Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
You are naive. You don't even have any idea what different kinds of investment plans are out there, as evidenced by your cluelessness about withdrawal fees and job changes. 401k is not synonymous with retirement. There are other ways.
At least pick up 'investing for dummies' and find out what your options are, before rejecting the options you don't even know exist.
The ROI % figures people base their cheerleading of 401Ks on are simply ludicrous. More like a couple points above inflation if you're lucky, big whoop.
The real return on a 401K comes from the employer match. I am lucky enough to have an employer who matched dollar for dollar up to 5% of my income on my 401K contributions. If I just put in my 5%, and the company match is dollar for dollar, then even if I put it in a fixed income type money market or stable value fund within the plan, I still make a 100% return on my money, PLUS whatever tiny return rate I earn on the fund, with almost no risk, not to mention the tax deferal benefit. Even if your employer only matches 50%, that's still a fantastic deal.
Now I'm not exactly Warren Buffett, but I do know that making a 100%+ return on every dollar you invest is impossible in the stock market, so ignore your 401K and invest in stocks with a short term mindset at your own risk.
Quote:
Most people simply can't even max their 401Ks without incurring financial hardship by doing so.
Then those people are spending too much in other areas and need to change their lifestyle to match their income. Everyone's got their flat screen TVs, cell phones, Ipods, subscription satellite radio and 9000 tons of other crap they don't need, yet they scream poverty when it comes time to add another 1% to the 401K. Your retirement is no joke people, so grow up and make grown up decisions on handling your money. Trust me, it can be done. I speak from experience.
Last edited by treasurekidd; 04-12-2010 at 04:49 PM..
You are naive. You don't even have any idea what different kinds of investment plans are out there, as evidenced by your cluelessness about withdrawal fees and job changes. 401k is not synonymous with retirement. There are other ways.
At least pick up 'investing for dummies' and find out what your options are, before rejecting the options you don't even know exist.
I invest short term and I've done pretty well. I'm at about a 25% profit. I'm working on being able to invest more so I can get more on my returns.
My employer matches up to 3%. I use to work a finanical company for a few years. They would fee the hell out the accounts, I have no clue how people made money on their investments. I know the about IRA and Roth's but not 401k because I didnt deal with that.
Yes you are young and VERY naive. They are retirement plans for a reason, the reason being is you don't WANT to touch them until you retire and until then you have some nice tax advantages and "free" money that accompany those plans. If you want accounts for short and mid-term savings, by all means, set up other investment vehicles-that is smart, but don't give up your retirement years, keeping in mind you will most likely be retired for longer than you work.
If you leave your current employer, any vested money you can roll into an IRA.
I invest short term and I've done pretty well. I'm at about a 25% profit. I'm working on being able to invest more so I can get more on my returns.
My employer matches up to 3%. I use to work a finanical company for a few years. They would fee the hell out the accounts, I have no clue how people made money on their investments. I know the about IRA and Roth's but not 401k because I didnt deal with that.
It doesn't take a lot to get 25% return in a HUGE gain time in the market this past year. That 25% gain probably would have been a 48+% loss in '08.
It doesn't take a lot to get 25% return in a HUGE gain time in the market this past year. That 25% gain probably would have been a 48+% loss in '08.
beat me to it.
If you are able to get a better return elsewhere when you factor in tax advantages, employer contributions, and market growth for typical 401k funds then do it.
Also 401k is that one stash of cash that you cant touch unitl your retired or in a huuge financial disaster.
My friends think I'm crazy. They tell me I'm going to regret not investing just a few dollars each paycheck into an IRA. I also do not believe in life insurance, I think that is a complete waste of money at my age...I'm 24.
I believe in investing but I like investing for the short term. I think there is alot more money to be made with short term stocks. There are plenty of old people who did the right thing by saving up so they can retire. Many of them were hit hard with this recession. For the most part, there is a solid recession every 25-30 years. I also think inflation exceeds the interest made on an IRA.
Someone tell me I'm an naive young man? I just think there are much better ways to ensure stable living conditions when I get older without throwing money into a 30+ year account I can't touch without a massive fee.
You can still do short term trading in tax advantaged accounts. Trading and tax advantaged accounts are not mutually exclusive.
You can invest money into your 401(k), enough to get the match, then when you switch jobs rollover the 401(k) to an account you can do short term trading with (you can roll over a 401(k) to a normal brokerage account that's an IRA and still trade to your hearts content). An IRA/401(k)/Roth IRA are just tax designations - there is nothing that requires you to hold funds, buy and hold, etc.
If you are able to get a better return elsewhere when you factor in tax advantages, employer contributions, and market growth for typical 401k funds then do it.
Also 401k is that one stash of cash that you cant touch unitl your retired or in a huuge financial disaster.
Also if I am not mistaken it is protected from BK and lawsuits.
My friends think I'm crazy. They tell me I'm going to regret not investing just a few dollars each paycheck into an IRA. I also do not believe in life insurance, I think that is a complete waste of money at my age...I'm 24.
I believe in investing but I like investing for the short term. I think there is alot more money to be made with short term stocks. There are plenty of old people who did the right thing by saving up so they can retire. Many of them were hit hard with this recession. For the most part, there is a solid recession every 25-30 years. I also think inflation exceeds the interest made on an IRA.
Someone tell me I'm an naive young man? I just think there are much better ways to ensure stable living conditions when I get older without throwing money into a 30+ year account I can't touch without a massive fee.
Depending on your tax bracket and any employer match, a 401K *might* be an excellent investment, with you so young it has plenty of time to put compound interest on *your* side for a change.
401K is in general a retirement plan but it can in some cases be used for other things without having to pay the penalty - educational expenses IIRC. And even if you have to make a withdrawal and pay the penalty, it's better than borrowing from - who - the Sopranos?
Life insurance. If you are single and have no dependants, you are right, you don't need it. Most employers provide some life insurance for free or very cheap, typically about 1 year's salary - should be more than enough to bury you and tidy up your estate, if you even care about that.
When I bought my first house at 25 I was single, was offered "mortgage life insurance" - I took one look at that and said: "I'll haunt this house title or no title!"
Life insurance is IMHO strictly for people who have dependants that have not yet built enough wealth to not need it, although it can also be an excellent way to pass wealth on to a 2nd generation in many cases tax-free and probate free.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
