I’ve been reading quite a bit in this sub forum lately in an attempt to avoid having to post my own thread, but I’m hoping you guys can steer me in the right direction. I have a 401k from my most recent previous employer (managed by ADP) that I need to do something with and I’ve been considering opening my own account with a company such as Vanguard (I see them constantly mentioned in this forum), rather than simply rolling it over into my new employer’s 401k which is managed by Mass Mutual. From my reading here, it seems that this would be a better option as it affords more control and options on my investing if I am understanding this all correctly.
My current employer keeps a financial advisor on retainer for the company’s employees use and I spoke with him recently. Of course he proposed taking my ADP 401k and opening an account with him at Edward Jones as an option as opposed to just rolling into the new Mass Mutual 401k, but I am not sure I like that option just based upon my layman’s knowledge as I’m sure there’s some additional costs and risks with letting him play around with my money. Of course if I’m wrong, I’d like to know that as well.
Reading around here it seems as though opening my own account with someone like Vanguard is the generally accepted recommendation, but I am unsure how that all works. Also, even though I know there are never any guarantees with any type of investments is there any more risk/reward with going with something like Vanguard over just rolling into the new 401k at work? With the previous ADP 401k I am invested in a target date fund although earlier this year I did move 15% of my balance to a more aggressive fund. If I go to Vanguard, what should I be investing in there? Would it simply be another target date fund or would the recommendation be to go with one of the S&P or total stock market index funds I see you all talking about?
I also have an IRA account with John Hancock that was converted from a traditional 401k I had with the employer before this most recent one. That one was created about 4 years ago when I left that company and converted it to an IRA, and I do not contribute to it. My thought was to maybe leave that one where it is to have a little diversification- is that a good thought? To complete the picture, at my new employer I am contributing 12% to the Mass Mutual 401k and the company is giving me a 4% match, for a total of 16%.
I appreciate any guidance and explanation that might be offfered here. I do have a basic understanding of investing but am nowhere near the knowledge level that I read from some of you here. I just would like to know if a Vanguard or similar account provides any kind of advantage over simply pooling everything into my target date fund 401k, and if so how I go about setting it up. Also, anything I should be aware of that might affect me from a tax or accessibility aspect would be good to know. Although I don’t foresee any reason I would need to access this money ahead of retirement, there is always something that could come up. After going through a rough divorce a few years ago I am a single guy renting an apartment, but I suppose that one day I might want to look at a townhouse or something and may need to access some of these funds for a down payment. This is something I am very on the fence about, as I am not so sure that as a 44 year old guy with no kids to leave anything to there is much of a reason to sign up for a mortgage at this point in my life. In that regards, I have not made any final decisions yet but probably should consider how handling these funds would affect their accessibility if needed down the line.
Thanks for taking the time to read this and I look forward to reading some thoughtful and helpful posts.