How much control would you take?

[burger]

For a little background on my investing knowledge, last year was the first year that I really started taking time to do some investing on my own. I read a couple books, and started doing my own research on things. Up until this point, I basically contributed to my 401k and some mutual funds and mainly had things in index funds.

Last year, I decided to take control of my Roth IRA and fund a taxable brokerage account. For the year, I was up about 17.5%. As a comparison, the S&P was 12.98% (15% including dividends). So, I beat the average, but I didn't crush it or anything.

Well, our 401k also allows us the flexibility to open up a "Brokerage Link" account. It is basically just a trading account within our 401k. So, I can do all of the normal trading (no options) within my 401k now as well.

When I started last year, I figured my Roth IRA and taxable would kind of be my play accounts because they don't have nearly the amount of money that my 401k does. However, I really enjoy managing my money on my own. I decided initially to take 20% of my 401k and transfer it into my Brokerage Link account. So far this year, my return from the index funds is about the same as my other investments. So, once again, I'm not really earning much more than if I just left it in index funds.

So, the big question is, how much do I just leave in index funds vs. how much do I take control of on my own? Do I just continue to manage my taxable, Roth IRA, and 20% of 401k in Brokerage Link and see how it goes for the year and then re-evaluate?

If it matters, I'm 34 years old, married with 2 kids (3 and 5) whom my wife stays home with. We live comfortably on my income and I currently contribute 12% of my income (along with a 4% match from my employer) to 401k. I max out my Roth IRA contribution as well.

So, I've got plenty of time until retirement to gamble a little, but it isn't just me I need to think about. Thoughts?

[yclept]

I don't think that's the kind of question anyone can really answer for anyone else. If it was me, I'd take control of all of it, if for no other reason than to have the ability to sell and go to cash when I deem appropriate, or maybe even put some in negatively biased ETFs (leveraged or not) when appropriate.
But that's just me. I no longer believe in riding the market up and down and hanging on for the long haul. I believe that by using any of a dozen market direction indicators one can avoid a whole lot of the ride back down and yet not incur whipsaws that negate being out of the market when it rolls down into the abyss.
It only takes a couple of dot-com crashes or financial crisis crashes to negate a whole lot of average yearly gains. If one gets out of the way of those (even if a bit late in doing so, i.e. not at the top, but a little ways down the slope) it makes a world of difference to long term wealth.

[2kids10horses]

I agree wholeheartly with yclept. I, too, no longer believe in the 'Buy and Hold' mantra.

One thing I did for my kids was to create trusts for them. I gifted each of them the max for the first 5 years. ($50,000 each because the max was $10K in those days.) Their trusts are now worth aound $300K each. That should pay for college!

[Bluerobin]

Burger, do you contribute to a 401 or IRA for the bride? I did this, when my wife retired before me. I also transferred all my regular IRA into my Roth. Yes, I paid the tax, but now it grows tax free. I couldn't wait to get my money out of the plan and under my own control. Some years you beat the S&P and some years you don't. Depends what you put into it.

[burger]

I don't have an IRA for her. With what I'm contributing to my 401k and IRA (and the kid's 529's), there isn't much left over for other stuff. As DI mentioned, I do need to think more about life insurance, etc. I've been meaning to get more, but just never have. Suppose I should get a nice 20 year term while I'm still relatively young.

Thanks for everyone's input so far. If nothing else, I could transfer over a larger percentage to the brokerage link account and just sit it in the same ETF's/index funds that it's in right now and that way, I'd have quick access to it if I wanted to buy something.

[totalkaos]

The chief input I would use to make this decision is what amount of time is taken away from your family. As I look back over the years I value the time I have spent with my family far more than the returns I have received from my investments. I have been successful at both, it is just that my family life has returned the greatest rewards. I would say one should invest to enhance ones family life and future, but not live to invest. So get in touch with your feelings as to what it is you are trying to accomplish by managing your own investments and what amount of time you may need to devote to it to be successful. I guarantee those children will only grow up just once. You miss that, you will not get a second chance. Many young people feel they want it all. In my opinion your generation is missing some very important basics by trying to do it all. As human beings we are not wired to be "on" 24 hours per day. Take some down time and do let life happen. If you can do this and still manage your investments, go for it. If not be your team's quarterback and hand the ball off to another player. Life is too much fun and too short to do otherwise. Especially for someone that is blessed as you are.