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Not that anyone should want to consider this option necessarily, but is it possible for someone to invest in 'cash' within their 401k? I know you can invest in "very safe" Bonds.....but is cash an option?
i know Vanguard allows you to keep your IRA money in cash and you still get to deduct the amount from your income for the year...effectively reducing your tax obligations (for now) with zero risk.
Can you do the same with 401k?
Can you do it with a company 401k?
can you do it with an individual business 401k?
Could you? Yes but it would just depend on your options within your 401k. There more than likely is a money market,short term treasury fund or something of the sort. Not cash per say but about as low market risk as possible
Not that anyone should want to consider this option necessarily, but is it possible for someone to invest in 'cash' within their 401k? I know you can invest in "very safe" Bonds.....but is cash an option?
i know Vanguard allows you to keep your IRA money in cash and you still get to deduct the amount from your income for the year...effectively reducing your tax obligations (for now) with zero risk.
Can you do the same with 401k?
Can you do it with a company 401k?
can you do it with an individual business 401k?
Most 401k type plans have money market accounts, which are as close to cash as you can get.
Yes, that would be an incredibly bad idea to save long-term into a money market fund as opposed to dollar cost averaging into a diversified portfolio of stock index funds.
Do you think prices are going to be higher or lower by the time you retire? In the past 50 years, there haven't been any years without at least some inflation (.03% in 2009), though there were some such years further back. Prices will probably be higher by the time you retire. This means the value of the money in a money market fund will probably depreciate almost every year by around 3%, whereas inflating assets like stocks will generally see average annual long-term growth between 5%-10%.
I know OP doesn't intend to "invest" in a money market, but there are people who do this sort of thing or just leave all their money in checking/savings accounts and they don't know better. Anyway, cash funds can take different names such as "Capital Preservation Portfolio." Just call and ask to be sure.
I wouldn't try to play the market, especially in a retirement account. All through 2012-2013, many people kept their money in cash citing some news events, that it was only the Fed driving the market higher, or that volume wasn't increasing with price, but the market continued to pound higher. People generally underperform the market on their own missing out on hundreds of thousands or even millions of dollars long-term and are better off not looking in the first place.
cash is where you park the money you make from investing . it is not an investment. as an investment is it almost a guaranteed loss after inflation and taxes.
for retirees drawing an income from it ,cash has left retirees broke more times in any 30 year rolling period than any other investment. in fact 100% equities proved to be the safest bet as it failed only 2% of the rolling 30 year time frames since 1926.
There is no risk free investment. Even cash has the ability to depreciate through inflation overtime (and quite rapidly in some cases). The argument will always go back to diversification with a combo of cash, stock, bonds, real estate, etc...
My biggest single holding for the last 20 yrs has been Fidelity Contrafund. While it's not money market safe, it's got a long, consistent, proven track record.
Location: Chapel Hill, NC, formerly NoVA and Phila
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Quote:
Originally Posted by lenniel
My biggest single holding for the last 20 yrs has been Fidelity Contrafund. While it's not money market safe, it's got a long, consistent, proven track record.
Contrafund is NOTHING like a money market!
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