Spring Cleaning in My IRA

Six years ago, I started working for Enterprise Rent a Car.   I’ll be forever grateful that I took that job, because I met my husband there, and because I learned what it’s like to have a job that takes up every waking hour – 12 hours at work, followed by an evening of worrying about what the next day will bring.   Now, with two jobs that I love and plenty of free time, I’m all the more aware of how good my life is.

One of the best things I did when I started working at Enterprise was to enroll in a 401k as soon as I was eligible.   I put 10% of my pay into the account, and when I quit 2 years later, it was worth $12,000.   There was no matching, because they did a profit sharing program instead, which netted me exactly nothing when I left.   What a crock.   Anyway, I rolled my $12,000 into an IRA and then did nothing with it for the next 13 months while we racked up a good amount of debt getting our health insurance agency going.   In the summer of 2005, I started contributing $100/month to my IRA, and then bumped it up to $200/month last year (my husband did the same with his IRA that he had rolled over from Enterprise).   I picked an index fund where I stash my $200/month, and I also bought $1600 in GE a couple years ago, using money that was in a money market in my IRA.   Why did I have a money market in an IRA in my early 20s?   Your guess is as good as mine.   But the three mutual funds that I had chosen during that long-ago HR seminar had just been sitting there for the last six years.

Last week, I was showing my mother how to use Morningstar to evaluate mutual funds.   To show her an example, I had her log onto my IRA account and look at a fund.   Hmmm, that was bit embarrassing, since I had been telling her to watch out for high fees on mutual funds, and it turned out that those three funds had expense ratios of 1.27, 1.27, and 1.4!   And their Morningstar risk levels were average to above average, while their returns were average to below average.   Not so good.   So I sold all three of them on Wednesday.   The trades went through yesterday, and I have almost $15,000 in cash sitting in my IRA.   I found some exchange traded funds that I decided to buy instead (all 4 stars with Morningstar, highest expense ratio is 0.25, and TD Ameritrade will only charge me $9.99 each to buy them).   I went on to buy them this morning, and saw a notice that the markets are closed today for the Easter weekend.   Damn!   Oh well, I guess I’ll just have to be patient until Monday.   But it does feel good to do some housekeeping in that account.