I need pointed in the right direction, I want to quit my job and head back to school and look for other work.  I am looking for something to roll my 401k into after leaving the company.  I'm also looking for some investment advice for some other money, something relatively stable and paying out enough to beat taxes on my earnings and inflation.   I am 28 years old so I can afford to be a little risky, however I don't really have other employment lined up yet.  I will probably find part time work in a field not related to my degree to pay my bills in the meantime.

How much would you set aside for an emergency fund, money that you can have access to right away in case of emergency?  

6 months living expenses.  (all your montly payments) should be in your emergency fund.
You probably just ahd a heart attack and fell over, but it's true.  And having that kind of cash give syou all kinds of options.  Just keep it in a money market and let it sit there and don't ever touch it.

Roll your 401k into a IRA at any one of the big mutual fund companies.  (T Rowe Price, Vanguard, Fidelity, etc), whichever one fits your style of investing.  Also put the money market with teh same people.  It simplifies taxes and record keeping a lot to have one fund company hold all your investments.  (gets you better customer service too.  1 person with 200k they care about, 10 companies with one customer with 20k each, none of them care about)

I think the amount of emergency fund is a personal choice that depends on if your spouse works, if you have kids, what else you owe, where your invested money is, etc.  I keep 1 to 2 months, but have no credit card debt, we have other investments (balanced fund) that can be tapped easily, we have decent equity in our house.  That and it just kills me to see a big chunk like think getting such a low return.

That emergency fund gives you so many options.  And saves your a$$ when teh job market goes splat.  1 to 2 months isn't enough.  What is the stock market is down and you have to sell when it's down (and then you'll have to pay taxes on it).
Cash is King, the rest can go be agressive.  If you don't keep a bunch of cash, you can't be as aggressive.
Just MHO

Set your own standards before working for 7-10bucks a hr to survive. Suzei Ormans a show. I repeat a>>> show. I could live in parts of AZ for 10k a yr, Not BOS or NYC though Money markets funds are for investing when things go under .....like CSCO @7bucks, or the like.

Gentlemen, your advice is greatly appreciated.  I really haven't had much time to do much of anything right now.  I did check on my 401k and it is doing quite well, I wen't ahead and upped my contribution to 8% plus the companies match of 4%.  I shouldn't notice it much on my paycheck and my bills are getting paid, if all goes well I should be able to quit by my target date.  Right now it looks like I will have close to 120k by the end of the year,  between my 401k and the other money.  

I just don't feel like I know enough about investing to jump head first into the stock market.  Low risk sounds best right now at least until I do some more research and talk to a broker or the like.  I do realize that 2 and 4 percent  at the bank isn't going to do me any good in the long run, not when my 401k is getting 10 or 12 percent.  Obviously there is an associated risk with the investments that do better than what the bank can get a person.  However doing the research and soundly investing seems the best bet in my opinion.

I found out about a job I qualify for that may be available soon.   Not the greatest pay in the world but great for the area, and I'll have  a place to stay cheap for as long as I need.  If all goes well I can make the transition smoothly.

Treasurydirect.gov.

Ladder the 28-day and 91-day T-Bills.

Better terms than CD's and more liquid.

Regarding 401K rollover. I rolled mine toa Lefavi Financial IRA. Bruce Lefavi has a nationally syndicated radio talk show, "Bulletproof Your Financial Future" and a few books. Toll free number for my account is 1-800-422-9997 I don't know if this works for other states.  I had been with Fidelity with $178K, THEY DO NOT MANAGE, they only sell you stuff. The key is management. I have been with Lefavi for 5 years. They took my account to bonds before the dot com crash. On his show he had predicted the crash. Two weeks after 9/11 my account was only down 5.2%, I still finished the year up 12%. This wasn't a fluke. Last year market was only up 1.24%, my account was up 16%. And before you follow the "Vanguard, T.Rowe Price, Fidelity, other no load garbage" read the many research articles on managed versus no loads. I tried no loads and got nothing. I wasted 3 years.

T-bills don't even beat inflation. You pay a lot in wasted time for that alleged guarantee. I say alleged because let's say the banks go under, for theat FDIC guarantee, money won't be worth anything in this scenario. So why waste the time you could have growth?

My allocation from a nationally ranked firm is:
25% Small cap World-American Funds-SMCWX
25% Growth Fund of America- American Funds-AGTHX
10% Large Cap value-Franklin Templeton TESIX
20% Emerging markets-New World Fund-American Fund-NEWFX
20% EuroPAcific-American Funds-AEPGX
I also have 3 etf's: Brazil Fund, India Fund, Korean Fund

My account last year was up 16% in a flat market. Year to date 2006 is already 11%. I sure hope I haven't jinxed anything.

One rule I live by in investing my money is, if the guy comes across as a SALESMAN, I run! ALSO, CFP's may be in vogue, but CFP is a marketing concept. NOTHING can replace analysis experience.

Fidelity Sector Fund - Investment & Brokerage Svcs

Fidelity Stock Fund - Small Cap Value

2 of the strongest and most stable funds over the last 10 years... Even withstood the 9/11 market swing.

Fidelity has a very simple rollover program.  I've been seeing 20 -30% returns on my investments for over the last 5 years, but don't just take my advice for it.   See it for yourself.

Quoted: T-bills don't even beat inflation. You pay a lot in wasted time for that alleged guarantee. I say alleged because let's say the banks go under, for theat FDIC guarantee, money won't be worth anything in this scenario. So why waste the time you could have growth? My allocation from a nationally ranked firm is: 25% Small cap World-American Funds-SMCWX 25% Growth Fund of America- American Funds-AGTHX 10% Large Cap value-Franklin Templeton TESIX 20% Emerging markets-New World Fund-American Fund-NEWFX 20% EuroPAcific-American Funds-AEPGX I also have 3 etf's: Brazil Fund, India Fund, Korean Fund My account last year was up 16% in a flat market. Year to date 2006 is already 11%. I sure hope I haven't jinxed anything. One rule I live by in investing my money is, if the guy comes across as a SALESMAN, I run! ALSO, CFP's may be in vogue, but CFP is a marketing concept. NOTHING can replace analysis experience.

Hey smart guy, I'll be brief since your post is already self indicting....

1. You are wrong.  T-Bills are beating inflation.  Do you even know what the rates are?
Historical inflation
T-Bill rates
To be fair, usually this is not true, but the yield curve is inverted now so it is.

2. It's not an "alleged" guarantee.  T-Bills have nothing to do with FDIC.  Treasuries are the risk-free rate.  You're just ignorant, that's ok.

3. Growth is fine, but you're wrong to assume the poster wants that and wrong to assume fixed income has no place in person's portfolio.  He's looking for capital preservation to outpace inflation.

4. CFP is not a"marketing concept".  It's less focused on quant analysis than say a CFA, but then again a CFA is not expected to know current pension plan regulations, calculate retirement plan distributions or other financial planning concepts.

What!?? Treasuries are beating inflation? Pal, you're wrong. After inflation of 3%, and paying taxes on the crap return, you aren't investing, you are basically burying your money in the back yard. Plus, he's 28. He needs to get the growth while he can. Your telling a 28 year old to put his 401K in treasuries is the dumbest investment advice I've heard in a long time.

Just what are YOUR treasuries paying?

5yr bank Cds are paying around 4.9%. Banks buy t-bills (treasuries) from the fed, then mark them up to sell as CD's, RIGHT? So treasuries have to be less than CD's. on $100K @ 1.9% (after inflation) is $1,900 a year. NOT accounting for taxes. I hope he doesn't mind living in a box eating cat food in his retirement. Save the insults pal, you're out of your depth.

Quoted: What!?? Treasuries are beating inflation? Pal, you're wrong. After inflation of 3%, and paying taxes on the crap return, you aren't investing, you are basically burying your money in the back yard. Plus, he's 28. He needs to get the growth while he can. Your telling a 28 year old to put his 401K in treasuries is the dumbest investment advice I've heard in a long time. Just what are YOUR treasuries paying? 5yr bank Cds are paying around 4.9%. Banks buy t-bills (treasuries) from the fed, then mark them up to sell as CD's, RIGHT? So treasuries have to be less than CD's. on $100K @ 1.9% (after inflation) is $1,900 a year. NOT accounting for taxes. I hope he doesn't mind living in a box eating cat food in his retirement. Save the insults pal, you're out of your depth.

Feel free to address only one point.  Out of my depth (you mean league?)?  vs. you?  Why don't you get the adviser who sold you those A shares you boast about to post instead.  You're certainly paying for the advice.  Hey, don't get me wrong, American Funds are excellent.

Treasuries in a 401k? Where did you come up with that?  Read again and more carefully.
What are Treasuries paying?  Do you refer to the link?  Read again.
Allocation in Treasuries is akin to "burying money in the back yard?"  What?
Other Governments regarding inflation and taxes.
A 5 year CD?   Why would anyone want to commit to 4.9% for 5 years when 28-day T-Bill is at ~4.6%.

I'll repeat myself again.
You are right.  Treasuries are the risk free rate and so the implication is that CD rates should be higher .  However, given the current interest rate environment and no transaction costs to buy at Treasurydirect.gov, you will get a higher yield and more liquidity laddering T-Bills.  I never mentioned anything about a 5 year maturity.  Read more closely.

Readers of this post can decide who is making sense.  Good day.    

To the OP...

If this is getting too confusing for you, take these bits of advice...

Never seek financial advice from anyone who has a net worth lower than your own.

If someone thinks they have such a great strategy, they should be willing to show you they're portfolio to prove that it works.  I find that most people either greatly exagerate their financial situation or don't really understand it.  Either way, professionals get paid to help you.  Use a reputable company such as Fidelity, Vanguard, The Hartford, ING, Franklin, etc. and you won't go wrong.

Here's the funds reccommended by Gunrunner1

My allocation from a nationally ranked firm is:
25% Small cap World-American Funds-SMCWX
Last year up 16.5% this year up 10.18%
25% Growth Fund of America- American Funds-AGTHX
Last year up 14/2% this year 3.73%
10% Large Cap value-Franklin Templeton TESIX
Last year up 10.0% this year 6.17%
20% Emerging markets-New World Fund-American Fund-NEWFX
last year up 22.2% this year up 10.57%
20% EuroPAcific-American Funds-AEPGX
last year up 21.1% this year up 6.13%

The numbers in red are the fund facts as reported by Morningstar, the standard for investment research.
All of these funds have a 5.75% front end load.  That means you are only investing 94.25% of your original money.  As mentioned earlier, the "A" funds are sucker bets that brokers sell because it's a big payday for them, and they get it as soon as you invest.  I can not imagine how these funds could be part of a portfolio that is up 11% year to date with the returns shown by my research on Morningstar.  Get an account at Morningstar.com and do your own homework and LEARN how to invest in your future.  Brokers are in it for themselves, the more "Fees" you pay, the more money they make.  Why wouldn't they sell you the higher commission funds if you're naive?

I've made over 22% the past two years managing my own account, and year to date, I'm up around 7.5%  If you want my fund names, I'd be glad to provide them.

Advice is worth what you pay for it.  You've got the right idea about investing, don't line someone else's pockets trying to make money.  The typical broker cannot stay in business if he puts you in the highest return funds because they don't pay him anything.  Why would he sell you that?  They are looking out for number 1 first, and you second.

Quoted: Quoted: What!?? Treasuries are beating inflation? Pal, you're wrong. After inflation of 3%, and paying taxes on the crap return, you aren't investing, you are basically burying your money in the back yard. Plus, he's 28. He needs to get the growth while he can. Your telling a 28 year old to put his 401K in treasuries is the dumbest investment advice I've heard in a long time. Just what are YOUR treasuries paying? 5yr bank Cds are paying around 4.9%. Banks buy t-bills (treasuries) from the fed, then mark them up to sell as CD's, RIGHT? So treasuries have to be less than CD's. on $100K @ 1.9% (after inflation) is $1,900 a year. NOT accounting for taxes. I hope he doesn't mind living in a box eating cat food in his retirement. Save the insults pal, you're out of your depth. Feel free to address only one point.  Out of my depth (you mean league?)?  vs. you?  Why don't you get the adviser who sold you those A shares you boast about to post instead.  You're certainly paying for the advice.  Hey, don't get me wrong, American Funds are excellent. Treasuries in a 401k? Where did you come up with that?  Read again and more carefully. What are Treasuries paying?  Do you refer to the link?  Read again. Allocation in Treasuries is akin to "burying money in the back yard?"  What? Other Governments regarding inflation and taxes. A 5 year CD?   Why would anyone want to commit to 4.9% for 5 years when 28-day T-Bill is at ~4.6%. I'll repeat myself again. You are right.  Treasuries are the risk free rate and so the implication is that CD rates should be higher .  However, given the current interest rate environment and no transaction costs to buy at Treasurydirect.gov, you will get a higher yield and more liquidity laddering T-Bills.  I never mentioned anything about a 5 year maturity.  Read more closely. Readers of this post can decide who is making sense.  Good day.

I used the 5yr rate because this would be the highest rate. I used the highest rate to give your advise the most bang, and it still fell short. The original post was oriented on what to do with his 401K. He said he can afford to be risky. And A shares provide the best returns. Pay the load up front when the balance is the lowest. According to the NASD, B shares have been over prescribed, they feel that A shares are in the best interest of the investor.  And yep, after reading many articles regarding Load vs no load, Loaded fund, managed, perform the best. And, And, And, alright, "you are out of your league", does that sound better?

Quoted: To the OP... If this is getting too confusing for you, take these bits of advice... Never seek financial advice from anyone who has a net worth lower than your own. If someone thinks they have such a great strategy, they should be willing to show you they're portfolio to prove that it works.  I find that most people either greatly exagerate their financial situation or don't really understand it.  Either way, professionals get paid to help you.  Use a reputable company such as Fidelity, Vanguard, The Hartford, ING, Franklin, etc. and you won't go wrong.

Add American funds, and remove, Fidelity, Vanguard, Hartford, and ING. Hartford and ING are annuity companies. Annuities are crap investments. They don't have the true mutual funds, they use SUB ACCOUNTS that are supposed to reflect the mutual funds management style, but hardly ever match the performance. And you are paying for an insurance layer. If you want life insurance, buy term life insurance, not an annuity. Vanguard also has raised their fees.

Quoted: Here's the funds reccommended by Gunrunner1 My allocation from a nationally ranked firm is: 25% Small cap World-American Funds-SMCWX Last year up 16.5% this year up 10.18% 25% Growth Fund of America- American Funds-AGTHX Last year up 14/2% this year 3.73% 10% Large Cap value-Franklin Templeton TESIX Last year up 10.0% this year 6.17% 20% Emerging markets-New World Fund-American Fund-NEWFX last year up 22.2% this year up 10.57% 20% EuroPAcific-American Funds-AEPGX last year up 21.1% this year up 6.13% The numbers in red are the fund facts as reported by Morningstar, the standard for investment research. All of these funds have a 5.75% front end load.  That means you are only investing 94.25% of your original money.  As mentioned earlier, the "A" funds are sucker bets that brokers sell because it's a big payday for them, and they get it as soon as you invest.  I can not imagine how these funds could be part of a portfolio that is up 11% year to date with the returns shown by my research on Morningstar.  Get an account at Morningstar.com and do your own homework and LEARN how to invest in your future.  Brokers are in it for themselves, the more "Fees" you pay, the more money they make.  Why wouldn't they sell you the higher commission funds if you're naive? I've made over 22% the past two years managing my own account, and year to date, I'm up around 7.5%  If you want my fund names, I'd be glad to provide them. Advice is worth what you pay for it.  You've got the right idea about investing, don't line someone else's pockets trying to make money.  The typical broker cannot stay in business if he puts you in the highest return funds because they don't pay him anything.  Why would he sell you that?  They are looking out for number 1 first, and you second.

Draven, Ummmm, those "year to date" returns don't look bad to me. It's only March. And the original poster did say he would be a LITTLE risky. And the 5.75% is if you don't make the first break point discount. My $220K had an average UPFRONT fee of 3%. Get it straight, pal. Next you'll tell us that you ALSO predicted the dotcom bust AND a possible terrorism threat. The no loads didn't fair very well during 9/11 or the dotcom bust.

whs78, get a good manager, DON'T go to a publicly traded firm. Money managers want you to get a good return.

YES, please post the funds you are in.......this should be good.

Hey Draven, you forgot to post the ETF returns.....Because you're a "do-it-yourselfer", you probably don't know much about ETF's, MY money manager (they also manage money for many celebrities, pro-athletes, teachers, bus drivers, programmers, construction workers) told me about etfs. I couldn't be happier. This thread was supposed to offer insight to whs, right? You've given yours, and I've given mine.

And, what makes "smaller load"(they do have a load) cheaper? They aren't actively managed. Computer algorithims do the buying and selling ques. MATH. The market doesn't run on math, it runs on emotion. Only a human manager can guage this. Star Trek 101...

Quoted: Hey Draven, you forgot to post the ETF returns.....Because you're a "do-it-yourselfer", you probably don't know much about ETF's, MY money manager (they also manage money for many celebrities, pro-athletes, teachers, bus drivers, programmers, construction workers) told me about etfs. I couldn't be happier. This thread was supposed to offer insight to whs, right? You've given yours, and I've given mine. And, what makes "smaller load"(they do have a load) cheaper? They aren't actively managed. Computer algorithims do the buying and selling ques. MATH. The market doesn't run on math, it runs on emotion. Only a human manager can guage this. Star Trek 101...

Your parroting of what your adviser has told you is a pathetic attempt of passing off of what you think you know as advice to others.  I post here for the benefit of the forum, otherwise I know I waste my time.  Buy a membership and search my other posts.  I call BS and clarify facts for  financial poseurs like yourself all the time.  Hey, everybody is entitled to an opinion, but when financial advice is given based on ignorance of the facts, BS should be called.

Quoted: ..Because you're a "do-it-yourselfer", you probably don't know much about ETF's, MY money manager (they also manage money for many celebrities, pro-athletes, teachers, bus drivers, programmers, construction workers) told me about etfs.

The above statement alone tells all of us here you really have limited investment experience.

Here is another example of your poor advice I answered.  Thread

I'm done you with here.  You can have the last word in this thread.

Keep posting to continue embarrassing yourself.

Quoted: Quoted: Hey Draven, you forgot to post the ETF returns.....Because you're a "do-it-yourselfer", you probably don't know much about ETF's, MY money manager (they also manage money for many celebrities, pro-athletes, teachers, bus drivers, programmers, construction workers) told me about etfs. I couldn't be happier. This thread was supposed to offer insight to whs, right? You've given yours, and I've given mine. And, what makes "smaller load"(they do have a load) cheaper? They aren't actively managed. Computer algorithims do the buying and selling ques. MATH. The market doesn't run on math, it runs on emotion. Only a human manager can guage this. Star Trek 101... Your parroting of what your adviser has told you is a pathetic attempt of passing off of what you think you know as advice to others.  I post here for the benefit of the forum, otherwise I know I waste my time.  Buy a membership and search my other posts.  I call BS and clarify facts for  financial poseurs like yourself all the time.  Hey, everybody is entitled to an opinion, but when financial advice is given based on ignorance of the facts, BS should be called. Quoted: ..Because you're a "do-it-yourselfer", you probably don't know much about ETF's, MY money manager (they also manage money for many celebrities, pro-athletes, teachers, bus drivers, programmers, construction workers) told me about etfs. The above statement alone tells all of us here you really have limited investment experience. Here is another example of your poor advice I answered.  Thread I'm done you with here.  You can have the last word in this thread. Keep posting to continue embarrassing yourself.

The advcie I'm "parroting" as you put it comes from a great source. One would think that is OK. It sure beats the crap you were spewing. You're just mad cuz you're backed into a wall. Treasuries as an investment for a 28 year old! Funny stuff.....

Quoted: Quoted: To the OP... If this is getting too confusing for you, take these bits of advice... Never seek financial advice from anyone who has a net worth lower than your own. If someone thinks they have such a great strategy, they should be willing to show you they're portfolio to prove that it works. I find that most people either greatly exagerate their financial situation or don't really understand it.  Either way, professionals get paid to help you.  Use a reputable company such as Fidelity, Vanguard, The Hartford, ING, Franklin, etc. and you won't go wrong. Add American funds, and remove, Fidelity, Vanguard, Hartford, and ING. Hartford and ING are annuity companies. Annuities are crap investments. They don't have the true mutual funds, they use SUB ACCOUNTS that are supposed to reflect the mutual funds management style, but hardly ever match the performance. And you are paying for an insurance layer. If you want life insurance, buy term life insurance, not an annuity. Vanguard also has raised their fees.

Allow me to reitterate my previous point (highlighted above).

My investment portfolio has OVER doubled since 9/11 using the companies I mentioned above, which is more/better than can be said for most.

Gunrunner1

As I stated, I have made over 22% net gain for each of the past two years, so I'd say my strategy is working pretty well.  Weren't you bragging about your 16% last year?

The returns I posted were to show how there's no way your portfolio could be up 11% year to date.  If your "BrokerBuddy" says so, you need to find out what new math he's using.

Front end loads do just what I said.  They're a sucker bet for new investors who trust brokers to do the right thing.  Anyone who buys the "A" fund is giving money away.

To reply to another comment you made,
"MY money manager (they also manage money for many celebrities, pro-athletes, teachers, bus drivers, programmers, construction workers)"  All paragons of investment wisdom.  You're in good company.

Glad your Star Trek guided investment counselor is working out for you.

What you've called a "Load" is better known in the investment industry as a Management Fee.  You're paying that ON TOP OF YOUR LOAD also.  Check it out.  Do your homework.

Roll your 401k into a self directed Fidelity IRA. There will be no additional expense and you can choose from hundreds of different funds. You can also move money around in the fund at little cost (and no tax consequences). If you roll your 401k into a single fund, you would have to roll it each time you want to make an investment change.

Do not take any of the money from the 401k for any reason. The tax problems and penality would destroy the savings.

For an emergency fund, I would suggest 3 months of expenses or more (but not from your 401k).

Quoted: What!?? Treasuries are beating inflation? Pal, you're wrong. After inflation of 3%, and paying taxes on the crap return, you aren't investing, you are basically burying your money in the back yard. Plus, he's 28. He needs to get the growth while he can. Your telling a 28 year old to put his 401K in treasuries is the dumbest investment advice I've heard in a long time. Just what are YOUR treasuries paying? 5yr bank Cds are paying around 4.9%. Banks buy t-bills (treasuries) from the fed, then mark them up to sell as CD's, RIGHT? So treasuries have to be less than CD's. on $100K @ 1.9% (after inflation) is $1,900 a year. NOT accounting for taxes. I hope he doesn't mind living in a box eating cat food in his retirement. Save the insults pal, you're out of your depth.

Touche'.

Quoted: Quoted: What!?? Treasuries are beating inflation? Pal, you're wrong. After inflation of 3%, and paying taxes on the crap return, you aren't investing, you are basically burying your money in the back yard. Plus, he's 28. He needs to get the growth while he can. Your telling a 28 year old to put his 401K in treasuries is the dumbest investment advice I've heard in a long time. Just what are YOUR treasuries paying? 5yr bank Cds are paying around 4.9%. Banks buy t-bills (treasuries) from the fed, then mark them up to sell as CD's, RIGHT? So treasuries have to be less than CD's. on $100K @ 1.9% (after inflation) is $1,900 a year. NOT accounting for taxes. I hope he doesn't mind living in a box eating cat food in his retirement. Save the insults pal, you're out of your depth. Touche'.

Did you read the response? Do you suffer like he does?

Quoted: Gentlemen, your advice is greatly appreciated.  I really haven't had much time to do much of anything right now.  I did check on my 401k and it is doing quite well, I wen't ahead and upped my contribution to 8% plus the companies match of 4%.  I shouldn't notice it much on my paycheck and my bills are getting paid, if all goes well I should be able to quit by my target date.  Right now it looks like I will have close to 120k by the end of the year,  between my 401k and the other money.   I just don't feel like I know enough about investing to jump head first into the stock market.  Low risk sounds best right now at least until I do some more research and talk to a broker or the like.  I do realize that 2 and 4 percent  at the bank isn't going to do me any good in the long run, not when my 401k is getting 10 or 12 percent.  Obviously there is an associated risk with the investments that do better than what the bank can get a person.  However doing the research and soundly investing seems the best bet in my opinion. I found out about a job I qualify for that may be available soon.   Not the greatest pay in the world but great for the area, and I'll have  a place to stay cheap for as long as I need.  If all goes well I can make the transition smoothly.

Just remember two things:

1.  That risk/return is not always (or even usually) linear.  There are investments with low returns that are quite risky, and vice versa.  Investor knowledge in a given area can mitigate risk for them while such an investment obviously remains risky for others.  Sounds obvious, but I am always surprised by people who honestly believe that the risk/return ratio is fixed.  Warren Buffett can probably pick stocks better than I can, yes?

I earned 100% on my money one year in an investment that had less risk, for me, than an S&P 500 Index Fund.  It did require me to be proactive, versus the passive nature of said Index Fund however.

2.  Contrary to what Money magazine might have you believe, there really are other investments out there besides stocks, mutual funds, and bonds.  Many, many more.

Quoted: To the OP... If this is getting too confusing for you, take these bits of advice... Never seek financial advice from anyone who has a net worth lower than your own. If someone thinks they have such a great strategy, they should be willing to show you they're portfolio to prove that it works.  I find that most people either greatly exagerate their financial situation or don't really understand it. Either way, professionals get paid to help you.  Use a reputable company such as Fidelity, Vanguard, The Hartford, ING, Franklin, etc. and you won't go wrong.

Amen, brother.  Preach it from the rooftops!  I've been telling people this for years.