quick finance question - 401k

[ViviTheMage]

damn, that's a huge difference between 10% and 6%.

I'll leave it be, thanks dullard.

 

[Wyndru]

Someone else will jump in with a better answer but I'm pretty sure that even though it sounds like a good idea, it's actually not b/c the money withdrawn is not allowed to grow.

It doesn't lose either, in this economy that might be a good thing. I haven't made much on any of my investments in a long time. Even my money markets don't make anything significant.

With stocks down now, picking a style now and letting it ride will very likely do well. 10% would not be out of the question at all in next year starting now. You'd have a point if S&P were at 1400, but at 1200, your ideas are not as valid.

The only good years I've had in the past 15 were in the late 90's, other than that I've have not seen 10%, even with dividends. I doubt this will change anytime soon. Each time it's low everyone says this, so I buy more only to see it sit there and creep up at about 2-3% a year tops.

 

[seepy83]

While we're on the topic, I've got a question. If you did take a loan out from your 401k, do all of your contributions to the 401k go towards repaying the loan until the loan is paid off, instead of your contributions purchasing you X shares of Y investment/fund? And, if that's the case, does this potential set you back even further when it comes time to retire because right now you would be buying shares at a low price?

 

[dullard]

The only good years I've had in the past 15 were in the late 90's, other than that I've have not seen 10%, even with dividends. I doubt this will change anytime soon. Each time it's low everyone says this, so I buy more only to see it sit there and creep up at about 2-3% a year tops.

The recent past has nothing to do with the future. Things can tank now or they can skyrocket.

 

[Wyndru]

The past has nothing to do with the future.

I'm just illustrating an ongoing trend...that I doubt will be changing anytime soon.

 

[dullard]

While we're on the topic, I've got a question. If you did take a loan out from your 401k, do all of your contributions to the 401k go towards repaying the loan until the loan is paid off, instead of your contributions purchasing you X shares of Y investment/fund? And, if that's the case, does this potential set you back even further when it comes time to retire because right now you would be buying shares at a low price?

Depends on your company. But generally I think you sell stock and then rebuy the stock when you pay the loans back. That means a loan now would be selling when stocks are low and may be rebuying when stocks are high.

Also, this depends on the company, but some companies don't 401k match when you have a loan since your contributions are paying off the loan and not actual new investments.

Also, there is often a sizable yearly fee or at least an upfront fee which often comes out of your stocks that never gets paid back.

 

[dullard]

I'm just illustrating an ongoing trend...that I doubt will be changing anytime soon.

But, distant past can teach us lessons. Every few decades, the stock market goes on a 10-20 year pause. It always has and likely always will. The average pause is 16 years. We are about to the average length of the pause. These pauses are pretty easy to spot. http://pics.bbzzdd.com/users/dullard/DJIA2011.JPG We are right at an ok time to buy. We are not in the bad region or the good region. Note: this is only a long-term predictor, it doesn't predict short term events.

Your last 15 years were clearly bad times to buy. So of course you weren't happy with the results.

 

[Blieb]

THIS. I almost wish I needed a car right now so I could get in on 1.99%.

penfed, for both new or used (refinance):

[SIZE=+1]1.99[/SIZE]% APR†
12 to 48 months
$10,000 - $70,000

and it's easy as pie to join

 

[Printer Bandit]

Suze Orman says never take a loan out of your 401k.

 

[ViviTheMage]

Suze Orman says never take a loan out of your 401k.

Is that big Suze? hahah

 

[HardcoreRobot]

i think i heard that while you have a loan outstanding you can't make additional contributions? is that true or BS? if true, would be another negative.

 

[ViviTheMage]

That'd be an even bigger negative.

 

[HardcoreRobot]

found this on the web "A caution: some plans will allow or even require that you reduce or eliminate new contributions to the 401k plan while you have a loan outstanding."

http://www.cccsstl.org/lifeandcredit/401k.asp

so unsurprisingly its going to vary plan by plan but thats something to look out for

 

[GT1999]

I thought about doing this too... glad I didn't. Let the 401k grow.