My 401K........how much to invest yearly?

[Regs]

At least 6%.

 

[JEDI]

Originally posted by: Special K

Originally posted by: JEDI

Originally posted by: vi_edit
General opinion is to max out your match on your 401k, then max out your Roth IRA. If you still have money left over, go back and add more to your 401k.

1) max out 401k match
2) pay off your non tax deductible debts (ie: credit cards, car loans)
3) then have 6months of expenses saved up in bank acct for emergencies
4) THEN max out Roth
5) then max out 401k

What if you are just starting out and have a student loan with a moderate interest rate, say 6-8% variable? Would it be better to:

1. pay down that loan ASAP, and then build the emergency fund
2. build the emergency fund ASAP and then pay the loan down
3. do both simultaneously until the emergency fund is in place, and then finish paying down the loan ASAP?

you didnt lock in your student loan at 3.99% a couple of months ago?! (or whatever that rate is.)

the market is +10% on avg over 30 yrs. student loan at 8% is ~6% after tax deduction. pay the minimal on student loan, put the rest in emergency fund.

 

[Regs]

Originally posted by: JEDI

Originally posted by: Special K

Originally posted by: JEDI

Originally posted by: vi_edit
General opinion is to max out your match on your 401k, then max out your Roth IRA. If you still have money left over, go back and add more to your 401k.

1) max out 401k match
2) pay off your non tax deductible debts (ie: credit cards, car loans)
3) then have 6months of expenses saved up in bank acct for emergencies
4) THEN max out Roth
5) then max out 401k

What if you are just starting out and have a student loan with a moderate interest rate, say 6-8% variable? Would it be better to:

1. pay down that loan ASAP, and then build the emergency fund
2. build the emergency fund ASAP and then pay the loan down
3. do both simultaneously until the emergency fund is in place, and then finish paying down the loan ASAP?

you didnt lock in your student loan at 3.99% a couple of months ago?! (or whatever that rate is.)

the market is +10% on avg over 30 yrs. student loan at 8% is ~6% after tax deduction. pay the minimal on student loan, put the rest in emergency fund.

Oh crap Jedi, I forgot about this for myself. How do yo lock in 3.99%? Don't you need to have it consolidated from another lean holder?


The worst part is I have auto-deductions set on my checking account and I have nooooo idea what the interest rate is now.

 

[Special K]

Originally posted by: JEDI

Originally posted by: Special K

Originally posted by: JEDI

Originally posted by: vi_edit
General opinion is to max out your match on your 401k, then max out your Roth IRA. If you still have money left over, go back and add more to your 401k.

1) max out 401k match
2) pay off your non tax deductible debts (ie: credit cards, car loans)
3) then have 6months of expenses saved up in bank acct for emergencies
4) THEN max out Roth
5) then max out 401k

What if you are just starting out and have a student loan with a moderate interest rate, say 6-8% variable? Would it be better to:

1. pay down that loan ASAP, and then build the emergency fund
2. build the emergency fund ASAP and then pay the loan down
3. do both simultaneously until the emergency fund is in place, and then finish paying down the loan ASAP?

you didnt lock in your student loan at 3.99% a couple of months ago?! (or whatever that rate is.)

the market is +10% on avg over 30 yrs. student loan at 8% is ~6% after tax deduction. pay the minimal on student loan, put the rest in emergency fund.

The loan is a private loan with a variable interest rate. It can't be consolidated.

So you think I should save for retirement before paying down extra on that loan that can get as high as 8%?

 

[slpaulson]

I put 10% of my salary into a Roth IRA.

 

[jaybert]

Originally posted by: vi_edit
General opinion is to max out your match on your 401k, then max out your Roth IRA. If you still have money left over, go back and add more to your 401k.

thats not the general consensus at all...general consensus is to max out the 401k up to matching, then max out ROTH IRA, then finish maxing out 401k

 

[alrocky]

No Emergency Cash
Popular Advice You Shouldn't Take

"According to some financial experts, your top financial priority should be amassing an emergency reserve equal to six months of living expenses...

Let's be honest: This is dull, unrealistic and -- I would argue -- not all that sensible. Even if you regularly sock away 10% of your after-tax income, it might take four years or so to amass six months of living expenses...

Sound bad? It gets worse. While you were building up your emergency reserve, you were likely neglecting important goals like funding your 401(k) plan, which might earn you a matching employer contribution, and saving for a house down payment.

My advice: Forget the emergency reserve. Instead, stick at least enough in your 401(k) to get the full company match. Next, fund a Roth individual retirement account. If you still have extra money to save each year, by all means stash it in conservative investments in a regular taxable account.

If you get hit with a financial emergency, tap the money in your regular taxable account first."

 

[vi edit]

Originally posted by: jaybert

Originally posted by: vi_edit
General opinion is to max out your match on your 401k, then max out your Roth IRA. If you still have money left over, go back and add more to your 401k.

thats not the general consensus at all...general consensus is to max out the 401k up to matching, then max out ROTH IRA, then finish maxing out 401k

Reading comprehension obviously isn't your strong suit.

 

[rufruf44]

I have a distinct feeling that ROTH IRA/401K will be subject to tax one way or the other. There's already attempt by the donkey to do so in the past (Dick Gephardt).
For folks that lived in some states, traditional IRA might be more suitable than ROTH (Michigan for example).

 

[alrocky]

Originally posted by: OneOfTheseDays
Right now my 401k is set to deduct 3% from my payroll annually for annual payments of ~$2100 to my 401k. I could definitely put in more than this since I'm single and have very little expenses at the moment.

I'd like to retire when I'm 70-75 if that helps.

$70,000 * .03 = $2,100

For 2007, you may contribute up to $15,500 in your 401(k) and $4,000 in an IRA. It is to your financial advantage to invest as much as you can afford for retirement and to do so as soon as you can.

Start sooner not later

It would behoove you to drop the max into both accounts especially since you can afford to. You'll thank yourself way before you turn 70.

What mutual funds are availabe in your 401(k)?

 

[Jadow]

Originally posted by: rufruf44
I have a distinct feeling that ROTH IRA/401K will be subject to tax one way or the other. There's already attempt by the donkey to do so in the past (Dick Gephardt).
For folks that lived in some states, traditional IRA might be more suitable than ROTH (Michigan for example).

fvcker is out of a job isn't he.

I tell you what, my deal with the govt is, I pay the taxes now, get it tax free later. They try to mess with that, I get my old duck n pheasant gun out and march on the capitol.

 

[vi edit]

Originally posted by: Jadow

Originally posted by: rufruf44
I have a distinct feeling that ROTH IRA/401K will be subject to tax one way or the other. There's already attempt by the donkey to do so in the past (Dick Gephardt).
For folks that lived in some states, traditional IRA might be more suitable than ROTH (Michigan for example).

fvcker is out of a job isn't he.

I tell you what, my deal with the govt is, I pay the taxes now, get it tax free later. They try to mess with that, I get my old duck n pheasant gun out and march on the capitol.

I think trying to vote out the Roth is the equivalent of political Sepuku. I know that it has a sunset timeline where they can revote on it, but I just don't see that happening. You are talking hundreds of billions of personal assets here.

 

[evident]

Originally posted by: Naustica
Don't invest. That's what Social Security is for. You should be living it up in your 20's.

i hope to god you are sarcastic

 

[Azurik]

Originally posted by: alrocky
No Emergency Cash
Popular Advice You Shouldn't Take

"According to some financial experts, your top financial priority should be amassing an emergency reserve equal to six months of living expenses...

Let's be honest: This is dull, unrealistic and -- I would argue -- not all that sensible. Even if you regularly sock away 10% of your after-tax income, it might take four years or so to amass six months of living expenses...

Sound bad? It gets worse. While you were building up your emergency reserve, you were likely neglecting important goals like funding your 401(k) plan, which might earn you a matching employer contribution, and saving for a house down payment.

My advice: Forget the emergency reserve. Instead, stick at least enough in your 401(k) to get the full company match. Next, fund a Roth individual retirement account. If you still have extra money to save each year, by all means stash it in conservative investments in a regular taxable account.

If you get hit with a financial emergency, tap the money in your regular taxable account first."

I read that a few days ago... that guy... or rather if that is representative of his intelligence, is the dumbest guy to be giving advice for the future.

 

[Engineer]

Originally posted by: vi_edit

Originally posted by: Jadow

Originally posted by: rufruf44
I have a distinct feeling that ROTH IRA/401K will be subject to tax one way or the other. There's already attempt by the donkey to do so in the past (Dick Gephardt).
For folks that lived in some states, traditional IRA might be more suitable than ROTH (Michigan for example).

fvcker is out of a job isn't he.

I tell you what, my deal with the govt is, I pay the taxes now, get it tax free later. They try to mess with that, I get my old duck n pheasant gun out and march on the capitol.

I think trying to vote out the Roth is the equivalent of political Sepuku. I know that it has a sunset timeline where they can revote on it, but I just don't see that happening. You are talking hundreds of billions of personal assets here.

Voting out the Roth indirectly via a national sales tax might just be the hidden ticket. Then, everybody pays taxes on all of the money they spend...Roth or regular IRA/401k's.

 

[Pliablemoose]

Welll...

Here's my take

1.) Fund your 401K and put your $ in the most agressive funds you can invest in. Your maximum contribution is currently $15,500 (including your employer matching for those under 50 years old)

2.) If after you calculate getting the maximum into your 401K you have some spare cash, put another $4,000/year in a Roth IRA if you qualify to contribute to a Roth (google for the yearly income limits)

At your age, you should attempt to become a multi millionaire. and you can do it.

Only 9% of people have >$250K saved up, of those over 40, 14% have $250K or more saved.

<---I'm a 14%er, and happy as hell I listened to a friend when I was in my early 30's and started seriously saving $.

I recently rolled over my orphaned 401K's into a discount broker rollover IRA and I'm having a blast making those massive stock purchases & sales.

 

[rufruf44]

Originally posted by: Pliablemoose
Welll...

Here's my take

1.) Fund your 401K and put your $ in the most agressive funds you can invest in. Your maximum contribution is currently $15,500 (including your employer matching for those under 50 years old)

2.) If after you calculate getting the maximum into your 401K you have some spare cash, put another $4,000/year in a Roth IRA if you qualify to contribute to a Roth (google for the yearly income limits)

At your age, you should attempt to become a multi millionaire. and you can do it.

Only 9% of people have >$250K saved up, of those over 40, 14% have $250K or more saved.

<---I'm a 14%er, and happy as hell I listened to a friend when I was in my early 30's and started seriously saving $.

I recently rolled over my orphaned 401K's into a discount broker rollover IRA and I'm having a blast making those massive stock purchases & sales.

That's a disaster waiting to happen if that fund in the 401K plan is a mediocre one. There're plenty of 401K plan with terrible choices. One of the advantage of IRA is complete control of the investment.

 

[alrocky]

Originally posted by: Azurik

Originally posted by: alrocky
No Emergency Cash
Popular Advice You Shouldn't Take

"According to some financial experts, your top financial priority should be amassing an emergency reserve equal to six months of living expenses...

Let's be honest: This is dull, unrealistic and -- I would argue -- not all that sensible. Even if you regularly sock away 10% of your after-tax income, it might take four years or so to amass six months of living expenses...

Sound bad? It gets worse. While you were building up your emergency reserve, you were likely neglecting important goals like funding your 401(k) plan, which might earn you a matching employer contribution, and saving for a house down payment.

My advice: Forget the emergency reserve. Instead, stick at least enough in your 401(k) to get the full company match. Next, fund a Roth individual retirement account. If you still have extra money to save each year, by all means stash it in conservative investments in a regular taxable account.

If you get hit with a financial emergency, tap the money in your regular taxable account first."

I read that a few days ago... that guy... or rather if that is representative of his intelligence, is the dumbest guy to be giving advice for the future.

"according to some financial experts, your top financial priority should be amassing an emergency reserve equal to six months of living expenses"


That's odd. JONATHAN CLEMENTS is pretty well regarded and it's fairly sound advice. There is the opportunity cost involved in saving for emergencies if that is your top financial priority. Insurance and CCs should cover most emergencies - if they can't, the mad money you started to save probably won't save your arse anyway...

 

[rufruf44]

Originally posted by: Azurik

Originally posted by: alrocky
No Emergency Cash
Popular Advice You Shouldn't Take

"According to some financial experts, your top financial priority should be amassing an emergency reserve equal to six months of living expenses...

Let's be honest: This is dull, unrealistic and -- I would argue -- not all that sensible. Even if you regularly sock away 10% of your after-tax income, it might take four years or so to amass six months of living expenses...

Sound bad? It gets worse. While you were building up your emergency reserve, you were likely neglecting important goals like funding your 401(k) plan, which might earn you a matching employer contribution, and saving for a house down payment.

My advice: Forget the emergency reserve. Instead, stick at least enough in your 401(k) to get the full company match. Next, fund a Roth individual retirement account. If you still have extra money to save each year, by all means stash it in conservative investments in a regular taxable account.

If you get hit with a financial emergency, tap the money in your regular taxable account first."

I read that a few days ago... that guy... or rather if that is representative of his intelligence, is the dumbest guy to be giving advice for the future.

I agree for the average investor, the advice is hazardous. But for someone with enough financial savvy, it does make sense. Historically, the stock market return more than your typical interest bearing account. And in the event of getting caught in a bear market, there're other means to meet the emergency needs (HELOC, 0% CC offers, etc).

 

[Pliablemoose]

Originally posted by: rufruf44


That's a disaster waiting to happen if that fund in the 401K plan is a mediocre one. There're plenty of 401K plan with terrible choices. One of the advantage of IRA is complete control of the investment.

What part is a disaster?

 

[rufruf44]

Originally posted by: Pliablemoose

Originally posted by: rufruf44


That's a disaster waiting to happen if that fund in the 401K plan is a mediocre one. There're plenty of 401K plan with terrible choices. One of the advantage of IRA is complete control of the investment.

What part is a disaster?

This part:

Fund your 401K and put your $ in the most agressive funds you can invest in.

Invest that in several of the high flying aggresive but mediocre funds during the bear market = disaster.

 

[imported_Lothar]

Originally posted by: alrocky
No Emergency Cash
Popular Advice You Shouldn't Take

"According to some financial experts, your top financial priority should be amassing an emergency reserve equal to six months of living expenses...

Let's be honest: This is dull, unrealistic and -- I would argue -- not all that sensible. Even if you regularly sock away 10% of your after-tax income, it might take four years or so to amass six months of living expenses...

Sound bad? It gets worse. While you were building up your emergency reserve, you were likely neglecting important goals like funding your 401(k) plan, which might earn you a matching employer contribution, and saving for a house down payment.

My advice: Forget the emergency reserve. Instead, stick at least enough in your 401(k) to get the full company match. Next, fund a Roth individual retirement account. If you still have extra money to save each year, by all means stash it in conservative investments in a regular taxable account.

If you get hit with a financial emergency, tap the money in your regular taxable account first."

Dump any extra money you have in Index funds. Forget this building a "rainy fund" nonsense.

 

[imported_Lothar]

Originally posted by: Special K

Originally posted by: JEDI

Originally posted by: vi_edit
General opinion is to max out your match on your 401k, then max out your Roth IRA. If you still have money left over, go back and add more to your 401k.

1) max out 401k match
2) pay off your non tax deductible debts (ie: credit cards, car loans)
3) then have 6months of expenses saved up in bank acct for emergencies
4) THEN max out Roth
5) then max out 401k

What if you are just starting out and have a student loan with a moderate interest rate, say 6-8% variable? Would it be better to:

1. pay down that loan ASAP, and then build the emergency fund
2. build the emergency fund ASAP and then pay the loan down
3. do both simultaneously until the emergency fund is in place, and then finish paying down the loan ASAP?

Student loans are "good" debt.
Never rush to pay them. Always pick the longest paying period available. (ex: 25-30yrs)

Of course since you picked a private loan, you might be better off paying quickly.

 

[Azurik]

Originally posted by: alrocky

Originally posted by: Azurik

Originally posted by: alrocky
No Emergency Cash
Popular Advice You Shouldn't Take

"According to some financial experts, your top financial priority should be amassing an emergency reserve equal to six months of living expenses...

Let's be honest: This is dull, unrealistic and -- I would argue -- not all that sensible. Even if you regularly sock away 10% of your after-tax income, it might take four years or so to amass six months of living expenses...

Sound bad? It gets worse. While you were building up your emergency reserve, you were likely neglecting important goals like funding your 401(k) plan, which might earn you a matching employer contribution, and saving for a house down payment.

My advice: Forget the emergency reserve. Instead, stick at least enough in your 401(k) to get the full company match. Next, fund a Roth individual retirement account. If you still have extra money to save each year, by all means stash it in conservative investments in a regular taxable account.

If you get hit with a financial emergency, tap the money in your regular taxable account first."

I read that a few days ago... that guy... or rather if that is representative of his intelligence, is the dumbest guy to be giving advice for the future.

"according to some financial experts, your top financial priority should be amassing an emergency reserve equal to six months of living expenses"


That's odd. JONATHAN CLEMENTS is pretty well regarded and it's fairly sound advice. There is the opportunity cost involved in saving for emergencies if that is your top financial priority. Insurance and CCs should cover most emergencies - if they can't, the mad money you started to save probably won't save your arse anyway...

Robert Kiyosaki and Suze Orman are pretty well regarded by the masses too, but it doesn't mean they are great.

As to what you said above... if you don't have enough money to build a cash reserve (I don't personally think you need 6, I recommend 3 for people in our 20's) - you don't have enough to put into a Roth or 401k plan to make a difference (matching aside if offered). The financial mess you would be in without having a cash float in case you were laid off/couldn't work for a few months is a lot worse than missing out on a few months worth of 401k contributions.

Direct quote from Jonathan Clements:

"Those in their 20s are encouraged to invest heavily in stocks, because they have decades until retirement and thus plenty of time to ride out market declines. This is good advice -- in theory...My suggestion: Start with 60% stocks and 40% bonds."

This is probably the worst advice ever. In your early 20's, there is NO advantage is placing 40% of your retirement funds into bonds. You should be pretty be close to 100% in stocks. 80% for the most conservative 20-something year olds. One doesn't have nearly enough in retirement to think about having a stock/bond mixture.

Most of his advice is common sense. Buy a good sized house, but not too big. Don't buy life insurance if you are young and don't have a family.

It seems like a lot of the folks in the forum link you posted feel the same way.

 

[Jeff7]

Originally posted by: tfinch2

Originally posted by: joshsquall
What really bothers me about 401k is not even knowing if I'll live long enough to collect my money. I'm going to be pissed if I die and have boatloads of cash sitting in retirement accounts that I could have used to live a better (short) life.

How can you be pissed? You'll be dead?

You know how ghosts stick around because they have unfinished business? He'll stay as a ghost, since his unfinished business will be to get pissed off. That's kind of an open-ended commitment too, so crossing over just might not ever happen.