What should I do with my 401K funds and other investments?
AnomalousD asked:
I am 25 years old and have been working for about a year. I have about 12K in my 401K and some other money in savings.
I am 25 years old and have been working for about a year. I have about 12K in my 401K and some other money in savings.
I have been told to just keep contributing and to not pull out now because of the recession and possible depression.
Any other advice?
konichiwa:
There are early withdrawal fee and tax consequences if you pull money out at your age. It is generally worth forgetting about it until you are like 59.5. You might want to check into your account twice a year and see if your portfolio needs some tweaking. Also, see if you need to increase or decrease your contribution every paycheck. Look to increase it if your employer is contributing.
You could also borrow money against your 401K under certain circumstances, in which case you will be paying back the interest and principal on the loan to yourself.
May 27, 2009, 3:27 pmjoseph.foust:
If you can afford it, add more money now while stocks are “on sale”!
Let’s look at the best and worst things that might happen:
Let’s say you were able to defer an extra $100 a week for the next year, and you put it in your 401(k)
Worst case scenario, you add $5,200 to your 401(k) and lose it all. You are down $5,200!
Far more likely scenario, you add $5,200 to your 401(k), and over the next two years the economy drifts back to “normal”, and you earn 7-10% long-term on that extra $5,200 by the time you retire at age 65. Your extra $5,200 has grown to somewhere between an extra $153,00 if the economy ***** for the next 50 years, and an extra $1,500,000 if the economy performs as it has on average for the last 200 years!
Do the math.
May 28, 2009, 4:53 amDaniel M:
Put your money in the safest thing you can. Money market,Treasury’s, anywhere but the market…..I have been trading for 27yrs.(non professional) People will tell you that given your age.You should be 100% in the market. It’s called being long. Wait and see how this thing plays out. Lose 10 or 20% to the upside. I just do not like the similarity’s between what Paulson is saying, and what Hoover said! Peace Mac. ps A guy named birder (or something like that) answers a lot of these question. He gives great advise. INMHO
May 30, 2009, 6:56 amvilkri:
You should continue putting the same percentage of your income into your 401k plan. Even if the stock market keeps going down for the next couple of years, you will likely come out ahead in the long run. The technique of putting the same amount of money into an investment in regular intervals is called dollar cost averaging. If you want to know more about this technique, follow the links listed below. In any case, there is a very good chance that the market will rebound before you retire.
June 1, 2009, 5:32 am