I've been contributing to my 401K since I started my job in 2006. My company matches 6% and that's what I started putting in at the time of employment. Each year, I've increased and now I'm contributing 10% (was 12% but I dropped back 2%). I was having JP Morgan manage my account for me, for a small fee of course. Well, I cancelled that the first of the year and left my money where they had it. It's currently in Bond, Large & Small Cap, and International. I have an option of 19 different investment options. I feel like I should be actively changing my investments but I have no clue about the stock market. Can anyone recommend a good book to get my up to speed on 401K's? I really don't know what I'm doing and I'm trying to be more involved with my account instead of "forgetting" about it. I'm 28 and would like to retire at 55.
No. You should forget about it. And I would stick with a company that knows what they are doing to manage your account if it's not too expensive. Luckily, my company pays someone to do that for me, so I don't have to worry about it. I contribute my 10% and I don't touch it. Oh, and if you can move your money to a Roth 401k, do it.
I'd be too scared to try and handpick investments. My work uses Troweprice, they have basically retirement year packages. 2020 2040 etc. They start out aggressive and as it nears your targeted date they progressively move it to lower risk investing. All I have to do is glimpse at the quarterly statements when they come in, early on you'll see big gains and equally with losses when the market takes big turns. But they know what they're doing and I don't. I'm sure they all have some package like that.
Donnie, that is awesome that you have been putting in 6% matching this entire time. Your sacrifice will pay off handsomely. My wife has been doing it since 2000 and my uneducated rear end has been doing it for a year.
I've been with my company for 13.5 years now and have contributed to get the maximum match from them all but one year. I have only changed my contribution distribution once, to go more aggressive. When I get closer to retirement, I will change it again to go super conservative. I'm with Hook just set it and forget about it.
Roths are the way to go. Pay your taxes now, and not later. If you dont know what your doing with stocks and bonds dont F with it. not sure what your age is but i would say leave it in a low risk plan.
I have worked at the same place for 17 yrs, with a 5% match. the first few years I contributed hardly anything (i was 24 when I started and the last thing I thought about was retirement), but now I do 10% with 5 percent being matched. Have been for about 11 years now. I have a nice chunk in there, and I leave my money fairly risky and just ride the rollercoaster.
First off good work and the mere fact you are contributing puts you light years ahead of others. I would disagree with Hooker as far as paying "professionals" and forgetting. Although he does mention fees. I would encourage you to read the writings of Jack Bogle and visit bogleheads forum. The main crux is to get your investments passively invested with as low as fees as possible. I am fortunate to have access to Fidelity at work, but while they administer the plans, its the fees in the individual plans that hurt you. That is especially true of "mutual funds" and target dated funds. Passive index funds beat the "pros" time and time again over the long run and let you keep more of your money. I also keep a small amount of "gambling" money for hitting homeruns or taking flyers on low prices stocks. (this was especially easy after the financial crash- scoping up bofa for $3.5, citi for sub $2.00 etc.) But the majority I mean like 95% goes into index funds that are cheap to administer. Watch the following about the power of small fees on your portfolio. http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/
nchunter, I'll check out your suggested reading materials. Thanks. There seems to be a debate within our office if you should contribute before or after tax. Won't they both equal out in the end?
depends if you think taxes will be higher or lower in the future... I'm going to bet they are higher.
This. Historically, your tax rate is generally lower when you retire, hence the tax deferred options being so popular with my parents generation. That's probably not going to be the case with people our age. My wife had 5% dollar for dollar at CVS, and we maxed out for three years she was there. Now she's at Wegman's it's 6% .50 on the dollar, but she can't contribute until she's completed one year of employment (coming up on that mark this fall). We will max that out as well. We also are moving some things around for IRAs as well along with my TSA through work. I'm happy to pay a company who knows what they're doing. Set it and forget it. We're young. It SHOULD pay off.
I pay someone. I don't have time to learn this, and there is too much risk associated with me screwing around with it. I'd rather focus my time on earning more to contribute more. JMHO. If I want to get involved in something with investments it will be something more liquid that I can tap before 62 y/o should I decide to retire early or if I want to buy a business someday.
I did day trading for a bit. Trust me you dont want that stress. Once all my debts are paid off (car some loans) im going to start investing more and trading more, but, it's going to come with a large amount of stress. It is best to forget and just live life, in the end when you pull out you should have more money. The downside is that you couldve made $$$% more.
Taxes withdrawn when you retire depend on Age and amount drawn. I think its basically like a paycheck. You are better off paying them now.
Dave ramsey on 401 http://www.daveramsey.com/blog/401k-enough-for-retirement Sent from my SAMSUNG-SGH-I317 using Tapatalk 2
^^This. I am betting they are going to be higher as well. I look across the pond and see 50% in taxes plus VAT's and I think that essentially this is a suckers bet. Pay them now and let your money grow. My only concern is that the gov will panic with this perceived freebee and impose some type of minimal 4% withdrawal tax or something. In the past when top tax rates were so high, like in my parents day and age, they bet the opposite way and it paid off as well. Regardless, it is also possible to not be roth eligible in a dual income family due to income limits. My wife and I no longer qualify for Roth's or Deductible IRA's so I am forced to pay the tax man now regardless. There almost seems to be no limit of howw much to save. Short answer is as much as possible and still have enough to live on now. I feel almost universally, that the retirement game will be changed to close gapping budget holes.
