They’re all good places to keep your investment accounts. They all offer advisor services as well, should you ever need to speak with someone down the road. I personally have a Fidelity account (3, actually - a rollover IRA, Roth IRA, and a beneficiary IRA) - it’s free to set up, they have zero-cost mutual funds, and have a very usable website. They also have an office near me should I ever need in-person assistance with something. Vanguard and Schwab have very similar offerings. It’s my impression that Schwab handles higher-difficulty level trading (options and such), and they’re a little more aggressive in pushing their advisor services.
They’re great because they’re advice-neutral. They’re not going to try to sell you anything, or push you towards any particular solution. And they’ll be strong on the basics - time horizon, asset allocation, risk tolerance, types of risk and various investment vehicles.
I love my Vanguard account. They started the first index fund for individual investors back in 1976, and have led the way with low fees. That being said, if you’re a timid investor who needs a lot of hand holding and reassurance, along with the low fees comes slow customer service if you need to talk to a person.
I’ve seen some complaints from the folks on the Bogleheads group, where you should absolutely be looking, about long wait times for speaking to an advisor. I haven’t experienced this, but I’m one tier up from where you’d be starting, so I theoretically have a “special telephone line”, plus I talk to people a couple of times a decade, so hold times are not really that burdensome.
As far as books go, you can’t go wrong with anything written by John C. Bogle, beginning with Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns.
You can put a lot of work into it if you like, but you really don’t have to. Once you assess your risk tolerance and the length of time before you need the money it’s pretty easy. Look into something called a three fund portfolio.
I’ll second this. The Bogelheads forum has a vast collection of posts on just about every investing topic someone getting into investing could be interested in.
A second forum that is useful is the Mr. Money Mustache forum. Again, a large community of posters and archived posts. Note that the Bogelheads and the MMMer’s have different philosophies and goals giving each place a certain flavor, but you can find useful investment/money/retirement information at either place.
For small investors like us, active account management is almost never a good idea. The very best way for small investors to maintain and grow their accounts is to buy no load, low fee, broad based market index funds or ETFs and just let them sit. If you hire an investment manager and he/she is any good, after setting up the portfolio they won’t mess with it hardly at all but they will charge you an annual fee for sending you newsletters & other BS you can live without. You can do this as well or better than they can (honest!) since they really don’t know much more about the financial future than you do.
The very wealthy (multimillion$ or more) investors use account managers because 1) they can afford it and 2) the US gives very attractive tax breaks and incentives to the uber-rich and the high powered accountants know how to find and exploit these advantages.
The Dummies book & Bogleheads are good recommendations; also check out the Motley Fool website for their basic advice (though I would ignore their stock picks).
OK, Dummies book on order from the local library and I’ll check out the others.
I also have a TD Ameritrade account left behind by my late spouse. I honestly haven’t done much with it. Not sure if I should close it down or not. Or maybe roll what’s in it into something else at that firm.
A Roth IRA is likely your best bet in general - assuming your income is below the limit for contributing to one. The advantages are 1) you will NEVER pay income tax on anything you take out of it, and 2) with certain restrictions, you can tap into the principal without penalty.
The general advice on savings is:
Contribute enough to workplace savings to get the maximum employer matching, but no more - typically that will be 6% of your income. This means you don’t leave any “free money” on the table.
Contribute as much as you legally can to external plans (e.g. that Roth)
Contribute as much as you legally can to the workplace plan. That’s likely going to be a lot more than you can afford - the limit is well over 20,000 a year now (given the after-55 catchup rule that lets you save an extra 5K a year).
4( Save as much money as you can in other places (e.g, your regular savings account, an index fund, etc.)
I gather you’re in your late 50s. This means the “withdraw without penalty” is less of an issue since you can start withdrawing money from IRAs etc. at age 59 or so.
The advisor can also talk about options for your 401(k) and also your individual investments. The general rule of thumb is to base the type of investment on how soon you’re likely to need the money. For example if you are planning on paying for a car, a down payment on a house, or whatever in the next few months, you’d be advised to keep more of it in a regular savings account (FDIC insured) vs the stock market.
There are also mutual funds which have a mix of investments based on target date - and move the investments among classes based on that date. Something targeted at 2020 would have a higher rate of cash or bonds versus stock, while something targeted at 2040 would be the opposite - that’s because of the “how soon you’ll need it” logic.
Does your workplace plan have a Roth option? A Roth 401(k) is just like a Roth IRA - except with the higher contribution limit, and of course your money is stuck in their plan until you leave that job. Not all emlployers do, though mine (and my husband’s) both do. We’re personally using a mix of that and traditional, because we need the tax savings of pretax contributions right now, but we also want to take advantage of the Roth option. We’d be doing all Roth if we could.
The main advantage(s) of an individual account versus the workplace account are a) you have full control over where the money is invested, and b) you can withdraw from it (if needed) without leaving your job. The advantages of the workplace account are that you can (if the plan allows) take a loan and repay it from your future earnings, if needed, and also such accounts are protected from lawsuits etc,. while an IRA may or may not be depending on your state.
Is that an IRA-type account or a regular investment account?
If IRA, as a spouse you can basically treat it (for tax / withdrawal purposes) just as if it was your own IRA - so you could leave it as is, merge it with your own, etc. This is as opposed to an IRA inherited from someone else - eg. money from my mother’s IRA has to be taken in annual installments (I get about 800 a year from it).
If it’s NOT an IRA, treat it as any other investment / savings vehicle. You could even use it to make your own IRA contribution. Someone at TD Ameritrade will be happy to help you with the logistics of that, especially if you’re rolling it into one of their funds.
This is how my work 401(k) is structured. You tell them what year you plan to retire and they chose the investments. The only thing you can do is change that date. So if the system defaults, to, say 2025 as your retirement date (it assume 65 unless you tell it otherwise) but you plan to work until 2035 you can change the date to that, but beyond that you really have no other options.
Stocks. Not a lot there, either. But I can do whatever I want with it.
TD Ameritrade has a bunch of educational stuff, too, which I am going to be studying in the near future.
I think the question is more of what type of account is it. The big brokers like Ameritrade, Fidelity, Schwab, etc. allow you to purchase stocks as well as mutual funds, ETFs, etc. within various kinds of investment accounts. So your former spouse’s account could have been an IRA, a Roth IRA, a non-qualified account, etc.
Well, THAT’s annoying!! I would have expected them to offer such a plan as one of their options, with others as well (e.g. bond funds, index funds, etc.).
It is NOT an IRA, Roth IRA, or anything like that. He bought a few stocks because he wanted to learn about trading them. I’m not sure what else I have to tell you to convince you this was NOT a retirement account. At all. He bought a few shares of stock and spent some time trading them.
I haven’t done much with the account since he died. When I check in the value might be a little up or a little down but it sort of orbits around the value it was at when he died, between $350 and $450.
I work in a glorified grocery store. A significant number of my co-workers didn’t finish high school. Even some that did are not, shall we say, the most functional of people. There is at least one that is functionally illiterate, and that’s not taking into account those officially diagnosed as intellectually challenged. Anything more sophisticated would be lost on them.
Meanwhile, those of us with a little more capability tend to max out the matching then find other vehicles for investment. As I am now doing.
It doesn’t actually matter what kind of account it is. I just jumped in to point out that “it’s just stocks” didn’t answer the question - and if you started this thread to learn more about investing and retirement accounts, then it might be helpful for you to learn more about what sort of investments can be put in various types of accounts.
Some of these companies have monthly or annual fees on accounts below certain thresholds, so it’s possible that between that money and the new investments you plan to make, you might reduce or eliminate those fees. So I recommend consolidating your investments at one company (and even perhaps any money you have in the bank).
First, congrats on getting to the point where you have extra money. I remember how hard the past years have been for you.
Since you have an accountant who does your taxes, I would talk to them about financial planning, if you decide to go the CFP route, they may have a suggestion.
I’d personally avoid the CFP. Fees eat up a lot of the gains on stocks - including the fees the CFP will charge for advice - and you don’t have a lot of assets. I’d buy a Vanguard index fund and leave it there. As you get more money, you can diversify - but the vast majority of my portfolio is in the basic Vanguard fund. You could buy it through the Ameritrade account - look at the features. There is a chance you’ll lose money, but the stock market is one of the few ways to make gains doing very little that doesn’t require five or six figures. Otherwise, you aren’t going to get much more off of CDs than you would in a savings account, but that will be the safest place if you’ll need it in the short term (say five to ten years).
I strongly agree with those who advice against going the CFP route. In fact, I think any CFP who would take as a client a really small-time investor, when this is so clearly inappropriate, has a good chance of being the type of scamster that you’re best off avoiding in any event.
That’s not to say that a CFB has nothing at all to offer a small time investor. But almost all of it is the type of generalities you can get yourself for free by just reading up about it, and the fees as a percentage of assets would be exorbitant.
CFPs are for people with big bucks, who have complex investments and investment strategies, and who have the ability to absorb the costs.
Speaking from my position as a non-expert, if I had a few thousand dollars of savings, I would look for something FDIC insured and leave it at that, low returns and all. Anything else - including index funds - is risky at this time, and if you have that small an amount to play with, you’re best off with something risk-free. JMHO.
Makes sense - and I think that occurred to me after I posted.
Sometimes even more edumacated people don’t take advantage of it. I remember a couple decades back, having a conversation with a co-worker who said he just hadn’t bothered to sign up for our 401(k), I was flabbergasted. This was not at a grocery store - we were in the consulting division of an accounting firm.