OK, I’ll give it a try:
It sounds as though your retirement is all or mostly in your company’s stock, and you’re concerned that you might lose it if something bad happens to the company.
It also sounds as though you’d like to move it “somewhere else” so that you don’t lose it all.
Your questions then seem to be “How do I do this, and how much is it going to cost?”
Now, the company holding your stock can supply you with the paperwork to roll it over into an IRA, which is probably what you want to do so that you don’t hit with a serious bite. I believe that when you roll over, you can request a check for the amount instead of the actual stock. I believe when I did this some years ago, the check was written out to me and the (new) financial institution holding my account.
Your (future) financial advisor will then take those assets (stock or check) and divvy it up into several buckets. In the previous example, the buckets were:
Bonds: (Basically, you lend a company, level of government, etc. some money, and they promise to pay it back with interest. Hopefully, the people selecting the bonds will choose high quality bonds that are not likely to fall victim to default.)
International Growth: These are probably stocks. Notice the relatively small percentage that the program said to invest. Typically, when a fund says “growth” it means there’s a little higher risk factor with it. Potentially, though, there’s a much bigger payoff over time. I also think that “International” can include US stocks, at least it used to.
Primecap: Not sure what this is. My guess is that it’s probably a mutual fund of some sector of large companies.
S&P 500: This is a list of 500 large companies representing a broad spectrum of US companies. The mutual fund invests in these companies. Note that this is was the biggest chunk of allocation.
And if you’re not familiar with a “mutual fund,” here’s the way I visualize it. Think of it as one share of a company, but that one share is made up of pieces of shares of lots of different companies (or bonds, as there are bond funds, too). That way, if you have $100 for example, and it was in Enron stock, you’d probably have nothing, now. However, if that $100 was invested in an “Energy Mutual Fund” that contained many energy companies, one of which was Enron, it might take a hit—but you wouldn’t lose it all.
A couple of more points:
Do not take investment advice from friends, relatives, acquaintances. What is a good strategy for them, is not likely to be the same strategy for you. That’s where the advisor comes in. Some are paid by the mutual fund in the fees that they charge.
If you decide to invest in stock or bond mutual funds (like those listed earlier), think about how much stomach you have. Are you going to freak out and panic when one day you look at your portfolio, and see it’s lost almost half its value? That does happen. And 20-30% drops from one statement to the next are not uncommon. Now, typically, most people just ride it out, since over time it catches up again, and will outperform interest-bearing savings accounts—over time. Some people, however, don’t want to ever, ever see that there retirement has gone down in value, and there are ways of accommodating them, too.
Here’s a good site for a lot of terms
http://www.investorwords.com/
