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401k and Personal Finance

Two baskets for our retirement accts

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Roll over IRA
In early Nov. I received a letter from Vanguard, it says I am eligible to transfer some of my 401k to an IRA account. I thought about it, the pros and cons, and decided to do it yesterday. Here are my rationale:

1) Ideally I like to keep all my retirement in one place, but one problem is I am not very familar with the new funds avaiable in the new 401k plan. On the other hand, I have been with Vanguard for a while and I know some of the funds are really good (good enough to make me sleep well in the night).

When I say Vanguard is good, I am not only talking about the fees, the performance, etc; but also their brand: it is one of the most respected mutual fund companies in the world. I rememeber a few years ago NY AG Spizer investigated many mutual funds, and I did not heard Vanguard name there (come back to the sleep well factor…).

2) Diversify: this will also allow me to diversify my 401k (IRA); and I can compare the performance of two baskets as time goes on.

Interestingly, when I read the annual report for the Vanguard and the funds in new 401k plan, I found a fund usually has multiple investment advisors. For instance, the Vanguard International Value fund has the following advisors: Hansberger Global Investors, AllianceBernstein L.P. and Lazard Asset Management LLC. I think it adds another level of diversification.

Maybe Chinese mutual fund can move toward this direction, i.e., managing people’s retirement money instead of speculating on the market (as shown in the Chinese A share market) in last 2 years 🙂

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