Cover Image for TAKE YOUR TIME


Phil Town
Phil Town

Many of you write in asking how to roll over your retirement plans. Here's a question from Kay:

Hi Phil,

I am a nurse at a local hospital with a 401K and a 403B plan.  I have a 14% payroll deduction every two weeks.  The funds are managed by Fidelity. I have yet to see a 10% return.  I have given myself 6mo to become a real rule #1 investor.

I have a paper account at MSN and am making money!  When I get the guts to jump in what is the best strategy to get my $130,000.00 out of Fidelity and into the stocks I pick.

I am currently looking at AZN, COST, TJX, CHS, RCL and of course the controversial NW staple, SBUX.

Other info-- I am 59.5 yrs old and want to retire ASAP, so I can go rafting too.

I am rafting the Deschutes and the Wild and Scenic Rogue this year.  I like paddling my own IK.

Thanks for your help and input,

Kay H.

My response:

Great question:

First thing I gotta ask: Are you getting matching funds at work for that 14%? 

Probably not.  I'm guessing at best they match a bit of it. And if they don't match any, it's time to see if you can roll it over and still stay employed. 

If you can, roll it to a regular IRA.  If you try to roll it to a Roth you are going to get a whopper of a tax bill, and that would not be a good thing. Even better, see if your 401k plan admin person will open a window into the Fidelity online trading site so you can invest in whatever you want within your 401k. It's totally within their power to do so, but you must demand it of them.

In any case, once you get the money where you can invest it, do not jump right in with all of it until you are totally solid with Rule #1. I do NOT want to see you take any risk. 

To put that in perspective, one totally probable market move sometime in the next few years is going to put the S&P 500 at about 8 times earnings.  It's around 18 right now.  That's a long way down or a long way sideways.  Either way, no hurry, right? 

Take your time.  Be patient.  Practice and study your picks like they are the only means of income for your family for the next 100 years.

And nothing wrong with SBUX that I can see!

Now go play!