Too Rich to Invest?

Do you have too much money to invest? Before you roll your eyes, consider that many fortunate Americans are maxing out not their credit cards -- but their retirement accounts.

Uncle Sam has limits on what he allows you to put in certain tax-advantaged savings accounts. You're welcome to contribute up to $13,000 in your employer-sponsored retirement plan and $3,000 in an IRA (Roth or traditional). But after that, you're on your own. (Of course, there are catch-up provisions for those older than 50 as well as contribution limits based on salary. Hey, it's the IRS. You thought it'd be cut-and-dry?)

For those bitten by the savings bug, there's no reason to call it quits once you've exhausted the limits of these accounts. Trust us, your future self will thank you for the bonus check. Going it alone will create a little more work for you or your CPA come tax time, but the bonuses of investing more for your future far outweigh the calculation headaches.

For solo flyers, keep these basic rules in mind:

Don't go against type: If you're not a risk taker in your 401(k) or self-directed IRA, don't feel pressure to go out on a limb with the rest of your investing dough. If you're an index mutual fund kind of gal, that's OK.

Don't be distracted by shiny new things: Investment choices are limited in employer-sponsored plans. And that's not necessarily a bad thing if it keeps you and your retirement dollars out of trouble. Out on your own you'll face a lot more options -- real estate, penny stocks, annuities, llama farms -- but that doesn't mean they're right for you.

Shop around: Since you'll need a go-between to invest on your own, chances are you'll be shopping for a broker. There are all flavors of discount brokerage accounts (and we prefer the discount variety to the full-service ones). Many will try to lure you with free trades or a toaster, which is all well and good if you need a new toaster. But like a bank account, there may be features that you can't live without and others you simply won't use. So shop around, and compare and contrast.

Keep fees in check: You have no say in what your retirement plan administrator charges you and your co-workers. But you're in complete control of costs when you're calling the buy, sell, and hold shots. A good rule of thumb is to keep the costs of investing (your trading costs, investment subscription costs, aspirin costs) to less than 2% of your portfolio's value -- and 1.5% or less is even better.

Follow the KISS rule: No, not that one. We mean, "Keep it separate, Sam." Don't commingle your IRA money with your non-IRA funds (it irks Uncle Sam). Although, come to think of it, the other KISS rule of thumb isn't a bad one to follow, either.

For a general investing pecking order -- from IRAs to annuities -- check out the aptly titled Where to Invest Your Money.


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