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Investment Workshop 102

Updated on August 10, 2020
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Before retiring, Jack worked at IBM for over 28 years. His articles have over 120,000 views.


This seminar is for someone who has gone through a first job or two. After college, many people are still finding themselves. Working for a few companies will give one the exposure and practical experiences that will get them closer to a career they like. In addition, moving about will also get you a faster salary increase than staying put.

- Aug. 2020


After working at a company for a year or two, you are most likely enrolled in a 401K pension plan. Some companies offer a matching component to encourage their employees to participate. It is like getting free money. One you moved on, what to do about the account?

My advice, and most other professionals, is to roll it over to a personal IRA account. The reason is simple. Most company pension plans are restricted in their investment options. When you roll them over, you can have all the flexibility of investment options.

How To Do It?

Assume you don't have an IRA account, starting an account is easy. If you already have a brokerage account as I recommended in my first workshop, all you need to do is to contact the company and create one. Next, contact your previous employer's benefit administrator and fill out a form to rollover your 401K balance to this newly created IRA account. All you need to provide is the Account number and your name and Social Security Number.

Investing in IRA account is very similar to your regular account. You can buy and sell stocks, mutual funds and ETFs just like before. The only difference is when it comes to taxes. Your gains and losses are not taxed in the year they are incurred, but deferred till you retire.

Another Way...

In case you worked at a company that do not offer a 401K plan. You are allowed by the IRS to start your own IRA retirement plan and contribute up to $6000 per year. This is a great way to start saving for your retirement.


Once you start to make an income, you are liable to pay taxes. The more you make, the more taxes you owe. That is our progressive tax system. In fact, the more income you make, your tax rate will increase as well.

One of the taxes is on capital gains. Money you earn investing in stocks and bonds are taxed as ordinary income. You will get a 1099 form at the end of the year from your brokerage company that summarize your account. You would need to report this when you file your 1040 tax form.

An IRA is one method where you can defer paying income tax while investing it so that you will have a nice nest egg in your retirement. At which time, you will be paying income tax as you withdraw from this account, on the principle and any gains you've made.

An ROTH IRA is an alternative way where you can pay the tax as you go. This way, any gains you made over the lifetime of this account will be tax free.


Investing for retirement is a top priority. Time is on your side. The earlier you start, the better you will be. Besides the 401K plans or 403B provided from your employer, you can also start your own IRA account. Putting your money in these accounts is a good way because it defer your tax liability until you retire. The theory is that you will have the money working for you in your working years while paying taxes later after you retire. For most people, your tax rate will more likely be at a lower rate when you retire than when you are in the prime of your earning power. This is a win-win scenario for all workers.

Action Plan

  • Start contributing to a company 401K plan (only 56% participate)
  • Roll over your account from an Ex-employer into your IRA account
  • Contribute to IRA account if allowed to minimize your current tax
  • maintain an Emergency fund of 6 months of expenses in cash
  • open an investment account for your additional funds
  • Invest in SPY on a regular basis (in all accounts)

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Jack Lee


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