DH and I are finally in a position to participate in his company's 401K plan. We currently have nothing saved for retirement; we cashed in our previous retirement accounts in 2001 after he was laid off from both of the full-time jobs he was working and started his own business. Now that he's back in the corporate world, we are really starting over from scratch. DH is only 44 and has a good 20+ years to work and invest. His company does not provide any matching funds; however, it's still pre-tax investing. They have a pretty good selection of funds to choose from across a variety of sectors, both equity and bond, mostly large cap, but a few small and mid-cap, and there's one cash equivalent fund. So asset allocation isn't a big problem; there is some opportunity for diversification. I've been researching the choices at Morningstar, and there are actually a few funds that didn't completely tank over the past few years. I'm mostly concerned about our timing as far as government interference goes.
Are we better off just saving it after taxes and stashing it under the mattress or in some other kind of savings or investments? Would we be better off managing a portfolio ourselves through Ameritrade or ING? Maybe concentrate solely on DRPs? Or put it in a Roth so at least we can take out our contributions if we have to? (After 5 years, I know.) Obviously I know there is no guarantee on return for any investment in the stock market; I'm mostly concerned about putting this money away for 5 or 10 or 20 years and then having the feds decide to yank it for their own purposes.
We have a 25 year window, assuming DH works through his 68th birthday. Hopefully, I will be able to contribute 10-15 years of full-time work (and catch-up funds) at some point as well. At this point though, every year we wait means a significantly lower end result.
I'm feeling kind of antsy about it. We don't have to decide by any particular deadline; we can jump in and start whenever we want, and we're thinking about the first 2012 paycheck in mid-January. But again, I don't want to just throw it away.
Opinions?
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"Life is a banquet, and most poor suckers are starving to death." ~Auntie Mame
However it is a good time to regularly buy small amounts of gold
and possibly silver . Your returns will be better and your money
will be much much much safer .
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I can't help with what to buy, just what NOT to buy! Don't put it all into stock in DH's company. If his company tanks, there goes not only his job, but all his retirement money also.
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LOVELIEST of trees, the cherry now / Is hung with bloom along the bough,
And stands about the woodland ride / Wearing white for Eastertide.
Now, of my threescore years and ten, / Twenty will not come again,
And take from seventy springs a score, / It only leaves me fifty more.
And since to look at things in bloom / Fifty springs are little room,
About the woodlands I will go / To see the cherry hung with snow.
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For financial advice, especially from the internet, you get what you pay for.
A lot of banks, building societies and credit unions have financial advisers free or a reduced cost.
But, for me, the first thing everyone needs is to have a stash of ready cash for emergencies. Most recommend 3-6 months of salary. This should be an honest amount to allow you to live the way you do now. (Transition time.) It is rare for a person to be able to put on the financial brakes the day they are laid off/made redundant/released.
The second is to contribute the maximum that your company matches. Most match to 6%. That is free money and is a 50% ROI. There is no place you can get 50%.
Past that it depends on you. If you have a really good 401k program where you can apportion money in different funds to reduce risk I would do that.
Yes, you can get more handing your own investments but lets admit it, most people can do that.
When you get to this point go see a financial adviser.
As for "buy gold!", gold is a bad investment vehicle. You should have a portion to protect wealth from hyper inflation but it would be unwise to put everything in gold.
I am not a financial adviser nor did I play one on TV.
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D.Gale I would think long and hard about any 401K plan. I would also recommend a darn good stash of cash. I never would have believed that the company that I worked for for 34 years would fold.I never thought we would ever use that saved cash so fast. In this job market, nothing is safe, nor is any stock or fund.We lost over 30K in a couple of short months even in a well diversified fund. Got out with our original investment because we hated someone else playing with our money. That was alot of money to us.
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I wish I knew the answer. If I knew the future I'd pick the right lottery numbers
If the world doesn't end as we know it, and 401K's are not 'taken over' by a gov or just crashed due to how they are invested....you will be glad you have it when he is 68.
If it all goes to hell....you will wish you had not saved for the future.
Which regret bothers you the most to think of?
(We are in hubbys 401K)
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The only way to win is to not play...(like global thermal nuclear war).
I'm kinda in the same boat as D Gale-we have matching, but I have no idea what's offered in our plan (which is a simple IRA, not a 401k). I'm 48, but I own my house outright, and I have a reasonable diversified stream of income, so I can probably hack putting in the money-but what to put it into?!?!?!
The way I see it, at this point, it becomes return OF investment, not just return on investment-yeah, Greek bonds are paying 30% and more-but do you trust them to actually pay it? Of course not...
Gold/silver (actually in possession) is good to have, especially silver for trading, in case of financial system breakdown. I'd forget paper gold, that's a fool's trade in my mind. As mentioned by Pote above, don't put all your eggs in one golden basket though...
At this point, the only place I'd feel anywhere near comfortable would be in US Treasuries, or a fund that only holds said Treasuries... I figure if the US govt goes kaput, then EVERYTHING is kaput, and a 401k/IRA won't mean anything anyways...
One last thing-AVOID ANYTHING WITH BANK OF AMERICA ON IT!!! it's only a matter of time before that dog dies... yeah I know it's gonna be hell when it does, best to be as clear of them as much as you can...
Franc (penguinzee)
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Right this moment I would not be starting a new account. However, in a few months if the euro thing were stabilzed, I would consider a minmal 401k if your company offers a decent match. My company offers an 80% match on the first 6% of my income. That is free money. I would be crazy not to take it. And my 401k provider has just started offering a Roth 401k. All my contributions are now Roth after-tax contributions.
For now, I would put everything you can save into silver and gold. But if the economic outlook improves, I would go with a 401k, putting in only what is matched. Make it a Roth 401k if at all possible. Then if everything goes to hell you can pull out your principal without penalty or tax and convert it to gold.
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I generally agree with 06. It is nice to muse away on this aboard about conspiracies, disasters and TEOTWAWKI. But, at the end of the day no one really knows what is going to happen with any certainty. The Euro thing is a big uncertainty, which makes me very cautious about putting new money in the market right now. But, all else being equal a 401(k) is a good investment program because it is pre-tax money and many employers match. Personally, I am keeping my money in the 401(k) and continue to invest at the same rate as I have previously. But, I also don't have all my eggs in one basket. I am also putting some money in gold and other hard assets (including some distressed assets), which I regard as inflation hedges. Everyone must figure out his own risk appetite and preferences. Professional advice can be helpful, although personally I have become very wary of it over the years.
When governments are failing economically they pillage their citizens
to retain power .
We have just witnessed Portugal raid public pension funds to
delay failure . An act that will be repeated many times around the world
within the next few years .
How often have you heard Obama use the phrase "private property rights"
or similar ? These people think your money is theirs to confiscate and use as
required .
.
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All paper is a short position on gold.
I am planning to go back to work full-time in the next 18-24 months, and want to make sure we're opening the right retirement accounts so we can max out our contributions once our joint income increases.
Are the contribution limits for 401k's and IRA's separate? If we have a Roth 401k and a Roth IRA, can we contribute the maximum to each account? Or is the higher maximum for the 401k the TOTAL we can contribute across all accounts?
Example: DH is under 50, so the max he can contribute to a Roth 401k is $17,000. In addition, the max he can contribute to any IRA is $5,000.
If I am reading my information correctly, they are two separate animals. I only have to be concerned if I have both a traditional 401k and a Roth, or a traditional IRA and a Roth IRA. Then you have to split the contribution for that particular kind of fund across the two accounts.
Example: We have a joint 401k (traditional or Roth) through DH's work and I have a separate Roth 401k. We can only contribute the maximum of $17,000 across both accounts. But we could still open an IRA (either traditional or Roth) and contribute an additional $5,000.
Is that right?
Additional question. Since I'm over 50, does the additional "catch-up" $5,000 I can contribute have to only go in my account? Or can I put it in our joint account?
Yeah, it might be time to pay a financial advisor...
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"The problem with this world is that everyone wants a magical solution to their problems, but everyone refuses to believe in magic." ~The Mad Hatter, Once Upon a Time
There's only us, there's only this: Forget regret or life is yours to miss. No other road, no other way, no day but today. There's only now, there's only here; Give in to love or live in fear. No other path, no other way: No day but today. ~Rent
"Life is a banquet, and most poor suckers are starving to death." ~Auntie Mame
Lacking so far is the word 'debt'. Are you in any? To what degree and at what annualized rate? Is any of it consumer debt at high interest rates?
Contrast the realistic rate of return of any retirement plan with the money out the door from debt servicing. If you're looking at 5% compounding from investments, but you have a credit card you're paying 15% on, every dollar still on that credit balance wipes out three dollars on investment.
Once all debt with interest over realistic returns on investment is eliminated, then it makes mathematical sense to begin putting money away for investments.
Bear in mind that returns are potential; accrual of debt interest is certain.
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401K Accounts -- a good time to start?
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