first investing questions

[Snydley]

Hi-
Quick info- I'm 38, DH is 44. I've written some other posts about how we recently dumped our financial advisor and are now picking up the pieces. Here's what we've got going on:
(1) DH's 401K (Fidelity). 50K in there now and with company match he'll now be contributing ~2K/month.
(2) DH's IRA with Jackson Variable Annunities: currently worth 25K.
(3) My 403b: current balance $500, adding $342/month with University match (currently 100% invested in Vanguard SP index fund).
(4) My IRA with Chambers Street Properties: currently worth $9,000
(5) My ROTH IRA with Munder funds: currently worth $800
(6) An extra $650/month of income to put into ROTH IRAs. We plan to also save extra money to reach the max contribution of $5,500 each by next April.

QUESTIONS (numbered in reference to accounts above):
(1) DH's 401K is not currently invested. I was thinking of doing ~40% stocks and the rest bonds and cash, with that 40% invested in some type of SP500 index fund. Suggestions? Can he invest in a Vanguard fund even though the account is with Fidelity? Is Vanguard really the best?
(2) My financial guy moved his IRA to Jackson and I bet we are getting slammed with fees (cryptic website and when DH called they told him he is charged $35/year in fees only. Yea right.) There would be a surrender fee of ~$1,500 if we move this money now. Should we? And where to? Vanguard?
(4) This is another move of my financial advisor- move it? to where?
(5 + 6) It seems Vanguard ROTH's have the lowest fees but you need more money to get them started. Should I let this money pile up in a bank account and then start each ROTH once I have the $3,000 to get started? Move the $800 from the Munder fund there as well? Or is it better to start a ROTH with fidelity and not lose out on investing profits this year?

thanks!
Jen

[Petunia 100]

Hi-
Quick info- I'm 38, DH is 44. I've written some other posts about how we recently dumped our financial advisor and are now picking up the pieces. Here's what we've got going on:
(1) DH's 401K (Fidelity). 50K in there now and with company match he'll now be contributing ~2K/month.
(2) DH's IRA with Jackson Variable Annunities: currently worth 25K.
(3) My 403b: current balance $500, adding $342/month with University match (currently 100% invested in Vanguard SP index fund).
(4) My IRA with Chambers Street Properties: currently worth $9,000
(5) My ROTH IRA with Munder funds: currently worth $800
(6) An extra $650/month of income to put into ROTH IRAs. We plan to also save extra money to reach the max contribution of $5,500 each by next April.

QUESTIONS (numbered in reference to accounts above):
(1) DH's 401K is not currently invested. I was thinking of doing ~40% stocks and the rest bonds and cash, with that 40% invested in some type of SP500 index fund. Suggestions? Can he invest in a Vanguard fund even though the account is with Fidelity? Is Vanguard really the best?
(2) My financial guy moved his IRA to Jackson and I bet we are getting slammed with fees (cryptic website and when DH called they told him he is charged $35/year in fees only. Yea right.) There would be a surrender fee of ~$1,500 if we move this money now. Should we? And where to? Vanguard?
(4) This is another move of my financial advisor- move it? to where?
(5 + 6) It seems Vanguard ROTH's have the lowest fees but you need more money to get them started. Should I let this money pile up in a bank account and then start each ROTH once I have the $3,000 to get started? Move the $800 from the Munder fund there as well? Or is it better to start a ROTH with fidelity and not lose out on investing profits this year?

thanks!
Jen

Hi Jen,

1. Typically in a 401k, you are limited to investing in the mutual funds specifically included in your plan. Does your husband have a brokerage option? If not, do you know what investment choices are included in his plan?

2. In my opinion, it should be illegal to sell anyone a variable annuity in their IRA. There is no benefit to you whatsoever, and the fees are astronomical. If it were me, I would move it in a heartbeat. Yes, you will pay an early surrender charge. Do you know what that represents? It is the amount of money they would have made from you over the next several years if you had stayed. You are going to pay it one way or the other. Vanguard is an excellent choice.

4. Is this a self-directed IRA, investing in rental real estate? If so, is that what you want to do?

5. and 6. You can get started at Vanguard with 1k if you choose either a Target Retirement Fund or the STAR fund. If you can save $650 per month, then save for 2 months and open 1 Roth. Save for another two months and open the second Roth. From then on, split your monthly contribution between the two. When your balance is higher, you can switch to a different fund if that is what you want to do.

Oh, and yes, transfer that Munder fund in too. So really, Munder fund + 1 month and you are all set with the first Roth.

[MonkeyMama]

Agreed 100% with Petunia.

[Snydley]

Thanks Petunia100 and MonkeyMama!

"Typically in a 401k, you are limited to investing in the mutual funds specifically included in your plan. Does your husband have a brokerage option? If not, do you know what investment choices are included in his plan?"
I will look into this soon.

"In my opinion, it should be illegal to sell anyone a variable annuity in their IRA. There is no benefit to you whatsoever, and the fees are astronomical. If it were me, I would move it in a heartbeat. Yes, you will pay an early surrender charge. Do you know what that represents? It is the amount of money they would have made from you over the next several years if you had stayed. You are going to pay it one way or the other. Vanguard is an excellent choice."
How about I move it to the Vanguard 500 Index Fund Admiral Shares(VFIAX). I've been reading that index funds are the way to go.

"4. Is this a self-directed IRA, investing in rental real estate? If so, is that what you want to do?"
My financial advisor moved it to real estate. I now realize he was just sticking our money where he would get the biggest commissions. I have no interest in funding the creation of more strip malls and Best Buys. I should just move this to Vanguard as well.

"5. and 6. You can get started at Vanguard with 1k if you choose either a Target Retirement Fund or the STAR fund. If you can save $650 per month, then save for 2 months and open 1 Roth. Save for another two months and open the second Roth. From then on, split your monthly contribution between the two. When your balance is higher, you can switch to a different fund if that is what you want to do.

Oh, and yes, transfer that Munder fund in too. So really, Munder fund + 1 month and you are all set with the first Roth."

Perfect- I will do exactly this. Thanks!!

[Petunia 100]

You're very welcome, Jen.

I notice that you have a lot of money in the S&P 500 now and that you plan to add more. That is a great way to own large US companies. However, I think you should at least consider also owning some mid/small US companies and foreign companies.

And yes, I am a fan of investing via index funds/etfs too. A lot of folks in these forums are.

[feh]

You're very welcome, Jen.

I notice that you have a lot of money in the S&P 500 now and that you plan to add more. That is a great way to own large US companies. However, I think you should at least consider also owning some mid/small US companies and foreign companies.

And yes, I am a fan of investing via index funds/etfs too. A lot of folks in these forums are.

Both Vanguard and Fidelity have total market funds that would fit the bill here. For Fidelity, it is FSTVX.

OP - since you are leaning toward Vanguard and see the benefit of index funds, I suggest you visit the Bogleheads forum to ask these questions. Not that the advice you've received here is incorrect, but there are many more folks over there that will be willing to help you get things in order. First thing you need to do is create an asset allocation and then decide where to hold the funds.

http://www.bogleheads.org/forum/index.php

[DKdon]

[QUOTE=Petunia 100;352673]Hi Jen,



2. In my opinion, it should be illegal to sell anyone a variable annuity in their IRA. There is no benefit to you whatsoever, and the fees are astronomical.

Best point made on this board 100% agree

But make sure you fully understand that surrender change. Is it something that will go away in the near future? Because once you make the move you are 1500 behind and correct me if I am wrong but you will need an addtional 6% on 25k to erase that fee. It would be a shame if you moved it one year before the charge exspired.