Poor 401K. Going it on my own with ROTH IRA, advice?

[Guest dcsurfing]

My 401K is underperforming. I plan to reduce contributions down to 1%. My company does not match. This move will not throw me into another tax bracket. I have calculated what the after-tax amount will be to invest and plan to start a ROTH IRA. This will be my first trek into taking control of my retirement (only 15 to 20 years left to go) and I really am under-educated. Advice has been sturdy but looking for verification. Care to weigh in? Thanks!!

[John G]

15-20 years? That may be the years to retirement, but you are going to need to understand investing for a lot longer than that, it is not bizzare to think you might live 30 years beyond retirement, even more if you are retiring early.

Steps you can take to learn more about investing:

1. Subscribe to Money, Worth, or Kiplinger Financial and dedicate 2 hours each month to reading the articles and the ads.

2. Ask your brokerage if they have "classes" or tutorials. For example, Charles Schwab holds some seminars for beginners. Many brokerages have on line tutorials. If you expect to use mutual funds, try visiting Vanguard's web site and look at their support. Almost every brokerage and mutual fund has pamphlets on investing basics - ya just gotta ask!

3. Your local library and every bookstore has way too many books to read about investing.

4. Consider joining an investment club. Some are very good, others are weak. The concept here is that you learn to research stocks as a group and contribute some amount of money each month that goes into an investment portfolio. Normally this does not do anything for your retirement account, but it might help you learn more.

Why is your 401 not working out? They are better when there is a match - true. But, who is making the investment decisions now? And what are your choices?

Did you know that you can do both 401 and Roth? Doing both might make sense iIf you are far from your retirement goals and have the funds.

There have been many posts on this message board about mutual funds, no-loads, index funds, and just getting started. You might want to use the search engine to look at those posts. I am not sure if you are looking for help on how to start a Roth or investment choices within a Roth.

Post again, and I will try to respond. Please indicate your current age, some idea of your background (engineer vs English major?), what kind of investments have been used with the 401 and some numbers about the results that disappoint you. The last few years have been less than stellar for many investors, so you may be disappointed because of high expectations.

[GBurns]

Why do you feel that you are knowledgeable enough to have already made the decision that a Roth IRA would be better for you? Shouldn't any such decision and calculations etc have waited until you raised your knowledge level? If you are in your own words "under educated" it concerns me more that you have made firm decisions before the education.

Also, What is it for which you are seeking "verification"?

[Guest SelfDirectedIRA]

Do a search on the net for "Self Directed" retirement accounts/IRA's.