what do you mean by 'account ownership?'

12/12/2006 1:55:55 PM

a company 401k is what's called "Trustee owned." Because they are the trustee, they decide when you enroll, when you can move in/out of your investments, when you can increase/decrease contributions, what investment options you are allowed to contribute to, and how that account is paid out. One big issue I run into is: say you have $200,000 in your 401k and you have an accident and die. Your account now goes to your beneficiary. Well, the employer could require that that account be liquidated that calendar year. So, instead of paying taxes on $10,000-$15,000 at a time as you need it (assuming you are eligible for distributions), your beneficiary gets taxed on the entire $200,000. I have seen it happen. And it becomes an issure more when you are of retirement age.

12/12/2006 2:02:57 PM

Quote :

"If you make enough money to max a ROTH and contribute 10-12% in a 401k, then there are a lot of options as to what you can invest in."

If you make enough to do that then you are probably in a high tax bracket and in that case it seems, to me anyway, that a 401K would be perfect for additional investing.

12/12/2006 2:54:13 PM

you can bring yourself down a tax bracket if you contribute enough and are on the verge (as I understand it).

12/12/2006 4:54:28 PM

^ yep, which is exactly why i contribute above the company match to my 401(k).

12/12/2006 5:00:42 PM

Quote :

"If you make enough to do that then you are probably in a high tax bracket "

you wouldn't have to be in a high tax bracket to afford that. i could easily do that on my 50k/year salary (if the military had a 401k).

12/12/2006 5:06:32 PM

well % is relative, i took that to mean maxing out a roth and an 401k.

which, if you can put away 19k/50k per year,

thats goddamned impressive.



[Edited on December 12, 2006 at 5:21 PM. Reason : e]

12/12/2006 5:11:36 PM

a single male in the military probably can without too much difficulty.

12/12/2006 5:20:36 PM

yeah you're probably right. I didnt think initally about other expenses that wouldnt be applicable to a serviceman.

12/12/2006 5:22:59 PM

19k per year is awesome

12/12/2006 5:24:16 PM

Quote :

"you wouldn't have to be in a high tax bracket to afford that. i could easily do that on my 50k/year salary (if the military had a 401k)."

50k a year would put you in the 25% backet which I consider high for a single male. Keep in mind the avg family a 4 gets by on about 40K a year.

12/12/2006 5:31:42 PM

^^^the only things i can think of are health insurance and the fact that our pay is somewhat tax advantaged (certain components of the pay, like your housing allowance, are tax free).

Quote :

"well % is relative, i took that to mean maxing out a roth and an 401k. which, if you can put away 19k/50k per year,"

yeah, i was going off of maxing the Roth and then 10-12% of your gross, which is easily doable at even my salary.

i don't put away 19k out of 50k/year...I actively save/invest $1000 per month (so 12k/year). If you count what I accumulate in life insurance policies with cash value, as well as any other money that I accumulate in the bank without really having it earmarked for investment or savings (which doesn't amount to that much), then it's somewhat more.


^ok, we're just drawing the "high tax bracket" line in different places.

[Edited on December 12, 2006 at 5:34 PM. Reason : asdfasd]

12/12/2006 5:33:31 PM

Quote :

"our pay is somewhat tax advantaged "

No wonder your line is higher...

12/12/2006 5:42:48 PM

it's not that big of a difference...it's probably effectively a couple % higher pay.

12/12/2006 5:47:44 PM

I suppose, but it doesn't really matter considering there is no 401k for the military.

12/12/2006 5:55:46 PM

yeah, there's the TSP, but it isn't matched. I don't contribute to it, because I want my investments (besides the Roth) accessible before I'm older than dirt.

12/12/2006 7:07:00 PM

6 months living expenses always seemed ridiculously high to me.

I mean the chances of needing SIX months of living expenses at any given time unless you're doing illegal things are pretty slim.

I think you'd be better off with ~3 months of living expenses in the bank and a separate stock/bond portfolio. Although if your "savings" is in one of those new ~5% savings accounts then i guess its not an enormous waste of money.

I mean if you go on unemployment you're still bringing in 70% so thats essentially 4 months worth of savings (over a 6 month period) right there. Tack that onto your 2-3 months of personal savings and you've got over 6 months no problem.

If you really do go unemployed for longer than that or have some type of major emergency its not like you get KILLED by selling off some stocks/bonds. The gains you had from the investments would probably cover it assuming you're not having emergencies every 5 years.

Convince me why you'd need 6 months savings ever....

[Edited on December 12, 2006 at 7:34 PM. Reason : a]

12/12/2006 7:33:26 PM

i'm with you. I keep, at most, about 3 months' worth of expenses in savings. I see it as an opportunity cost.

[Edited on December 12, 2006 at 7:39 PM. Reason : of course, I'm paid on a set salary, and have good job security.]

12/12/2006 7:39:05 PM

You don't. One big investor caught a lot of flack when he said he only had on month of living expenses in liquid form. He said he wanted his money working for him not just sitting in the bank. The only thing you have to consider is that not everyone can go on unemployment.

12/12/2006 7:52:11 PM

How is everyone's 401k performing?
Mine is up 13 percent this year, is that on par with everyone else?

12/12/2006 8:20:36 PM

Mine is up 17% in about 8.5 months.

12/12/2006 8:28:15 PM

Quote :

"YTD Rate of Return 20.6%"

12/12/2006 11:20:32 PM

70% for unemployed, shoot....

I should get fired and use that six months to start a business, work in stealth mode

Naw, i guess work is ok. for now

12/13/2006 7:26:16 AM

401(k) performance matters not until you're getting ready to withdraw it.

I don't like risks, so I put mine in slow but steady funds that at worse, gain like 3% to match inflation. I never even look at my 401(k) performance.

12/13/2006 8:10:33 AM

^ you don't honestly believe that, do you?

12/13/2006 8:29:02 AM

Seriously, do the math on that, and think again on whether that is a good idea.

12/13/2006 8:48:00 AM

i typically change around my 401k investments quarterly unless something very large happens in a particular market

southpaw you should listen to drhavoc and bobbydigital

12/13/2006 9:10:20 AM

^^^^ you are 21 years old. this is not the time for risk aversion...you do that when you're 60. what you're doing is a horrible idea.

12/13/2006 9:16:38 AM

Quote :

"401(k) performance matters not until you're getting ready to withdraw it."

So, what do you do when you are getting ready to withdraw it and you've only managed to save a few hundred thousand for retirement?

Quote :

"I don't like risks, so I put mine in slow but steady funds that at worse, gain like 3% to match inflation. I never even look at my 401(k) performance."

You should seriously calculate how much money you need to save each year given your slow funds and see how long you will have to work to retire with X dollars and you'll probably find out that you will never be able to retire.

12/13/2006 9:44:01 AM

When the morning star rating says below average it may be stable but it isn't performing like it should.

12/13/2006 11:45:19 AM

^^,^^^,^^^^,^^^^^,^^^^^^ are correct. i am posting in agreement with everything they said

12/13/2006 11:46:43 AM

some of you folks took what I said (it was early) way outta proportion

but yeah, generally I don't look at it too much

EDIT: but it's working out ahight, just checked it: 19.42 % YTD return, word

[Edited on December 13, 2006 at 1:02 PM. Reason : .]

12/13/2006 12:52:04 PM

Damn, this thread makes me feel irresponsible or something.

I'm ignoring/opting out my 401K and the only savings I'm doing is a moneymarket with Virtualbank at 5%. Deposting about 200$ a week.

I make 60K with minor bonuses at my job currently but am looking to buy a house next year. It's too late isnt it? (to worry about 401K now) considering financially speaking all I care about until at least 2008 is (house, paying off CC debts)t.

12/13/2006 1:04:29 PM

it can only somewhat be argued as reasonable to ignore/opt out of your company's 401k plan if they don't offer matching - otherwise you are just throwing money away

12/13/2006 1:06:11 PM

True, but opting out to put 10K a year in a money market account instead doesn't seem too reasonable.

12/13/2006 1:09:28 PM

yes, I'd suggest ALWAYS taking them company up on the matching. I mean, it's FREE money. You can't beat it.

I'd get it started asap. If it gets decuted before you get your check, you learn to live without it, and the beautiful thing about pre-tax deductions is your check won't decrease nearly as much as the amount you're stashing away.

12/13/2006 1:09:33 PM

No, it's not too late. You could still throw in a % of your last paycheck.

12/13/2006 1:12:55 PM

Well the problem in my delay is that my company manages their 401K through Fidelity. So I have the different accounts to distribute them in, but you can only choose from a field of stocks, bonds, and funds. Real generic stuff like 'fidelity america fund' etc. I know nothing about this stuff.

There's also company specific stocks/bonds and stuff that I dont know if i should mess with. Basically, I want an agressive but not silly stupid portfolio that runs itself. But honestly the way this is setup, it is like greek for anyone that doesnt know finances very well.

12/13/2006 1:19:52 PM

It's certainly worth it to develop a working knowledge of personal finance.

Sadly, most people spend more time agonizing over a car purchase than their entire financial future.

12/13/2006 1:29:41 PM

Quote :

"I want an agressive but not silly stupid portfolio that runs itself"

Usually there is one specific fund just like what you described called Aggressive Life Strategy or maybe it will have a specific retirement date listed in the fund name like target retirement 2040 fund. You should be able to click on the fund somewhere to see a description.

12/13/2006 1:31:56 PM

Fidelity's funds do pretty well. my co-worker said about 17% from when he started

12/13/2006 1:36:38 PM

Yeah I know it's worth it but i just started this stuff since I finally landed a full time (non contract) gig and am getting married next fall.

My reasearch so far landed me with the money market account and disbanding my shitty wachovia savings account so that at least has been an improvement in the meanwhile.

Now for my 401K , I was just waiting to invest in something sound becuase it doesnt seem as important to me - I mean I know retirement is impt, but I'd rather focus on short term goals while putting something stable on the backburner that i can pay more attention to in a couple of years (managing the folios and whatnot).

So I see one fund I can use - Domestic Equity Mid Cap Growth - Fidelity Aggrssive Growth Fund (FDEGX). how bout that one?

12/13/2006 1:37:32 PM

Also, there are people on the payroll at these companies that are solely designed to help you make choices with your 401k.

12/13/2006 1:39:55 PM

There's also:

Fidelity Asset Manager: Aggressive and Growth
FAMRX and FASGX.

The FASGX looks good (70% stocks, 25% bonds, 5% short term, money market)

12/13/2006 1:40:28 PM

Doesn't look that great. Personally I would go for a large value fund if you are just choosing one. Here is the info for the fund you listed.

http://quicktake.morningstar.com/fundnet/TotalReturns.aspx?Country=USA&Symbol=FDEGX

[Edited on December 13, 2006 at 1:41 PM. Reason : ^^^]

12/13/2006 1:40:56 PM

for something like a 401k you may want to probably consider something with a blend of value and growth but midcaps aren't a bad thing.

12/13/2006 1:41:29 PM

Yeah I know marsh, but I hate to say that I trust a more similar demographic to my own (god forbid tdub what am i doing) with these things.

I suppose my fidelity netbenfits thing has a support line.

12/13/2006 1:42:02 PM

25% bonds seems too high

12/13/2006 1:44:37 PM

Yeah, i understand. I am really bad about learning these investments, etc... So i spent about an hour talking about my goals, etc.. with a merrill lynch rep, and they helped me decide on some smart choices for my 401k placement. We have a scheduled review every year to make sure things are going in the right direction.

12/13/2006 1:49:07 PM

After looking through a bunch of these, this looks like the best bet.

http://quicktake.morningstar.com/FundNet/Snapshot.aspx?Country=USA&pgid=hetopquote&Symbol=FEQIX

12/13/2006 1:54:29 PM