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Come retirement, most of us will be faced with two important decisions: what to do with our 401(k) or IRA money and how best to spend an abundance of free time. Some dream of adventurous vacations or beachside villas, others want to devote their days to a favorite charity. Some, no doubt, will while away hours on the golf course. However, for a growing number weaned on CNBC, E*Trade and buoyant bull markets, retirement will mean a chance to finally pursue a “second career,” actively managing their own money.
Of course, playing money manager with one's nest egg is not without risks. Take Nancy Wells, 62, a former manager for Pacific Bell who said good-bye to her life as a “corporate road warrior” at age 54 after 28 years. In 1999, just as everyone around her was getting rich on Internet stocks, Wells opted for early retirement and rolled her 401(k) into an IRA, which she planned to parlay into a fortune.
Having read Jane Bryant Quinn's Making the Most of Your Money in the mid 1990s, Wells's plan was to live off of her investments until her defined benefit pension kicked in. However, like thousands of other investors in Internet bubble stocks, Wells's plan backfired. By mid-2002 she had lost 40% of her IRA |
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