401k....anyone here have one?

[50 Proof]

Today is the last day for me to enroll in the 401k plan where I work. Last year company contribution was about 32% and goes up or down depending on how well the company does.
I'm not sure if I should enroll or find other ways to invest my money. Does anyone here have one?

[negusm]

If your company contributes and you are not enrolled you are passing up free money.

Enroll and contribute as much as you can.

In the unfortunate event that you NEED to use the money, you CAN borrow against it and pay yourself back.

Even if their plans are poor...with a good match it MORE than makes up for any lackluster performance.

-Mike

[FoxChassis]

I was in one and in the just under five years I was in it, it accumulated twenty large. 8)

[onebad93LX]

I cashed my 401K in on 9/09/01.. My check was cut on 9/11/01 and I got it a week later. The investment company that cut the check was on the 101th floor of one of the New York Trade towers...SO I assume my check just made it out the door...

[50 Proof]

I just received a 5% pay increase(still doesn't amount to much) so I might take that pay increase and deposit that straight from my check every pay period.

fox- do you have an agressive plan? I might go for an agressive plan, i'm young with nothing to loose other than the pay increase I received, lol.

[Evil86lx]

Do it....

I put in 7% and aggresive... My brother is doing 15%..

kyle

[J. Alden]

A 32% match is pretty good. Like was said, free money. Also most are with pre tax money so that is another benefit. Most also have different funds to chose from depending on your risk tolerance. I assume you are fairly young so an aggressive fund is an option.

I have mine split between a few different funds. Trying to balance it somewhat.

There are situations where you may not want to be in a 401. Saving for a house is one example.

Overall they have a lot of benefits. Decent returns, forced savings etc. Keep in mind they are set up for retirement funds and if used that way can be great. Do not use them as a put and take. Like most investments the longer you are in them the better. No substitute for compound interest over time.

Good luck.

[EFI 4-EYE]

401K RULES. a 32% match is HUGE too. I wish mine went that high. My company matches dollar for dollar up to about 6% I think. Even still, I'm 28 years old and have been contributing to my 401k for about 3 or 4 years. It's well into the double digits and my actual contribution is a fraction of the total in my 401 now. DO IT NOW

[negusm]

A 32% match is pretty good. Like was said, free money. Also most are with pre tax money so that is another benefit. Most also have different funds to chose from depending on your risk tolerance. I assume you are fairly young so an aggressive fund is an option.

I have mine split between a few different funds. Trying to balance it somewhat.

There are situations where you may not want to be in a 401. Saving for a house is one example.

Overall they have a lot of benefits. Decent returns, forced savings etc. Keep in mind they are set up for retirement funds and if used that way can be great. Do not use them as a put and take. Like most investments the longer you are in them the better. No substitute for compound interest over time.

Good luck.

ALL 401K contributions should be with pre-tax money. I have never heard otherwise. A 401K is a BENEFIT when saving for a house. The mortgage company takes it into account as an ASSET in your favor. Also, you can borrow from your 401K if you need to. You pay yourself back and not the bank!

When my wife and I went for our first mortgage, the banker loved our 401K funds since he could see that we had a good financial buffer zone.

I do not recommend borrowing from it lightly as paying it back uses AFTER TAX money.

-Mike

[FoxChassis]

If I remember correctly, the company I worked for that I had my 401(k) plan with did not allow us to pick and choose what percentage of our investments went toward, for example, stocks, small cap funds, large cap funds, mutual runds, investment funds, real estate, cash, etc. The allocation was set at a certain percentage (of every dollar invested) for each type (stocks, mutuals, caps, etc.) of investment. All we could change was the percentage of our gross pay that we contributed to our plan. And no, it was not an aggressive plan. Nonetheless, the paln made some pretty good money with as little as I could invest (at the time I was investing, I was only making $10/hr.)

After I left that company, my 401(k) was rolled over into an IRA which WAS invested agressively -- into tech stocks and growth funds. Then the market took a dump a short few years ago and has been trying to crawl back since. My initial $20K is now worth just under $6K (from a low of $4500). I blame that much of a drop (it should have been a smaller drop) on two things: my portfolio wasn't diversified to begin with and the account manager didn't get off his ass and move stuff around when things started dropping so much.

Be agressive but at the same time be conservative. In other words, don't put all of your eggs in one basket. DIVERSIFY!! Oh, and start NOW, while you're young! You'll have a big jump on people who start late and try to catch up. ;)

YES, absolutely take advanatge of your employer's 401(k) plan. Like Mike said, if they do ANY kind of matching, it's free money. That's all the more money you'll have to buy shares/funds/real estate/cash/bonds/whatever.

I also urge you to also start an IRA, either a traditional IRA (tax deferrred - initial investment AND profit are taxable) or a Roth IRA (initial investment is after taxes so ONLY profits are taxable) and put the maximum in each year (I think it's $2500 for single, $5000 for married).

And above all, educate yourself. Seach online. Visit Websites such as The Motley Fool (http://www.fool.com). Etc, etc.

And one last thing, if you have ANY debts that have double digit interest rates (credit cards are the devil!! :evil:), pay them off BEFORE you invest your money into 401(k), IRA, etc.

[J. Alden]

I assume you did not borrow from it for your down payment? That can look like a liability for a mortgage when they calculate your loan amount.

You are right about the pre tax. Forgot that.

J.

[50 Proof]

Okay, you guys talked me into it. I signed up for it. I'm starting with a contribution thats a little more than 5%, for now. I'm gonna consider increasing it next time an opening comes around that allows us to modify our contributions.
The 401k is pre-tax dollar which is good because I received a pay increase, and the pay increase I got is all going to the401K plus a little extra. If i'm thinking correctly, the govt shouldn't be getting their hands on my pay increase.
They let me choose which funds to invest in. I can go in at any time and choose to invest in different funds if I want. For now I choose 4 funds. 45% and 40% into 2 different aggressive funds, 10% into a moderate fund and 5% into what they called a dynamic fund. They said the dynamic fund is really aggressive.
Thanks for the input guys. I've been needing to do something like this for some time now.

EDIT:
Fox - i'm gonna look into IRA's. i've been researching lately different ways to invest money. I'm in a very good position right now. I don't have any credit card debt at all(finally got them suckers paid off), no car payment, insurance on the two stangs is dirt cheap. The only burden is my student loans but the interest rate is 3% on them. 8) I have a nice chunk of cash sitting in a savings account because I like to have a certain amount of months worth of income put aside for emergencies. Now all additional money I can put aside will be used for investing(aside from money used to fix up my 86).

[negusm]

I assume you did not borrow from it for your down payment? That can look like a liability for a mortgage when they calculate your loan amount.

You are right about the pre tax. Forgot that.

J.

You are correct.

I also did a little more reading and there ARE times when borrowing from the bank is better than from you 401K. Generally it depends on how fast you will be paying back the 401K loan. The faster the better of course.

-Mike

[twister]

so far this year, I have had a 67% return on investment for my 401K

[FoxChassis]

I was a bit off with my quick forray into IRAs and their tax implications. You just can't trust me with the facts sometimes. :P....

http://retireplan.about.com/library/weekly/aa_FAQ1.htm

....If i'm thinking correctly, the govt shouldn't be getting their hands on my pay increase.
The government gets their hands on EVERYTHING one way or another and at one time or another (and sometimes more than once - ever heard of the fed's famous "death tax" which is essentially a huge DOUBLE DIP?). Some politicians want to let you KEEP more of your money :tu: and others want you to give them MORE than you're giving now. :x Think about that next time you vote.

A 401(k) is pre-tax alright but you pay taxes on your initial investment AND profits when you start drawing from the fund. Also, if you draw from the fund before the age limit (which is currently 59½) penalties can be as high as 30% of the balance (I think). Exceptions are one-time withdrawals for a down payment on a home or a dependant's college education.

http://retireplan.about.com/cs/401k/a/401k.htm
http://retireplan.about.com/od/rothandtraditionaliras/

[v8only]

Ive got one too, been doing it for less than a year, and I've already got like 3-4 grand. It is pretax money, so It really made almost no difference at all in my paycheck amount. You don't know it's coming out, and you've got money accumulating in an account. + you can take out a 401k loan for an s trim when it gets high enough hehe ;)

[50 Proof]

+ you can take out a 401k loan for an s trim when it gets high enough hehe ;)

why take out a loan when you already have the $ ?

fox - thanks for the links

[v8only]

being smart I see. you know I don't have $ for a bag of chips :)

[Hissing Cobra]

I painted brand new houses for 16 years and quit that job with just the clothes on my back. I had nothing for retirement. :cry: That won't happen again.

I then took a new job and for the first time in my life, I could save for retirement via the 401K plan. When I became eligible, I immediately began to contribute the maximum amount of 15% (it's now unlimited) of my pay and forced myself to live on the difference. I have to make up for 16 years of working and having nothing saved during that time.

It's now 2-1/2 years later and I've got over 25K in it. I can't believe it myself, but I've got a loooooong way to go. I don't know too much about all of this, but I have my contributions going into 4 different funds. A high risk fund, two middle of the road funds, and one low risk. Because of this, my balances don't fluctuate too much. When the markets rise and fall, I'm either in the positive a little bit, or in the negative a little bit. That's o.k. with me. I work too hard for my money, I certainly don't want to see it disappear because I dumped it all into high-risk funds.

For those of you who either don't contribute or can't. Please consider it! You'll be thanking yourself when you're 80 years old and your life is everything that you hoped it would be. ;)

[Mike 83 GLX]

I just re-enrolled today after letting my previous balance sit the last couple of years in order to save for building our new house. I'm getting back in at 8% and my employer contributes $.15 for each dollar of mine. Better than nothing. I think we are allowed to contribute a max of $12K/yr or something like that. Mine is set up in moderate risk investments. My wife makes alot less, so we are putting hers in very agressive investments for now. If hers does well, we'll change mine around a bit. My dad lost a ton(>$200k) because of his choice of investments, so I'm a little hesitant about taking much risk.

[BetterDays]

Piece of advice for all:

Start as young as possible due to compounding and put in at least the percentage of the match offered (if any)

I had one and rolled it into an IRA.

Waiting for new company to allow me into 401(k) - new hire rules.

[WHTLTHR79RS]

50 proof; hats off to you...you are thinking long term man. Check into this book: " Rich dad, Poor dad". and learn about compound interest and also the "RULE OF 72". these will set you up. the final thing to remember is this: When you work at a job, you are trading hours for dollars...period. You do the work and get paid once and once only. You NEED to do something where you do a job and recieve income from your efforts from that point foward. thats called residual pay. Your goal should be to earn more money when you sleep than your friends earn when they work. You will come across paperwork during your life that asks you to list your assets and liabilities. here is a line to remember:....If you lost your job tomorrow, your assets will "feed you" and your liabilities will "eat you". simple enough, right ???

Neil

[ZEN50]

Anyone lose their 401k? Just happened at my place of work. The boss/owner decided to loan it to his buisness over the last few years, overall it totals to over 1.1 million $$$$
We are in the process of trying to get it back with the help of lawyers,state police,prosecuters, etc. this totally sucks :evil:

Zen

[negusm]

Anyone lose their 401k? Just happened at my place of work. The boss/owner decided to loan it to his buisness over the last few years, overall it totals to over 1.1 million $$$$
We are in the process of trying to get it back with the help of lawyers,state police,prosecuters, etc. this totally sucks :evil:

Zen

That is one problem I heard about very small companies. I forget exactly what but small companies aren't required to work the 401k in the same way.

I think it was that small companies had an option to invest it in anything they want....usually they do the right thing and put it into mutual funds but I heard about a car dealership that screwed their employees in about the same way.

-Mike