YA401(k)T

[kyparrish]

My company matches 50% of my 401(k) contributions up to 6%. Since I started my 401(k) a few months ago, I had it split up evenly among stuff that was conservative and aggressive.

My question is, being that I'm only 23, should I just put 100% into something like a Baron Fund which has the highest risk, but has the highest chance of a good return, or should I still invest conservatively. Or, does it not really matter at all since I'm only 23.

:beer:

 

[EagleKeeper]

You should choose the level of risk that you are comfortable with.

When I was younger, I had 60% Agressive, 25% mid-Risk and 15% in low risk
At that time I did have a family.

I have advised my children to go as far as 75% agressive and 25% mid-risk while they are care-free.

 

[KeyserSoze]

Can I reccomend some other advice.

When I started working, while living at home with my parents, they would always say "401K, 401K, it's the greatest, blah, blah, blah. Put as much as you can, max it out." Looking back, this was a dumb idea. Keep it in there, a good amount, but take whatever else you can afford to NOT put in there, and think about other investment idea's.

I wish soo bad, that I had started to keep a seperate savings fund for a downpayment on a Condo. Because I don't know if that'll be possible when I move out soon. Had I thought about it back then, I dould have made some different decisions.

You get penalized for taking it out of the 401K early (duh!), so that's pretty much money I don't want to touch.





KeyserSoze

 

[kyparrish]

Originally posted by: KeyserSoze
Can I reccomend some other advice.

When I started working, while living at home with my parents, they would always say "401K, 401K, it's the greatest, blah, blah, blah. Put as much as you can, max it out." Looking back, this was a dumb idea. Keep it in there, a good amount, but take whatever else you can afford to NOT put in there, and think about other investment idea's.

I wish soo bad, that I had started to keep a seperate savings fund for a downpayment on a Condo. Because I don't know if that'll be possible when I move out soon. Had I thought about it back then, I dould have made some different decisions.

You get penalized for taking it out of the 401K early (duh!), so that's pretty much money I don't want to touch.





KeyserSoze

Yeah, I understand where you're coming from. i'm in the same boat too, trying to save up for a down payment on a house. But, I figure that if I ever really needed to withdraw from the 401(k), then it wouldn't be THAT bad. It would be taxed at the normal income rate, PLUS the 10% penatly, but if you're company is giving you 50 cents for every dollar you put in, plus whatever growth you might see, then it might be worth the penalty to take it out. Not to mention that all the while you've been lowering your taxable income for the past few years, hopefully saving a little cash on your taxes.

 

[EagleKeeper]

Put in at least enough to get the full company match.

The rules have changed to allow the withdrawl from the 401K for the first time purchase of a new residence.

 

[DaveSimmons]

At 23, you should probably be putting 90-100% of your 401k into stock-based funds, especially since bond funds aren't going to do well for the next couple of years.

Does your 401k include an S&P 500 index fund? If so, it will outperform most actively managed funds over time with much lower risk.

I actually have my 401k allocated like yours, but mostly because it's through PayChex and doesn't have any really good fund choices. So my goal for it is just to get the matching and not to lose money, until I change jobs and can roll it over to a brokerage. Then I'll either roll it over to my existing Schwab IRA/rollover account or send it to Vanguard.com for some nice VFINX.

 

[PolarNorth]

The short answer is max your 401K to make the most of the companies matching policy, then put the rest into a IRA or ROTH IRA. Read the fine print or reputable condensed version a bank etc.

Both the Roth and IRA have stipulations for taking money out for a first time home buyer. Both have restrictions, so read them yourself, is worth the time.

 

[Yossarian]

Originally posted by: kyparrish

Originally posted by: KeyserSoze
Can I reccomend some other advice.

When I started working, while living at home with my parents, they would always say "401K, 401K, it's the greatest, blah, blah, blah. Put as much as you can, max it out." Looking back, this was a dumb idea. Keep it in there, a good amount, but take whatever else you can afford to NOT put in there, and think about other investment idea's.

I wish soo bad, that I had started to keep a seperate savings fund for a downpayment on a Condo. Because I don't know if that'll be possible when I move out soon. Had I thought about it back then, I dould have made some different decisions.

You get penalized for taking it out of the 401K early (duh!), so that's pretty much money I don't want to touch.




KeyserSoze

Yeah, I understand where you're coming from. i'm in the same boat too, trying to save up for a down payment on a house. But, I figure that if I ever really needed to withdraw from the 401(k), then it wouldn't be THAT bad. It would be taxed at the normal income rate, PLUS the 10% penatly, but if you're company is giving you 50 cents for every dollar you put in, plus whatever growth you might see, then it might be worth the penalty to take it out. Not to mention that all the while you've been lowering your taxable income for the past few years, hopefully saving a little cash on your taxes.

my 401k lets me borrow against it and pay myself back for a home purchase. can't you guys do that?