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I'm close to maximizing my 403b contributions, and I may in fact make the maximum this year, but I've been setting aside money for a sizeable emergency fund. The $2500 (or so) difference in my contributions have made a difference over the past few years in helping me build that fund.
I have another 20-25 years or so until retirement, so I certainly hope it does grow.
During the Great Depression most banks folded.
Most corporations folded. Some companies folded right away. Some fell apart slowly and were gobbled up by competitors.
And some companies prospered.
If you and I were standing there in 1928, when the early signs were there. How could we guess which ones to pull out from and which ones to invest in?
It is a gamble.
Investing in the stock market has always been a gamble. Mutual funds try to spread out the risk. But the risk still exists.
So here we are, today, banks are folding, corporations are folding, the government is spending like fiends trying to out spend the economy. In the hope that more debt will fix everything.
How do you guess which fund will survive?
The roulette is spinning, where do you place your bet?
Red 12?
In 25 years, which company from today will still be in existence?
Most corporations folded. Some companies folded right away. Some fell apart slowly and were gobbled up by competitors.
And some companies prospered.
If you and I were standing there in 1928, when the early signs were there. How could we guess which ones to pull out from and which ones to invest in?
It is a gamble.
Investing in the stock market has always been a gamble. Mutual funds try to spread out the risk. But the risk still exists.
So here we are, today, banks are folding, corporations are folding, the government is spending like fiends trying to out spend the economy. In the hope that more debt will fix everything.
How do you guess which fund will survive?
The roulette is spinning, where do you place your bet?
Red 12?
In 25 years, which company from today will still be in existence?
You're right, it is very much a gamble. If I keep all of that money under my mattress, will it be worth anything in 20-25 years? If I keep that money in a bank, will the money still be there in 20-25 years? If the U.S. is living on borrowed money for generations to come, can we really hope that the FDIC will honor its commitments to individuals with bank accounts?
Things is, I have to do something with my extra money. I can spend it (and I do plenty of that); I can give it away (I do that, too); I can pay down debts (I do that, and only have low mortgage debt anyway); and I can save it. I don't make a huge salary by any means, but I can't possibly spend all of the extra money I have in my life. So, the extra money goes to charity, extra mortgage payments, and savings.
Though I'm as wary of the world economy and markets as other folks, I only put into my 403b what I can afford to live without. That happens to be a significant percentage of my income. Might I lose it all? Sure, possibly, but it's not like the gamble is a matter of life and death for me. However, I will probably want to retire at some time in my life.
If there's Social Security available for me, that's great. However, I'm not counting on it. My employer has a Pension Plan in which I participate. If that remains intact, that's great. However, I'm not counting on it. So, in the meantime, I have to think ahead using my own resources. My father and partner will leave me some property and money, and that's great, but I'm not factoring that in, and would rather have both people in my life, not their riches. So, this takes me to the 403b gamble.
Might my 403b grow? Sure, possibly--and in a 20-25 year time-frame, quite likely. Regardless of general world economic trends, some sectors are holding steady and growing now. My hope--and gamble--is that my fund-handlers know how to find those sectors and use them to my long-term advantage. As this global mess sorts itself out, some stocks will disappear, others will languish, and others will rise. Or perhaps even worse cataclysms await us. We just don't know, and everything we do is a gamble of some sort. We take risks for merely being alive.
Ultimately, by the time I retire, if I retire, I expect to have no mortgage, various kinds of cash and account savings, plenty of frugal behaviors, and--with some hope--one or two or three income streams (social sec, pension, 403b). Will it happen? Maybe, maybe not. But I'm living my life frugally now, so I won't be too high-maintenance in the future. So, that's the game plan....
Why don't we save and invest every dime? Maybe because our new socialist govenment will tax it more than we can save. Pay off your house, grow a garden, ad hope they don't tax you out of your house too.
If 401k allowed ready access without penalty, I'd be all over it. Unfortunately this is not the case. It's either loan (which needs to be paid back out of your pay check) or withdrawal (which not only gets taxed twice, but a penalty assessed).
I do contribute, but at a significantly smaller amount than at my previous job. This is due to the fact that when I contributed before, I watched my money dwindle by about 30% over time.
I think paying off a mortgage is the best thing that any of us can do right now.
I agree. If I had the money, I would do just that.
To answer the OP, my 401 k is now slightly less than a 200.5, so maximizing it would only lose me more money. I no longer work for the company that I had it with and have not had the money to put into it, which in this market is probably a good thing as it was heavy in high yield investments according to the management company. I'll get the statement in April to see how much I actually lost.
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