Wednesday, January 16, 2008

What Do You Do With an IRA like an Ing IRA?

The good news: last year, I opened a traditional IRA (it was the better choice for me, based on a couple different IRA calculators).

The bad news: my IRA sucks.

My Ing IRA ended with a balance lower than the amount of money I put into it last year. Now, if it was a bad market year, I’d just bite the bullet and say “this is part of what happens.” However, my Vanguard 401k account [from my hi-tech days] earned 19% last year. A friend of mine disclosed that his 401k (I don't know which provider) earned about 17% last year. As such, I can only take this to mean that the investment options at Ing are, well, crappy.[Disclosure 1: it’s unhealthy and unwise, I know, but I check my IRA balance at the end of most business days. Because of this, I can tell you the number of days my IRA balance has been more than $2 above what I’ve contributed – in the last nine or so months – has been probably 10 or less. Disclosure 2: I have other savings accounts with Ing, and I love those.]

My IRA allocations are diversified into five different funds, ranging from bonds (the only one doing “well” – which means that it’s actually in the black, though I attribute that more to the dividends it’s paid as opposed to its overall market earnings), to medium and large cap funds, in addition to a couple other funds. I don’t think I’m under-diversified for the amount I contributed. I specifically chose a mix of stocks and bonds, and a variety of different [risk/performance level] stock funds.

I’ve been saving my IRA-tagged money in a bank savings account, and when it hits $1000 again, I’m going to open a Roth IRA elsewhere. If you have recommendations for a broker service that has done well (anything from 7%+ earned last year), please share that. I’ll shortly be embarking on the Great IRA Research Project, and any helpful guidance is much appreciated. I will also be enlisting the advice of some other personal finance bloggers (whom I respect), and I hope to write a future post with their wisdom and feedback.

The question now is this: leave the money in the existing IRA until it reaches the amount that I originally invested into it, or take the loss and roll it over into a new, fresh account?

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