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Ask Dave

Real Estate Investment Trust?

Dave helps Joel invest the $10,000 he inherited from his grandparents, as well roll over his old retirement plan.

QUESTION: Joel has inherited $10,000 from his grandparents and he wants to invest.  Should he invest in a real estate investment trust?  He’s also changed jobs.  What should he do with the money from his old retirement plan?

ANSWER: Roll that old money to a good mutual fund. You don't want to roll it to your current retirement plan. A real estate investment trust has not performed as well as good growth stock mutual funds. Since you're talking about $10,000, I would fund a couple Roth-IRAs in good growth stock mufual funds. Maybe spread it across the four types that we talk about, which are growth, growth and income, aggressive growth and international.

As far as your current retirement, make sure you roll that into a traditional IRA rather than into your current retirement plan.  As a matter of fact, anytime you leave an employer, always roll your old 401(k) into a traditional IRA.  Your employer’s options are limited, but in the open market you can choose virtually any mutual fund you want.  That way you have a lot more control and a lot more flexibility.