AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
I have recently changed jobs and am planning to roll-over my 401K either into a traditional IRA or my new company's 401K (I was not aware that this is possible but they informed me it is). Can you tell me the pros/cons of putting the money in either the new 401K versus an IRA.
Also, my new company's 401K offers what they call retirement funds which are investments that are combinations of stocks and bonds in a proportion that provides the typical risk/return for a given retirement year (mine is "Retirement 2035") and is adjusted automatically based on the time remaining to retirement. Can you tell me the pros/cons of investing in these?
Thanks you,
Ed Howland
Answer Dear Ed:
There's an easy answer.
If your new employer offers a match, go with it. If your new employer contributes to your 401k, say yes. Don't turn down free money.
Otherwise...an IRA always gives you more choices. Does your new employer's plan offer Dodge & Cox International? Fairholme? Fidelity Leveraged? In other words, unusually good choices?
Go to a library and check Morningstar Mutual Funds, the newsletter. Look at its list of Analyst Picks. Are a goodly number of them being offered by your new employer's 401k?
Since you have 30 years till retiring, you might consider a Roth IRA if you do go the IRA route. Pay taxes now rather than in the future.
Those all-in-once funds you mention are usually a wonderful opportunity for ordinary investors-- depending on what's in them. If you are an inexperienced investor, you might put a good chunk of your portfolio in them -- providing that you decide to go with your new employer's 401k.
