Make $500 By Rolling Over Your 401k In To An IRA

If you’ve ever switched jobs and contributed to a 401k plan, chances are you just the old plan at the old company. Unless of course it was under $5,000 and they told to take it with you!

I have 2 such 401k’s that are currently orphaned. If both the companies went bankrupt, I’d have to jump to a lot of hoops to get my money back. It wouldn’t be impossible, but it would be an unnecessary  hassle and waste of time. Better to liquidate the positions and transfer the cash in to what’s known as a roll-over IRA. Or if you’re not planning to work in the year of the transfer, you might opt to convert it into a ROTH IRA because you’d be in a lower tax bracket and wouldn’t much taxes on the conversion.

The difference between a regular IRA and a ROTH is that in the first one you pay no tax now, but pay taxes on withdrawals in retirement. In the ROTH, you pay tax now, but you withdraw your money later totally tax-free. Of course, there are income limitations governing whether you can participate in a ROTH so check with your tax person.

Currently TDAmeritrade is offering $500 if you transfer the assets of your old 401k into a roll-over IRA. That’s a pretty good incentive to money my retirement money out of their existing home. I think the offer code is 164, but you should double check for yourself. I wonder if they’d pay me the $500 twice, since I’ll be transferring two accounts?

Looking at CGMFX

Its that time of year, where you should be looking at your investment portfolio, assessing your performance, seeing what you did right or wrong and if any part of it needs to be rebalanced.

Its also a good time to assess your tax liability and see if you can (or should) be funding your Roth IRA for last year. Typically, if you’re in the highest tax bracket, you cannot invest in a Roth IRA. It also doesn’t make much sense, since when you retire you might be a lower tax bracket. But in any case, you should be investing in a regular IRA. Up to certain income levels you get a tax credit for these contributions, so its definitely worth more research. You can invest up to April 15th for last year’s contribution.

You might also want to take a look at your life insurance and see if it still meets your needs. You may have had a life event which requires you to modify it.

Since I’m expecting to go to business school in the Fall, I want an evenly balanced portfolio and preferable a no-load Mutual fund with low fees. Typically, you’d chose several funds to balance out your portfolio. I already have a few country-specific ETFs that I’ve short-listed, but I also want a little bit in a fund that’s a bit aggressive and willing to go short if conditions permit.

After some research, I think I’ve found a pretty decent fund which suits my investment mindset. Here’s a snippet from there July 2007 semi-annual report:

CGM Focus Fund held major long positions in the oil service, metals and mining and engineering industries at quarter end. The Fund’s three largest long holdings were Open Joint Stock Company ‘‘Vimpel-Communications’’ ADR, Potash Corporation of Saskatchewan, Inc. and Schlumberger Limited. The Fund was also approximately 8% invested in stocks sold short at June 30 (percentage of total net assets). The short positions were in financial services and regional banks. The three largest short positions were Countrywide Financial Corporation, Indymac Bancorp, Inc. and Fortress Investment Group LLC.

CGMFX returned a whopping 80% in 2007. Except my BHP Billiton, Anglo American and Petro-China shares, most of my portfolio didn’t come anywhere close to these returns. Don’t know if it’ll continue to produce these stellar returns, but so long as Ken Heebner is the fund manager I think it will.

The 35th Carnival Of Money Stories

Welcome to the 35th edition of the Carnival of Money Stories. This edition is pretty big with 50 entries, so pour yourself an extra-large cup of hot cocoa and sit down for some serious reading.


Reggie presents Why Money is Debt – Part 1 posted at Reggie, the black kid with good credit.

Millionaire Mommy Next Door presents What Would You Do? saying “Sleepless in Seattle” and her husband have acquired a substantial debt load and are considering whether or not to sell their home, pay off their debt and rent. They love their house, but they are tired of living on the edge financially. She asks, “what would you do?” .

Ted at Campus Grotto provides a Student Loan Consolidation FAQ saying I just recently consolidated my student loans. Here is what you need to know to ensure you don’t get scammed.
Eric at A Penny Closer laments Ahh, How I’ve Missed Consumerism…

James at Payday Loan Cheapskate presents How to Escape the Payday Loan Debt Cycle.

Linsey Knerl presents Confessions of a Former Payday Loan Junkie posted at Wise Bread.


Living Off Dividends presents Why Low Interest Rates Are Bad For You, while wondering If Its A Good Time To Invest In Milk!

Thomas Humes presents Simple Habits That Lead To Wealth posted at Wealth Building World saying Wealth creation is a combination of rules and habits. Here’s the number one rule, if you want to be wealthy, its not how much money you earn, its not how many cars you drive, it is how much you can save and invest and that’s the key.

The Dividend Guy presents 5 Things Dividend Investors Should Do To Make It Through Volatile Markets posted at The Dividend Guy Blog.

Matthew Paulson presents How to Plan for Retirement If You Don’t Get a 401(k) or a 403(b) at Work posted at American Consumer News.

Market Poetry presents Ode to All Struggling Value Investors posted at Market Poetry.

The Skilled Investor presents Where’s Waldo? – The illusion of superior professional mutual fund manager performance, saying The effort to find those few supposedly superior money managers willing to sell their services sufficiently cheaply is a costly, time consuming, and futile, “Where’s Waldo?,” searching exercise for the individual investor. Many money managers will claim to be superior and few or none actually will be. If such superior money managers did exist, then there should be dozens or hundreds of them who prove their superiority year after year after year. Unfortunately, the scientific finance literature indicates that this is not the case. This year’s star money manager tends to be next year’s average or laggard money manager.

Living Off Dividends wonders whether the fact that Even Supermodels Don’t Want Dollars is an indicator that The US’s Economic Strength Is In Permanent Decline?


Phil presents I moved to Indianapolis for the money! posted at Queercents, saying One day, Phil and his partner went to Indianapolis to look at some properties and it dawned on them. Indy was a lot less expensive than Chicago. Could they live here? .

My Wealth Builder presents Our Journey To Financial Freedom #7 – How Luck Played A Role.


Christine presents GoogleAds, Keywords and Website Content: Making Money Online Using Web Content, Keywords and GoogleAds posted at Me, My Kid and Life: An American Single Mom Living in France.

Mr Credit Card presents Digital SLR Camera Shopping with Reward Points (Ask Mr Credit Card’s Blog) posted at Ask Mr Credit Card’s Blog.

Doris Chua presents Are Loans Good or Bad? posted at Home Office Women.

Kyle James presents Frugal or Cheap? – When To Spend The Extra Money posted at Blog discussing the things in life that are worth spending a little extra money on in order to save money and time in the long run.

Wealthy_1 presents Bill Me Later posted at collectingmycash.

FIRE Finance presents FREE Land & Handsome Living Allowances! posted at FIRE Finance.

Pinyo presents I Just Saved A Bunch Of Money On My Insurance posted at Moolanomy explaining how he saved money on my home and car insurance by switching.

Paidtwice presents Experiments in Frugality: Disaster Number 2 posted at I’ve Paid For This Twice Already….

FMF presents Internships are Great for Your Career/Life posted at Free Money Finance.

Nivek presents FSA End Of The Year Spending Spree posted at Money Clipped.

Ashley presents Graduating Without a Full-time Job Lined Up posted at College of Cash.

Mark Runta presents Open A Door posted at Smart Investing & Money Management saying Switch off the TV, get off the couch and do it.

The BagLady presents My First Holiday with a Huge Family posted at the baglady.

Stephanie presents They’re Out to Sabotage My Plan posted at Stop the Ride!.

Glblguy presents 1 Year Ago Today – 10 things we’ve done to regain financial control posted at Gather Little By Little.

Cashmoneylife presents I Bought a New Car, and Why it Was Good Idea For Me posted at Cash Money Life.

Kevin at Satellite TV Guru presents How to Get Satellite TV if You Have Bad Credit.

The Digerati Life presents The Financial Task I Dread The Most.

Raymond at Money Blue Book warns about How I Got Scammed By a Seller On Alibaba.

The Happy Rock wonders when Do We Earn The Right Not To Budget?

Becoming & Staying Debt Free presents How to Become a Stress-Free Shopper, saying Have you ever gone into a store with the intention of only buying one (1) item and you walked out with several bags full of stuff? I can remember one time back in about 1990, I carried a cart load of groceries for a customer. Her husband and kids were waiting in the car. The first comment that was made when the door was opened was, “I was going to say, if you had to milk that cow.” It is a comment I have heard my own dad say when I was younger to. I knew instantly, that she had said she was just going to grab a gallon of milk. Instead she did her weekly grocery shopping.

Christine at Me, My Kid and Life presents Film vs TV, Why We Opted to Turn the TV Off, plus Frugal Tips for Movie Buffs, France on the Cheap: Traveling in France for less than $200 per day for Two – Traveling Cheap in Europe, and The Exchange Rate – The Euro vs The Dollar – The Declining Dollar.

The Dough Roller presents How To Find Healing From A Deep Financial Wound, saying Many of us have been hurt over money. Here’s my story and how I’ve coped for the past 30 years.

Jason at A Bankruptcy Lawyer’s Blog presents Five Top Alternatives To Personal Bankruptcy, saying If you are considering filing for personal bankruptcy, stop, think and consider the following.

Allen at Investing World Today presents Business Investment Strategies That Work Every Time : The secret to investment success is the consistent application of time-proven strategies, not the use of complex, hard-to-understand investment vehicles created by investment bankers out to take your money!

Madison at My Dollar Plan presents My Personal Story: Background, Taxes, First IRA : My introduction to money, working, taxes, and retirement accounts has all influenced where we are today and how I handle money.

Thomas at Wealth Building World presents Money Doesn’t Grow On Trees, saying How is your money flowing? How are you feeling about money? What do want in relation to money? Do you think about how much you have, or don’t have, often? What kind of statements were made about money while you were growing up? Why is it that people who have a lot of money can make it so easily and those who don’t have it, continue to go without?

Matt at How I Will Be Rich offers advice for increasing your pay at Make More Money at Your Day Job.

The Frugal Duchess presents How I’m Conquering My Bag Lady Fears: My 10-Step Program saying, What keeps me up late at night? In addition to worrying about past mistakes and my kids and my work, I worry about becoming a bag lady. And I have plenty of company; a lot of women (and I imagine some men also) have secret fears about living on the streets without money or sanity. Even Oprah and other successful women have ‘fessed up to bag lady fears.

Goodbye Cruel Job!

Tomorrow is the last day at my job. I gave my notice 2 weeks ago.

No, I don’t have another job lined up.

No, I didn’t win the lottery.

No, I don’t have a back-up plan or any idea what I’m going to do next.

So why am I quitting? 

Because I don’t feel 100% committed. Not being fully committed isn’t fair to the company and it isn’t fair to me. Life is too short to be working at a job that you don’t love and aren’t willing to commit 110% too.

Besides, working for someone else will rarely make you rich. One of the reasons is that you get paid for the number of hours you put in. Having a finite number of hours is your limiting factor here. As an employee, you also pay the highest amount of tax since you have almost no tax deductions unlike business owners and the self-employed.

So I think the best option is to quit the job and refocus my long term goals and strategies. The best way to do this is when you’re totally relaxed and in a good mood. So in early December I’m going to Thailand and India for about 5 weeks.

Once I get back, I should be in a more clearer frame of mind to plan the next stage of my working career. I’m very keen on getting an MBA. It may not be the smartest decision financially, but its one of the things I’d definitely regret not pursuing.

Not having a job will free up my time to pursue other ventures. Like investing and writing about investing. And like MoominHouse, I may even take up trading as a side hobby.

My only concern is that either boredom or insecurity (about not having a steady paycheck) will set in and I’ll go back and get a job again!

In the meanwhile, I expect to make approximately $1,200/month from advertising revenue, trust deeds and dividends. While its not a lot, the wife’s income will supplant the short-fall. But it looks like I’ll be going from a job to literally “living off dividends!”.

Wish me luck!

How Does Your 401k Compare?

I have a 401k from a previous employer. With only a dozen mutual funds to choose from, it doesn’t have very many investment choices. I’ve done the best I can from these choices and have selected 8 of them, with 75% of my 401k invested in just 3 funds. And I’ve managed to eke out a very respectable 17.4% for the first 3 quarters of the year.

On the flip side, my 401k with my current employer has about 3 dozen options. However, there’s less diversification amongst them than with the previous employer! It lacks a REIT fund (not that I’d invest in it, since I’m heavily invested in Real estate on my own), a health care fund, and a technology fund.

Instead, some moron set it up with 4 bond funds, 2 small-cap broad market funds, 2 small-mid cap value funds, 2 small-mid cap blend funds, 4 mid-large cap equity funds, 4 mid-large cap value funds, 3 international funds, and so on.

So despite the wide selection of funds, they’re less diverse than the 401k with only 12 options. Instead of choosing the fund with the least management fees, the lazy (or maybe inept?) administrator just included 3 or 4 similar funds so the participant can make his own decisions.

And despite having so many options, I only managed to make 14.05% in the current 401k for the same time period, which is basically a reflection of the broad market indices minus the management fees.

Sometimes fewer, more well-thought out options are better!