Expert: Paul Henneman - 10/18/2005

Question
Hello,
I am 26 and have been investing since I turned 21. I have a 401k plan through my company, which I have been investing in since I was able to. I also have a Roth IRA, I buy savings bonds each month, and I also invest in a mutual fund through Edward Jones. I recently cashed some of the savings bonds and would like to invest them in a fund that I can let sit for many years.
Also I was interested in a rollover of my 401k if I ever decide to leave my current company what would my options be to me? What would be in my best interests as far as financial institutions to roll over into?
Are there any good websites, or books that can help me be a more informed investor?
I hope that I have given you enough information. Any help would be greatly appreciated.

Thank you for your time,

Carl Foust


Answer
Carl,
  Thank you for your question! Congratulations on thinking about, and more importantly, taking action to begin investing so early. You will have a very prosperous future in the coming decades to be sure.
   I think you are right on target with everything that you are doing. My only suggestion is that you are fairly conservative. A good stock portfolio will outperform your current investments in the long run. It is true that you could also experience some ups and downs in the short term. As your investments grow, I would suggest putting 10 to 20% of your overall worth into something a bit more agressive, such as a stock portfolio.
  It sounds silly, but the best source I know of to really get a good handle on most of the investment options out there is "Investing for Dummies". It also provides sources for more detailed information on any of the topics should you wish to dig deeper. It will provide an excellent foundation for you.
   If you left your current company, and started work somewhere else that also has a 401k program, you could move your 401k program to the new job with little problem. It would all work the same way, altough the new job will have different investment options for the funds in the 401k, which you will have to research and make some decisions on. If your new position does not have a 401k plan, you could either cash it out and pay the penalty to put it into an IRA (I do not suggest this due to the pentalty), or just let it sit in its current form and grow. You will not be able to add to it unless at some point in the future you begin working for a company that does have a 401k plan again. But it could remain as is and grow tax free.
  Some good websites: www.morningstar.com for mutual funds. An index fund is the best way to park some money for it to grow over the long term without much attention from you. www.motelyfool.com for all sorts of information and chat rooms on stocks and mutual funds. finance.yahoo.com for all sorts of data and information on any stocks and mutual funds you are interested in. If you do decide to create a stock portfolio, www.foliofn.com has the most inexpensive trading service I am aware of. You can trade up to a 50 stock portfolio for only 19.95 a month, which is a fantastic deal.
  Everyone should have 3 months of emergency money available to them in a quick to access location. I use www.Netbank.com, and have it in a money market. You can access through an atm card that they issue, but the funds will earn interest. Netbank has one of the highest returns on money market accounts I have seen, it is only 3 percent but that is much higher than almost any other source.  
  Most importantly, stay away from debt! Credit card and car debt the two main reasons why most americans are not properly prepared for an early and prosperous retirement. If everyone would buy an average instead of luxury car or suv, and simply save up to buy expensive things instead of using credit cards, they would be much better off.
  I hope this helps! Please do not hesitate to follow up with me if I can offer anything more specific,

Best Regards,
Paul Henneman
President
ValuEngine, Inc.
www.ValuEngine.com
www.VEInstitutional.com
(800) 381-5576