I need advice on 401K

[oldngray]

Just keep saving!

Someone like you could really stress how important a 401k is. Yell these youngster's that our pensions aren't what they used to be.

Take a little personal responsibility for your own future.

If they would only listen. They have different priorities and seldom really understand that a little saved now equals a lot in the future.

 

[IVE GOTTA PACKAGE 4U]

If they would only listen. They have different priorities and seldom really understand that a little saved now equals a lot in the future.

It doesn't matter if you pick all the right investment's, it will never beat the power of compounding.

 

[Brownslave688]

It doesn't matter if you pick all the right investment's, it will never beat the power of compounding.

Screw that . Spend like you'll die tomorrow.


Worry about the rest later.

 

[IVE GOTTA PACKAGE 4U]

Screw that . Spend like you'll die tomorrow.


Worry about the rest later.

That's my wife's job.

 

[Brownslave688]

That's my wife's job.

Don't forget the daughters.

 

[IVE GOTTA PACKAGE 4U]

Don't forget the daughters.

I know!

 

[oldngray]

... and son-in-law.

 

[IVE GOTTA PACKAGE 4U]

... and son-in-law.

Not paying for anyone else.

 

[Ms.PacMan]

I was doing bright horizon fund 2035, aren't the smaller funds the smarter funds to get in?

The Bright Horizon funds are merely different percentages of stocks and bonds depending on your retirement date. The farther out the retirement target (2035) the higher percentage of stocks.

The thought is that bonds are less risky than stocks because in a company bankruptcy bond holders are paid first and stock holders usually get pennies on the dollar, if anything at all. So that school of thought says that the closer you get to retirement the more bonds you should hold in your portfolio to mitigate the risk of losing money.

Personally I think that might have been prudent when people were just buying individual stocks but now with index funds that hold maybe only 1% or less of a hundred or more companies stocks, one bankrupt company is unlikely to upset the apple cart and failing companies are usually delisted from the S&P 500, 400, etc long before they fail. Anyway, I don't like the word risky when it comes to index funds....volatile, yes.

http://slickcharts.com/sp500
This is a composite and weighted chart of the S&P 500. It shows all of the companies and how much of a percentage goes towards the total. Every S&P 500 index fund will mimic this as closely as possible.

 

[Ms.PacMan]

In general stocks and bonds work against each other because bonds do well in high interest economies ( because people want to loan their money and get high interest in return - which is what bonds are....loans). Stocks on the other hand do well in low interest economies because companies can borrow money for their business cheaply (which is why the stock market is dipping everytime they mention raising interest rates....because corporate costs will rise because of higher interest payments on loans).

Edit because I fat fingered the post button.....personally I usually try and increase my allocation just a bit to the one that's beat down and cheap. I don't do the Bright Horizon funds.

 

[upschuck]

The Bright Horizon funds are merely different percentages of stocks and bonds depending on your retirement date. The farther out the retirement target (2035) the higher percentage of stocks.

The thought is that bonds are less risky than stocks because in a company bankruptcy bond holders are paid first and stock holders usually get pennies on the dollar, if anything at all. So that school of thought says that the closer you get to retirement the more bonds you should hold in your portfolio to mitigate the risk of losing money.

Personally I think that might have been prudent when people were just buying individual stocks but now with index funds that hold maybe only 1% or less of a hundred or more companies stocks, one bankrupt company is unlikely to upset the apple cart and failing companies are usually delisted from the S&P 500, 400, etc long before they fail. Anyway, I don't like the word risky when it comes to index funds....volatile, yes.

http://slickcharts.com/sp500
This is a composite and weighted chart of the S&P 500. It shows all of the companies and how much of a percentage goes towards the total. Every S&P 500 index fund will mimic this as closely as possible.

Why the Singapore Dollar? I know it is a tiny percentage, but still.

 

[Brownslave688]

 

[Brownslave688]

Whoopsie wrong thread. Lol

 

[Ms.PacMan]

Why the Singapore Dollar? I know it is a tiny percentage, but still.

Cash but not in US currency. Without looking it up I would guess that the Singapore dollar is pegged 1:1 to USD and never changes.

 

[Damondogg]

Interesting no one talks about the age of the OP. We know he's 18-20 away from his projected retirement, which means 18-20 years of growth. I'd personally think about doing less than max if you can't afford it and go the Roth401K route. Considering the majority of what's in your 401k will be growth, you'd already have a defined taxation at this point, the future, who knows. You'll also have to remember that any pension you receive will be taxable and adding any pretax 401k withdrawals will add onto that amount, increasing your tax bracket.

If you are worried about the increase in taxes you'd pay vs the amount you put it, just take what you currently do pretax and multiple your tax bracket into it, (10,000.00 * .25 = 2500.00). Now take the remainder 7500.00 and divide that by your yearly wage (example 7,500.00 ~ 50,000.00 = .15 ). So set your 401kRoth at 15% and you'll keep the same paycheck size as if you would have gone 25% pretax. The benifit of doing this will allow you have 100% tax free growth instead of oweing the government any money when you leave. If there's one thing we can all agree on, it's not oweing the government is a good thing.

I appreciate you're insight. I decided to go Roth now, 10%. Stopped my % with my traditional 401K

 

[olroadbeech]

seriously consider upping that to the max over time. we started at 10 . usually you don't miss it. then we went up to 15 when we got our raises. in just a couple years we maxed out for the last 10 years of my employment. ( wished we maxed out earlier. would have had close to a million )

make changes like buying a good used car instead of new and asking yourself if you really need the newest thing. you will really not miss "things."

glad I did. was able to retire 4-5 years early because of the tremendous growth.

 

[UPSTeamster Pragmatist]

I enjoy reading your sheeple responses. The only reasonably intelligent response was that the government will take a fair percentage of you assets. 401k is the worlds worst place to put money unless its matched. If you have substantial assets when you retire the gov will tax them at ahigher rate than now and you will get reduced SSI and will have to pay high deductibles for your medicare. You will say to yourself "ya well at least I have something" you wont stop for a second to think what inflation (just another tax) is doing to your remaining principle. The rich used to send their assets to banks in Switzerland where banks pay NEGATIVE interest rates. Why? This was enough of a problem that the DOJ went after those accounts and won. For heaven sakes as a fellow driver please enjoy the fruits of your hard earned labor now.

 

[upschuck]

I enjoy reading your sheeple responses. The only reasonably intelligent response was that the government will take a fair percentage of you assets. 401k is the worlds worst place to put money unless its matched. If you have substantial assets when you retire the gov will tax them at ahigher rate than now and you will get reduced SSI and will have to pay high deductibles for your medicare. You will say to yourself "ya well at least I have something" you wont stop for a second to think what inflation (just another tax) is doing to your remaining principle. The rich used to send their assets to banks in Switzerland where banks pay NEGATIVE interest rates. Why? This was enough of a problem that the DOJ went after those accounts and won. For heaven sakes as a fellow driver please enjoy the fruits of your hard earned labor now.

That is crazy talk right there.

 

[UPSTeamster Pragmatist]

Verification that sheeple are sheeple for a reason.... denial. Was hoping for more responses.....

 

[oldngray]

Just trolling then?