I’m a college student and I’ve got about $700 in a 401k from some random job I had over the summer. Since withdrawing the money would be pointless after fees and such, I’m looking to roll the funds over into an investment plan. I’ve only got the $700 to invest and I can’t promise any kind of regular contributions. I’d really rather not pay the taxes on what contrabutions I do make. I think a Roth IRA might be the best option, but the descriptions of various plans from investment firms are making my head spin. Plus, everything seems to be dealing in the thousands of dollars when my budget hinges on +/- $50 every month. I’m also recently married, but the hubby’s job offers no 401k. Would there be a way to include him in the investment, maybe with small regular contrabutions from his paycheck ($20/month)? Any ideas? Or can anyone point me in the direction of some non-spin info? Thanks.
Personally, I wouldn’t worry about it untill I got myself another job that has a 401k plan. Then go from there. $700 really aint’ squat when I comes to investing. I mean you could might have a little fun with it if it were just cash in your hand. That way you could sit in front of the tv or computer all day and do some day trading. But most 401K’s only let you move your investments once a day and that’s at the end of the day of trading.
And no, your Husband can’t contribute to your plan. Or at least I know my ex-wife couldn’t contribute to mine.
Actually, if all I had were $700 I’d probably just move it in to a high risk fund and go for broke!! Who knows? Ya’ might hit the jack pot!! 
The name tells it, Individual Retirement Account, hence you cannot have a joint account w/ your husband.
I would suggest you are on the right track in doing a rollover. Since you don’t seem to have much investing experience, I’d suggest a NO load mutual fund tied to the S&P 500 since that’s about as close to “send it and forget it” as you can get.
Meanwhile, hit your local library and pick out a couple of investment guide that look easy to understand. You’ll eventual want to invest in more than just a retirement account, so if you can develop an interest, it might make a very lucrative hobby/avocation.
BTW your $700.00 should grow into about $40,000.00 in around 40 years and your $50.00 a month should return around $3000.00 in a like period.
I’m not going to reccomend any specifics, but I’m sure you’ll find what you want at the library. That’s much better than asking the sellers for advice. Remember, “Investment Broker” is just a fancy title for salesperson, whether it’s used cars, encyclopedias, houses or stocks, they all get paid by commission.
Don’t fool w/ high risk stuff until you’ve educated yourself, and even then remember, it’s all a gamble, but some choices have much better odds than others. Slow and steady is the name of the winning game.
Thanks for the advice, A.R. Cane. I guess I’m getting too techno when I completely forget about the library.
The CrockPot method of investing is definitely what I’m looking for, so I’ll go research no load mutual funds.
Oh, and I appreciate the sentiment, SHAKES, but right now $700 is just too much money to roll dice on.
Thank you guys.
Go to vanguard.com and follow the links to set up a rollover IRA. Vanguard has low-cost mutual funds, which will work well for you, but as I understand their website, you’ll need to pay ten dollars per fund per year because the amount is so small. So invest the whole $700 in one mutual fund. Or if you’ve already got a bank account, see if the bank will let you set up a rollover IRA without any fee.
Sounds good, but don’t just concentrate on “No Loads”. You need to learn basic investment principles and strategies. I suggested a no load as a place to start. There are load funds that are very good, but you need to gain some experience an knowledge before your ready for that. There are other things to look out for aside from commissions, such as maintenance fees, transaction fees, ad nauseam. Start w/ investing basics and you will find the right path for you.
I wish you a prosperous and fulfilling life.
Again, marvelously sound advice. Thanks, A.R.
There is no reason not to have the Hubby roll $20/pmonth into a no-load IRA of his own. If you can afford it (or more) it is unimaginable to me that you will ever look back at that as a mistake.
BTW $700 in an IRA for 45 years (assumptions here: you are 20, retiring at 65, a 7% average return and never ever adding another cent) is $14,702 in a Roth - $12,818 in a regular IRA. Imagine the sum if in 5-10-15 years you could begin adding to that sum. Very smart of you to begin now – if you can afford it.
You’re very conservative at 7%. I believe, historically, it’s closer to 11%. For those interested here’s a site for the rule of 72’s: http://www.ruleof72.net/rule-of-72-learn.asp
Well define “conservative” maybe slightly - but I doubt any financial planner would tell a young person plan an 11% average return on a Roth for 45 years – do you?
The Economist looked at a Century worth of data I think 7% shows that it is a more true average return - altho most Colleges are going to use an 8.5ish number
Correcting for these factors, as well as using a full century of data, gives a wide range of equity-risk premiums, with Denmark at the bottom of the league and Germany at the top. Messrs Dimson, Marsh and Staunton estimate a global historical average equity premium, over bonds, of 4.6 percentage points (see chart). That is nearly half the widely received forward-looking estimate of 8.8 percentage points from Ibbotson Associates, a consulting firm, and the 8.5 percentage points taught in finance courses everywhere (chart 2).
I see where you’re coming from and we definitely want to start saving as soon as possible. It’s just hard to justify setting anything aside while we still owe on our credit cards. (We financed the large portion of our wedding.) I mean, what’s the point of earning 7% when the cards all start charging at 18%? The only reason we aren’t putting this accidental $700 towards the cards is because it would be so little money by the time it actually reached our hands.
I’ll concede that I’m on the optimistic side, but even using 8.5% would turn the $700.00 into about $30,000.00, twice your estimate. It’s a moot point really. An IRA in your 20’s is still an excellent choice, even if your periodic contributions are very modest.