Buy high, sell low

By Mir
October 16, 2006

I know you’ll all be really relieved to know that I’ve finally rolled over my 401k into my IRA. It’s exciting news and I don’t blame you for being riveted. (Hey, I even went poking around in my archives to see if I’d mentioned this before, and how far back it was. The bad news for you is that I found it, and really, OKAY, you get it, I’ve talked about my long lost 401k before, WHO CARES; but the good news is that that post also contains one of the greatest Monkey quotes EVER, so there’s that.)

The check came and I called Big Financial Institution (henceforth referred to as BFI) to make sure I knew how to send it in. (Me: I have this check to send in. Them: Uh, okay, send it in. Me: Oh. Um. Alright then.) I don’t want to brag or anything, but with the deposit of this check, the value of my IRA increases by a factor of 30. I’m RICH. Or I just averaged a contribution of about a buck a year when it comes to the IRA. Hard to say, really.

Anyway, BFI cares deeply about my retirement. In fact, I’m pretty sure they’re more concerned about it than I am. So the earnest young Portfolio Consultant with whom I spoke today wanted to take “just a few minutes” of my time to talk to me about investment strategies. Did I have the time to discuss this with him?

I considered the matter. On the one hand, my current retirement investment strategy goes something like this: Hey, I’m young, and also, LA LA LA LA LA I can’t HEEEEEAR you! On the other hand, by the time this phone call occurred, I had already done a bunch of work AND gone out for groceries. And I’d just sat down with a cup of tea. And a snack. So I had a little time to kill.

The education began.

Me: Sure, let’s talk.
Portfolio Boy: Really? Okay, that’s great. I just need to confirm your name and date of birth so we can get started.
Me: [I confirm]
PB: Alright, thank you, now if I can just verify your account number?
Me: Account number? Oh, yeah, I have that somewhere. Hang on. I just need to find it. I must have a statement here somewhere. I think. Did I mention that it took me 6 years to roll over my 401k?
PB: Um, yes, well, I can just use your social security number if you’d rather.
Me: [I rather]
PB: Thank you, wonderful. Now, I’d like to ask you a few questions about your earnings and how much money you plan to invest each year.

[Ten minutes of intensive questioning follows, with me answering and him trying very hard not to laugh at my answers. Which made no sense to me. What’s funny about “Annual income? I’m supposed to know?”]

PB: And now I’d like you tell me what sort of investor you tend to be. Very cautious, cautious, moderate, aggressive, or very aggressive.
Me: Well, I tend to be very cautious about money in general.
PB: Well we can certainly work up a portfolio strategy that’s more cautious, by all means.
Me: Um. Wait. Isn’t the whole point here that you know more about this than I do?
PB: Wellllll… I’ll make some recommendations based on your style, is all.
Me: But what if my style is totally WRONG? I’m not retiring for thirty years. Aren’t you supposed to tell me to invest more aggressively?
PB: Well, that’s true, you certainly have the time to go a bit higher-risk if you like.
Me: I would like to have money. Do you know how to do that?

I’m sure he was feeling the love. I know I was.

Finally we arrived at some agreement about the level of risk that was appropriate. Then we talked about balancing investments and by the time he got to actual fund recommendations, my eyes rolled back in my head and I started playing Sudoku online while he talked.

And then I realized something.

Me: Hey, how come this portfolio you’re recommending has a dozen different funds in it, but none of them are the funds I’m currently invested in?
PB: Well, uh, we have thousands of funds to choose from, and these just happen to be the ones that came up—
Me: What’s wrong with the ones I already have?
PB: Nothing. There’s nothing wrong with them.
Me: Then why do you want me to move to something else and get rid of them?
PB: Perhaps I could have one of our specialists give you a call to discuss the individual funds in greater detail.

I think I agreed to a second phone call. Because the first one was SO MUCH FUN.

The problem is that I just have a hard time with this sort of thing. I vacillate between treating it like a party game (Oh! This fund has a funny name! Let’s put some money in it!) and becoming immobilized by the fear of doing it wrong. What if I pick a fund that’s ultimately the culprit in my only being able to afford water and generic soup during my golden years?

Portfolio Boy also told me—with earnest sincerity—that I should consider their full management service, where one of their fleet of Pod Portfolio People micromanages my investments for me. Then I don’t have to do anything but lose the statement each quarter when they send it out. This option costs 1% per year, though, so I figure I’m better off doing it myself. Especially since I did such a bang-up job staying on top of my 401k.

Clearly, if the whole writing thing doesn’t pan out, I should become a broker.


  1. dorothy

    Oh, Lordy. Beloved is a financial representative. Call me if this schmuck doesn’t show you the love. And I mean The Love.

  2. Vicky

    I’m totally befuddled by your 401k/IRA system, but my best guess is it’s something like our RRSP/Mutual Fund thingamabob…which I’m obviously way more edumacated in. I just stare glassy eyed at my banker until she puts the money where she thinks best. This strategy has worked well so far and I’m up at least 5 bucks.

  3. Cele

    Ducky is having a similar problem. His boss sold the business, after several months wondering and waiting we finally recieved a check from his retirement fund for investing. Ducky has yet to decide what to do. I mean really this is a bit of money.

    Why has it taken so long to invest, despite several trips to the broker? Because he’s pissed because he has to start drawing at age 70.5.

    WTF, he keeps telling me he’s going to die? Am I dying? Do you think I’m dying? Cele, I’m dying don’t have sex for 10 years after I’m gone. Make a decision already.

    Mir, you did the right thing. Just keep bobbling your head and smiling.

  4. InterstellarLass

    I’m helpless and hopeless when it comes to investing my 401K/IRA. I pray for a lottery win.

  5. Kimberly

    Hey! That’s my investment plan too! I find the LALALALA plan is working well so far, so why switch now, eh?

    (Thank god for well managed Teacher pension plans that require no effort from me.)

  6. jenn

    Poor Mir! I have been in your shoes, and I know the paralyzing fear of doing something wrong. (And hoo boy, did I do something wrong, despite the fact that I was in possession of my very own NASD Series 7 license and had been through some of the training to be a certified financial planner.) I have also had that guy’s job. What happened was, he put your answers into a computer program and up popped a list of funds to talk to you about. He has no idea why. Ideally you’re not supposed to question him, just say “Okey dokey.” (I’m not saying that’s what you should do, just that that’s what would make his job easier and he’d probably really appreciate it.)

    At any rate, good luck figuring this stuff out, it’s so stressful!

  7. Sara

    Gah! I feel your pain, my friend. My eyes glaze over and I start composing a mental grocery list whenever this stuff comes up.
    Also, Portfolio Boy sounds exactly like a superhero-in-training. Perhaps BFI could use him in a comic book to explain everything. Rather like the comic book versions of Great Literature only for the functionally investment illiterate.

  8. Zuska

    Yeah, 401K, whatever, I just have to tell you that I still remember that famous Monkey conversation, and probably at least once a week while MegaBoy is bathing I remember that infamous shower story and spend some time trying to figure out what the heck Monkey meant, lol!!! My latest theory is that corn kernels look like seeds and he probably heard something about how men provide a “seed” … anyway, just thank Monkey for giving me something to think about while my son cleans his own scrotum, lol!!!

  9. Meritt

    I had to laugh at Sara’s comment because that is what I was thinking!

    I take care of everything (EVERYTHING) in our household, including the financial decisions, savings, heck even our taxes – he doesn’t have a clue how the tax-fairies magically do them for us every year. But last year I got on his rear big time to get his 401K from his previous company and get it rolled over into an IRA.

    *And I wanted NOTHING TO DO WITH IT. I don’t want to know about it… my eyes glaze over…. I start to drift away to a more ‘happy place’ or just start planning our meals for the next month.*

    He lucked out. Previous friend-he-used-to-work-with is a financial guy for a big company. We basically said; “Here. Help Us.”

    … and for now? Because I’m still holding out and swearing I don’t want to take care of THIS TOO… I am just nodding and smiling.

    “We’re still young… la la la la la la…..”

  10. ferd

    PB makes money from churning. Keep your present funds.

  11. MMM

    We’re getting ready to do the IRA-thing, too. Sounds like a GOOD time! ;)

  12. Aimee

    La lala lalala lalalalalalalalalalala…

    I’m sorry… did you say something?

  13. Sarah G.

    What you want is a whole market index fund. Vanguard has the lowest fees and are a very good BFI. Mind you I live in the Lalalala land with out retirement fund, but my hubby is an economist so I figure he must know something.

  14. Susan TW

    Please do follow Sarah G.’s advice and get in touch with Vanguard. Yes, their fund management fees are among the lowest in the industry. Just as important, theirs are no-load funds – you don’t pay a percentage off the top just for the privilege of investing. And their investment counselors are not paid via commission, so they won’t churn your money. Plus their website and publications provide lots of information about investing and tools to track how you’re doing, determine how much you need to be saving etc.

  15. Amanda

    This is something I can actually HELP with (unlike the whole saving-money-in-the-first-place, at which we all know I suck). I agree with Sarah about the Vanguard thing, but what you really want is a no-load life strategy fund or a “target” fund. What these funds do is set you up with an asset allocation (stocks, bonds, etc) and then the fund automatically maintains the allocation for you and gets steadily more conservative as you get closer to your target retirement date. It’s basically like a crock pot for your money. You set it once and it’s ready when you need it later.

    PS – If you want to chat about stuff more specifically, just e-mail me. I’m all yours.

  16. Christina

    I married a financial guy so that I wouldn’t have to deal with anything but lalalalala :)

  17. pavegurl

    I’d watch the “no-load” funds frankly, ‘cos with some alarming regularity, they have fees wrapped into their structure that would be higher than a striagh ahead upfront fee. Further, typically, an A-share fund outperforms c-shares/ no-loads.

  18. udge

    Ferd is right. The reason he chose all different funds is that he earns money when you sell one and buy another. If you don’t buy and sell, he doesn’t earn. Banks advise in their own interests, not yours.

    You get rich when you hold on to a fund for a loooong time and its value rises; they get rich when you switch to whichever fund is hot and exciting this year.

    There are a very few outperformer funds on top, and there are a few real dogs down below, but the vast majority of funds perform IN THE LONG TERM quite similarly. Buy some that seem to have been good over the last ten years (and meet whatever ethical criteria you might have, i.e. no cigarettes, no torture states) and hold them forever.

    (Sorry, I’ll get down from the pulpit now.)

  19. Christina

    You just reminded me that I still need to roll over my 401k from my old company that I left two years ago.

    Like you, I’m more of the “I’m young, I’ll worry about it later” investor. Well, that and the “I can’t invest – I need all of my money right now, thanks!” type.

  20. Julie

    The only thing I can contribute…watch out for the management charges…they don’t do this for free…and the more they have their finger in the pot..the more they’re taking for their own.

  21. daring one

    We actually went with a financial advisor to the tune of 1% because for right now that means he makes about 10 cents per hour of his time and it’s nice to know that someone knows what their doing.

  22. alice

    Ditto on the no load/ fee only financial planner front – anyone who’s working on commission will encourage you to choose the best things – best for them, then best for you.

    I finally got off my duff and met with a (fee-only) financial planner, and I’m anxious about our second meeting. The upside? I’m young. The downside? listening to anything specific violates the LALALALALALALALA principle. Good luck on the second call.

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