I’m swamped today, so here are some posts from the past that fill requests from my suggestion box:
My 401k to IRA Rollover Decision Process
Part 1 – Stay put with old 401k?
Part 2 – Roll over into Fidelity?
Part 3 – What about Vanguard?
Part 4 – My Final Decision
Although this was done two years ago with my previous job, I think it still contains a lot of pertinent information. Note that Vanguard has since gotten rid of their low-balance fee if you accept electronic delivery of statements.
Also, since then there are now brokers that have free ETF trades, most prominently Zecco Trading (no minimum balance, $30 IRA annual fee) and WellsTrade ($25,000 minimum equity, no annual fee).
About Prosper.com – Person-to-Person Lending
Prosper Lending Review, Part 1: First Looks
Prosper Lending Review, Part 2: The Numbers
Prosper Revisited: Will Returns Drop As Defaults Increase Over Time?
I’m still not sold on Prosper’s risk/return characteristics to consider it a prudent part of my investment portfolio, but it can certainly be a fun diversion if you like that sort of thing.
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I’ve gotten my first couple defaults/late payments. While I think there’s probably opportunity there, I find it not worth my time. I don’t enjoy looking at loans all that much. I would rather research stocks….
I have a Roth IRA and regular IRA in TD Ameritrade (about $5000 total), but I don’t know what to do with it to place it in an interest earning area. Any ideas? They’ve not generated any money really for several years.
Did you look at Wells Trade for your IRAs?
You mention wanting to do ETFs but being worried about the commissions, at Wells Fargo you get 100 free trades a year…
TW, what are your retirements accounts invested in?
It was in a default TD money market I think for years not earning anything, I recently put it in a emerging markets fund and the total dropped $200 (due to fees ?? I don’t know why) or so but is slowly creeping back up to my original amount with the market going up a bit. I just want to find a fund or something that will generate steady amounts I suppose. Not just $0.17 a month that the money market was doing.
JT – That wasn’t an option back then, but that’s a good point. I edited the post to reflect this.
TW – It sounds like you should spend some time and learn about long-term investing. May I suggest starting here for some suggestions and my experiences.
TW, it really depends on your situation. I recommend you read up on asset allocation a bit.
If you want an off-the-cuff recommendation, decide how much you want to invest in stocks. If you have at least 30 years before retirement, that should be about 95%. Of that amount, invest 50% in an index fund or ETF that matches the S&P 500 (VFINX or IVV), 25% overseas (VFWIX or VEA), 25% domestic small cap (NAESX or VB). Invest the remaining 5% (not invested in stocks) in a money market fund. Rebalance about once a year to try to maintain this allocation. If you have less than 30 years before retirement, the common advice is to invest a portion of your portfolio in bonds ( VBISX or BSV ). This should increase over time, until by the time you retire, about half of your portfolio is in bonds. Bonds do not return as well as stocks, but they are less risky, and the idea is to take more risk when you are younger, and reduce the risk over time as you get closer to your retirement date. You should stick to your allocation regardless of market conditions, and try to use funds that have the lowest fees.
I listed Vanguard mutual funds and ETFs as examples, because they are widely considered to be good choices due to low fees.
You really should read up on this, though. Investing for Dummies or Charles Schwab’s Guide to Financial Independence are good books on the topic that are easy to read.
I used to be pretty rosy on Prosper as just a fun thing to do. But after the Bankruptcy and some late payments, I think it’s not so fun anymore. Looks like I am going for about a 7% return so far but I highly suspect it’s going negative really soon.
dong, Melvin – I would have to agree with you guys. I did actually open a Prosper account in order to give it a go, but with my strict lending standards have had about 5 failed bids. Right now my money is still just sitting there.
“It sounds like you should spend some time and learn about long-term investing.”
Reading the posts that you suggest don’t help since it is too general advice (which i’ve read before anyway) and not what i’m asking for in this case. I’m not trying to day-trade with IRA money.
My dilemma is that I earn 6% or more in online savings with non-retirement money, but the $5000 in IRAs that I have earned next to nothing in the past several years (fraction of a percent?). I figured some readers here may have a short list of funds or some alternate money market account at TD if there is one such that would earn more than $0.17 per month they’d care to share with me for small IRAs. If it is some big secret where to put $5000 at TD, then I could post my email addy for someone to send me advice.
This site promotes savings in IRAs, just trying to find out why IRAs are so great if they don’t generate any interest. My 401k at Vanguard is just fine, but i’m not so familiar with TD Ameritrade.
TW – IRAs are for retirement, right? So unless you are really old, why are you trying to figure out how to put it in cash? Over long periods of time, the return on cash after inflation is zero. The only way to get a real after-inflation return is to take real risk, in the form of stocks and bonds. That is what we are gently trying to tell you.
If you really must have cash, I believe TD Ameritrade has what is called the Total Asset Plan which offers a variety of higher yielding money market funds. There is no secret, if you just want to call TDA up I’m sure they can help you. Alternatively, move your IRA to a bank that offers high yields.
Finally, I’d read up on the recent news of the TD Ameritrade database hack, in case they really did lose Social Security numbers.
I don’t know what you mean by saying that I want to put an IRA into cash. I want to put my IRA money in good place for when I retire.
TW – when you open an IRA, you can put your money in any type of fund you choose: eg. stocks of mutual funds. If you are getting only $0.17/mo then the assumption is that you have invested in some kind of cash investment or that the stock/mutual fund you chose is a loser. Seriously, you can get 5.25% back even in a cash account like eloan.com. I dont know the rules at TD but you should be able to buy a Vanguard fund there as well. My suggestion is to go back and look what exactly have you bought in the IRA – my bet is you’ll be surprised. You may have just opened the IRA and not invested in a fund thus leaving it in cash as Jonathan presumes.