Anyone elses kicking ***? My 401k is up 22% this year. Too bad they all can't be like this.

 

ive only been doing mine for almost 2 years but im putting 10% of my check away into 401k and its doing quite well.

 

Once the 94 sells, Im starting my IRA

Wish I couldve done it this year, but the black car will be paid off in December, so Im not too terribly sad.

 

The sooner you start the better. Some of you guys are pretty young and it is amazing how starting early makes such a difference. This is especially true in years where the market is doing well.

Look at it this way, if you are unable to save into an account such as this and earn 25% rate of return because of other debt such as a car loan, then what is the actual cost of the loan? The answer would be 25% + the interest rate on the loan. This is why financial advisers always say your should pay yourself first...as in, invest in your retirement before paying for others things including houses and cars etc....

I did not start as early as I should. I started an IRA when I was about 22 years old. Cashed it in when I was 25 when I bought a house and then started my 401k when I was 25. I wish I had started sooner....I could retire sooner - lol

 

I would love to start but I'm still part time and I don't think I'm ready to start one yet.

Isn't there a fee everytime you switch it over to a new job?

 

i just started mine in feb. and im 21 so that should help me in the long run. im thinking about starting an IRA as well. WaterDR how much did you put in when you opened your IRA?

 

I know, and looking back, I shouldve just waited until next year to finish paying off my car, but I got so far into it, I figured, what the hay. BUT, Ill make up for it hopefully, by doing my 4k for this year, and my 4k for next year

Compounded interest FTW, and Im only 19.



Retire by 45 baby :woot:

 

there's no fee to roll over a 401K into an IRA or another 401K. My general rule of thumb is if your company matches any bit of your 401K contributions, then contribute the max until you reach their cap on matching. Then start taking that money out after tax (stop doing the 401K contributions but leave the money there for the duration of your stay at taht employer) and contribute it to a Roth IRA.

What you get with that is an instant 100% gain on the 401K contributinos that were matched. That money is taxed as income when you take it out at retirement age, so it's only so great. The Roth IRA is already taxed when you put the money in and they don't tax it again when you pull it out at retirement age. Aside from those two vehicles, you should also buy a small amount of treasury bonds every year until you start getting within 15 years or so of your retirement. That gives you money later which the government paid the interest on. A kind of way of getting some of your tax money back.

I have the problem of moving to a new company every couple years which makes managing all the IRA's and 401K's and options and blah blah blah a real PITA.

 

Explain the treasury bond thing, like, how much you would recommend putting into it.

 

they're just debt instruments for the government. when they spend what they don't have which is always, they issue bonds. We buy them (so do banks and brokerage houses) and save them or sell them until the maturity date arrives.

I put about 1K a year in bonds but your own financial situation will dictate what you should invest. The old rule of pay yourself first applies here and you are quite literally paying yourself by owning them over the long haul. They are equal to cash available at any time after the maturity date + interest. In the years with really high interest rates you'll want to get more bonds and in the years with the lowest interest rates, you'll want to buy fewer bonds. That will keep money available during low yeild years for you to invest in other long term devices. The idea is to maintain a balance of the really aggressive investments like 401K's with lower yeild, lower risk methods like bonds and cash. Bonds make sure your eggs aren't all in one basket.

I plan on cashing mine in as they mature and rolling the profits back into gradually shorter term bonds and CD's so that as I retire I'll have a steady income from nice safe savings mechanisms as well as all the other more aggressive avenues of income I have in place for my retirement. Hopefully that'll keep me from thinking SSI will do anything but take 10% till I die.

 

Noice! I have a savings bond now, which I rolled over from one that I had when I was born, but didnt know what most investors suggested as far as a steady holding of them. Thanks 'neck

 

no prob. always remember the key to a stable financial future is to diversify. get that money out there all over the place and make it work for you for a change.

know why they gave you a bond when you were born? so you'd never be broke and to teach you about investment. It's a good way to see, at just the age where it matters, that saving money when having it is not really that important to you can manifest huge profits for those days when it is really important. My parents were ignorant rednecks so I learned the hard way.

 

Thats one thing my parents have ALWAYS stressed, do it NOW instead of waiting.

 

Never put all your eggs in one basket, I have a 401k plus other investments. Most do not consider Art as an investment possibility but you have to know what to buy and its normal to see returns between 50% and up to 1000%plus.

 

I started mine at 17, they match 50% and it's fully vested after 5 years. I also participate in my company's Employee Stock Purchase Program. A percentage of my paycheck gets dumped into a temp. account, then once every 6 months it is used to buy the company's stock at 15% off.

 

OK...lots of good advice here. redneck has it pretty much nailed. Few things I would like to add.

1 - A 401k is a savings mechanism don't forget. A 401k can be invested in bonds, stock, money markets etc.... You can put it anywhere your employer's program allows. Most have multiple options, but they are limited to about 10 - 20 different investments.

2 - As far as "not putting all your money in one basket"...too true. BUT, most mutual funds are diversified by nature. Mutual funds are great, because they are diversified investments that are available to the smallest investors.

3 - If you are young....invest in gorwth oriented investments. I would say, stay away from bonds for long-term investments. Don't try to play the market.....look at the longhaul....over time stocks will perform much better. As you get older, you move your investments from stock into bonds. Some bonds also offer benefits for corporations that really have no merit to a private investor. Goverment savings bonds (E series) are a bit different because the interest can be tax deductible if used to pay for education.

4 - An IRA is a tool that young people can use that do not have a 401k available to them. As you get older and earn more money, an IRA will become useless as a tax shelter. I earn too much to deduct the contributions for example. IRA's can be rolled into other qualifying accounts such as 401k's I believe. Roth IRA's are different. You can't deduct your contributions, but your earnings are tax deferred.

 

Yea, I work for the state, and we only have retirement, which Im in, and vested after 5 years, BUT, they dont offer a 401k plan, so thats out. I know about the Roth IRA, but should I also start a regular IRA that I can contribute more to, or would that be pointless?

 

401 thousand whats??? lol.

Nah, jk. My 401k wont start till i'm out of college. IF i stay with this company.

 

[QUOTE=madmatt;227774]Yea, I work for the state, and we only have retirement, which Im in, and vested after 5 years.QUOTE]

Me to, not the state, but county. I became vested in November! woot woot. I also worked for the state for 2 1/2 year, but didn't put anything into retirenment. I was just out of college and needed every penny I could because of the cost of living....I should have sucked it up and put money into the sytem...oh well.

 

save everything you can everywhere you can. All retirement savings methods come with tax benefits that you'll really like and there's not a one that's pointless. The state plan is a single avenue, roth is another, etc... use them all. contributing to any IRA (roth or not) is good and will return profit on your investment in the time span left before your retirement.

My wife contributes a lot of her income to regular IRA's and education savings (and the house fund), I contribute to just about everything else with my income and maintain the household expenses on what's left. That's the key... savings before everything, then house, then fun.

And thanks to waterdr for clarifying the details. I think that brings up a good point... go see a certified financial planner. Tell them what your goals are and they'll tell you how to reach them. The modern monetary system is so convoluted that you shouldn't really try to understand it unless it's your job. Let the pro's tell you how and you just worry about making the money in the first place.

 

Roth IRA's vs Regular IRA's...

When you contribute to an IRA, your contributions are tax deductible UNLESS you make too much money....then they are either partieally deductible or not deductible at all. I am not sure, but it used to be that if you made more then $50k you can't take the full deduction and then by 100K you can't deduct any of it. The growtha nd interest on the account is tax deferred. This means that you pay regualr, ordinary income tax on it when you pull it out at retirement.

For a Roth IRA, NONE of your contribution are ever tax deductible, but the fund still gorws tax deferred and then you pay NO taxes at retirement when you pull it out.

IMO, if you think you will be making MORE money in the future then you are now (and thus in a higher tax bracket), then you should consider a Roth IRA over a regular IRA.

If you are making more then 100k, then a regular IRA is kind of pointless.

Keep in mind, my $50k/$100k values I stated may be old news. I don't know what are the current limits.

I have a spreadsheet that I created that I will post later. It will allow you to input your numbers and show you what you could earn in a 401k. It is pretty neat. It is not on this PC.

 

Cool deal. Roth only then, it is. Now someone buy the 94.