Okay, so you remember how I got all my 401(k) money the other week, and then I rolled it all over into an IRA account? To get it 100% away from my ex-employer? Well, that one account has now turned into THREE accounts. Which has then turned into the new “Let’s see which account wins” IRA game! Haha… Awwww yeahhhhhh! Time for a little action, baby!
You knew I couldn’t do anything simple and boring right? That would be too easy ;) Plus, I really don’t have an inkling as to *which* method really IS the best, so this is the perfect way to test the waters and then re-evaluate once a little time has gone by.
Here’s the deal. I’m splitting up all $180,000 into THREE accounts – all structured differently – and then at the end of 6 months we’re gonna see which performed the BEST. Or maybe I’ll wait an entire year, I don’t know yet. But what I DO know is that this will be the best way for me to see how different systems work, and which better suits my needs.
Here are how the 3 new IRA accounts will work (btw, this now marks #17 and #18 of my total accounts at USAA. That HAS to be the record now, right? Can anyone over there verify, USAA? Haha… I want my prize!):
- Traditional IRA @ $60,000 – NOT Managed. This one is just pure mutual funds in a brokerage account, set up by me but offered guidance from USAA. I tell them where my risk lies with all this (I’m as “aggressive” as they get), and they tell me what sort of funds they advise for me to follow suit. I can accept it, or choose my own, but either way I have to physically do it and then watch for it and account for everything. And after some thought, I’ve decided to follow their guidance BUT I’m not gonna touch it once it’s all invested. I’m gonna leave all the funds be for the 6 months or whatever, and then see where it lines up with the others. Mainly because that’s how I normally did my $180,000 invested in the old 401(k) anyways. I just set it, and then left it alone for long periods of time while I made deposits.
- Traditional IRA @ $60,000 – USAA Managed, only USAA funds. One of the other options available was to have the advisers over at USAA manage all my money FOR me. This one REALLY stood out, and grabbed my attention since it would mean I could not only be hands off, BUT someone else would move things around for me and re-balance them when needed. I really liked this option, but it would a) cost me around .40% in fees I believe (can’t remember off hand), and b) still doesn’t mean they’d be BETTER at it than I would. They probably would, cuz I really don’t know all too much about it all, but it’s def. not guaranteed. And this route also means I can only invest the money in USAA mutual funds and ETFs, etc. Which is def. limited. But how do I know it’s not the best route? (I don’t – which is why we’re doing this test :))
- Traditional IRA @ $60,000 – USAA Managed, ALL funds. This account is pretty much the same as the one above, except for it costing more (.70% I think?) and it opens up the pool of funds to invest in. Some are still USAA, but the others can be anything that any other brokerage account could invest in. So basically this allows the money managers to invest in anything at all they feel would be good based on my same risk factors. Which, again, is “aggressive.” Cuz I’m still so young ;)
So that’s the plan for the next 6-12 months. I’m gonna let all accounts run its course and see how they line up throughout the months. And since everything’s divided up evenly, it should be super easy to follow and track :)
Will the account that costs me NOTHING win in the end? (#1) Or are the money managers that much better, and earn me a ton more even WITH their fees I have to pay quarterly? (which comes to around $140 to $200 every three months if I recall correctly – not *too* much if they’re making me bank the whole time! I’d gladly pay lots and lots of money, if it means MAKING lots and lots more over time – no doubt about it.)
Only time will tell, but I’m pretty excited about it. It’s like an adult’s playground over here, and I’m just grinning ear to ear :) What do you guys think about all this? Am I an idiot? Would YOU do it? It’s kind scary for the main fact we’re playing with $180,000!!! (yikes), but everything factored in I can’t foresee anything horrible happening as a result here. It’s all being invested safely and securely – it’s just my indecisiveness and curiosity that’s really the variables here. Guess we’ll find out soon enough!
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!