks for any feedback!

Rom1b
Posts: 36
Joined: Fri Jan 05, 2018 5:34 am
Contact:

Re: What to do with old 401k

Post by Rom1b » Tue Feb 13, 2018 8:09 am

Hi grosx2 and welcome.

Your focus should be in my (and others..) opinion: low-cost investments, no middle man. Pay off debts, save as much as you reasonably can, invest much but reasonably.

Whats in your 401k exactly ? Id say keep it there, get more (from Vanguard or others).

Cant say about the SEP/IRA, perhaps somebody else.

I recommend these summaries here:
https://www.bogleheads.org/forum/viewt ... 10&t=88005

viewtopic.php?f=10&t=7353

Dr. bernstein's intro:

https://www.etf.com/docs/IfYouCan.pdf

I wish you success with your 'gross x 2'.. ? Id start with ~1,1 instead of 2 though, cheers
Dr Bernstein - If You Can / free PDF, google it | 3Fund Portfolio www.bogleheads.org/forum/viewtopic.php?f=10&t=88005 | CollectiveThought www.bogleheads.org/forum/viewtopic.php?f=10&t=7353

SloaneKerker
Posts: 2
Joined: Tue Feb 13, 2018 11:37 am

Re: What to do with old 401k

Post by SloaneKerker » Tue Feb 13, 2018 12:29 pm

The most important things is your asset allocation. what is it and where do you want it to be. Next, how will this $60k fit into that picture. I doubt that i would use robo advisors, as they will just go 50% in equities and 50% in bonds -- with adjustments depending on your age. if you manage it yourself, you maintain control. You may want to just keep it at Vanguard, perhaps a traditional IRA. A concierge adviser at Vanguard can review pro and cons with you about Roth vs. Traditional. If you convert to a Roth, there will be tax consequences. A balanced fund such as Vanguard balanced index or a similar fund, Vanguard Wellington are both good options. P.S. Vanguard advisers push index funds because of their low cost. And low cost is important. you'll keep much more money in your pocket over the course of a lifetime. Build your core portfolio first, then you can add on funds with more risk at a later date.

grosx2
Posts: 2
Joined: Mon Feb 12, 2018 11:30 pm

Re: What to do with old 401k

Post by grosx2 » Tue Feb 13, 2018 2:09 pm

Thanks for the links, lots of good info in there that I will need to read through.

Not sure what's in the 401k, it just says I'm in the "Blackrock LifePath 2050". Says my asset mix is 99% stocks, 1 % bonds.

Also not sure what my asset allocation is, or what I want it to be. I think that calling a Vanguard adviser is probably good advice.

Re: paying off debt, should I focus on that before investing? Current debt is $8k student loan at 4.5%, and $6k car loan at 1.9%. No credit card debt as I pay those in full every month. And no mortgage as I rent.

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ruralavalon
Posts: 14079
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: What to do with old 401k

Post by ruralavalon » Tue Feb 13, 2018 3:08 pm

Welcome to the forum :) .

grosx2 wrote:
Mon Feb 12, 2018 11:46 pm
I'm new to the board, and investing in general. I have a 401k with Vanguard from my first job that I left almost 3 years ago. There's a little over $60k in the account.

Been reading up on my options for this money, wondering if anyone has some advice. Robo apps like Wealthfront and Betterment seem popular, any thoughts on those? I would prefer a hands off approach to investing. I could roll over the 401k into an IRA with one of them.

Or I've seen suggestions to leave your old 401k where it is, in which case I could open a new investment account somewhere. The traditional and Roth IRAs have a low annual limit, but it sounds like I may qualify for a SEP IRA? I am a 1099 employee that works for a small company with no employee retirement plan. Would a SEP be my best option?

A little more about me that may be relevant, I'm early 30s single guy, earned about $110k in 2017.

Thanks for any feedback!
grosx2 wrote:
Tue Feb 13, 2018 2:09 pm
Thanks for the links, lots of good info in there that I will need to read through.

Not sure what's in the 401k, it just says I'm in the "Blackrock LifePath 2050". Says my asset mix is 99% stocks, 1 % bonds.

Also not sure what my asset allocation is, or what I want it to be. I think that calling a Vanguard adviser is probably good advice.

Re: paying off debt, should I focus on that before investing? Current debt is $8k student loan at 4.5%, and $6k car loan at 1.9%. No credit card debt as I pay those in full every month. And no mortgage as I rent.
An investing priority that often works well for many people without a work-based plan is:
1) pay off any high interest debt (a guaranteed high return, the next best thing to free money);
2) contribute the maximum to an IRA, Roth or traditional depending on eligibility and personal circumstances; and
3) contribute to a taxable account.

Please see the wiki article "Prioritizing Investments".

. . . . .

More information is necessary.

You can add this to your original post using the edit button, it helps a lot if all of your information is in one place. Please see the post "asking portfolio questions" for information needed and format.

About how much do you expect that you may be able to contribute to saving and investing annually?

Do you have an emergency fund?

What is your age?

What is your tax bracket, both federal and state?

What is your tax filing status?

What funds are offered in the 401k at your former employer? Please give fund names, tickers and expense ratios. Is there about account maintenance fee charged for you to leave the account there?

Are you an employee or an independent contractor in your current job?

. . . . .

"Asset allocation" refers to the stock/bond mix, and the domestic/international stock mix, that you want to aim for. Please see the wiki article "Asset Allocation" and the wiki article "Boglehead's Investment Philosophy".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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