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401 K

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AntyNet0914

401 K

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My work just introduced a new 401 K plan. I know nothing about 401 k's, and have heard they are great, and also heard they are crap. We have a plan with Merryl Lynch. The company I work for will match half of the first 6% we put in, with an unlimited amount for the year.At the presentation, everyone says "You MUST do this!" and I am ALWAYS cautious of any group that says things like that.Any advice would be appreciated. Thanks!-Antoinette There is an idea of a Patrick Bateman; some kind of abstraction. But there is no real me: only an entity, something illusory. And though I can hide my cold gaze, and you can shake my hand and feel flesh gripping yours and maybe you can even sense our lifestyles are probably comparable... I simply am not there.
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Mr. P

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Re: 401 K

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If the employer is matching, it is a good thing. If 6% of your weekly salary is $60.00, you would be saving $90.00 for retirement, per week. This is usually withdrawn from your check pre-tax, so that the impact on your pay is less than the $60 you put out. (For it is not taxed).This is usually a good deal. The drawback is, this is meant for retirement...if you withdraw early, you will be taxed and penalized, generally 10% on top of the tax.Also, this vehicle is usually based on stock market performance...so if stocks are down, you could loose money...but FOR THE LONG TERM...stocks are generally the best performers.There should be an offering of products to invest in form High-Risk to Low-Risk...depending upon your situation.Mr. P. The one thing of which I am positive is that there is much of which to be negative - Mr. P.The pain in hell has two sides. The kind you can touch with your hand; the kind you can feel in your heart...Scorsese's "Mean Streets"I came to kick ass and chew Bubble Gum...and I am all out of Bubble Gum - They Live, Roddy PiperEdited by: misterpessimistic  at: 10/5/05 3:10 pm
Keith and Company

Re: 401 K

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My company allows us to distribute our savings into different investment plans. So the year i lost $50 on tech stocks, i made it up with more long term plans.Which was a good thing, as i don't know enough to do more than pick random numbers. I just figured evenly spread was safer than maximizing eggs in one basket. Keith's Place
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Re: 401 K

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Quote:Also, this vehicle is usually based on stock market performance...so if stocks are down, you could lose moneyThe trouble with 401k is that many plans invest heavily in the company's own stock. Not a problem, probably, if your company is Microsoft or GM. Deadly if your company is Enron.Myself, I'd be leeary of getting all my retirement eggs in one basket, regardless of how tempting it looks. I'd try to have multiple avenues of investment if at all possible.Regards,M. Graham Trouble rather the tiger in his lair than the sage among his books.For to you kingdoms and their armies are things mighty and enduring,but to him they are but toys of the moment,to be overturned with the flick of a finger. -- Gordon R.DicksonEdited by: Murray Graham at: 10/5/05 3:24 pm
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Mr. P

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Re: 401 K

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Hmmm...depends on the company. Most will have a "Mutual Fund" type of plan that invests amongst many companies, bonds and other securities. If any plan invests in itself, I would not choose that plan (unless it is one of the companies that Murray mentions!).You want to diversify. Spread investments out. Even purchase your own IRA to keep those eggs separate.ALSO: Check the vesting schedule! Most 401k's have a vesting schedule for when you are eligible to claim the employer portion 100%. The last company I was with had a 6 year vestment...which means if I left before 6 years, I would have lost a percentage of what they contributed.You are ALWAYS entitled to the funds you put in yourself, barring loss due to investment losses. Any gains on money YOU put in are yours as well.Mr. P. The one thing of which I am positive is that there is much of which to be negative - Mr. P.The pain in hell has two sides. The kind you can touch with your hand; the kind you can feel in your heart...Scorsese's "Mean Streets"I came to kick ass and chew Bubble Gum...and I am all out of Bubble Gum - They Live, Roddy Piper
Timothy Schoonover

Re: 401 K

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My company matches 100% of up to 5% of your salary or $5000, anually, whichever is smaller.I wish I knew more about long term investment. Anyone have advice? Links to good articles?
0Lion0Eyes0

Re: 401 K

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Ahhh, this thread caught my eye because I am a CPA and I actually know something about 401ks - LOL. THat being said, everyone gave good advice and mentioned things my poor brain wouldn't have thought of right now.In general I would say go for it and maximize that company match so you can get as much as you can from the company. It is a nice advantage that it is tax-free. For example, if you are able to put away a lot of retirement money, right now you can only put $3000 - $4000 away tax-free yearly (IRAs). (I forget the dollar amount this year - I haven't been working for 4 months so haven't dealt with this lately). But 401ks you can put away about $14k tax-free - more if you are over 55. This is why in general 401ks are a much better retirement vehicle than those available to average joe blow with no 401k. If you're not going to put away more than 3k-4k a year though, well doesn't really matter. Except you wouldn't get the company match if you just put it in an IRA. As a general rule of thumb, if you can get that match, go for it. If it is going to kill you financially to put the money aside, maybe not worth it. Remember it will lower your income tax bill at the end of the year though.As a side note, CPAs don't know anything about investment - so don't ask me. : ) It's some myth out there that CPAs know anything about investments and I am always getting investment questions - ick...
AntyNet0914

Re: 401 K

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The vesting schedule is basically after 5 years you are 100% vested. The way this particular fund was explained to me is that there are 20 different "investments" involved in the plan that you can spread your money out in. I tried to read the book they gave me but it was almost like reading russian. I have heard that the match they are offering is pretty good, but from the people at Meryl Lynch, who I think would sell their first born to get you to believe they are the best to go with. At 25, I am becoming more and more concerned with saving money. I just want to do the best thing possible for my future.Thanks for all the great advice. Its always good to hear what other people think about these kinds of things.-Antoinette There is an idea of a Patrick Bateman; some kind of abstraction. But there is no real me: only an entity, something illusory. And though I can hide my cold gaze, and you can shake my hand and feel flesh gripping yours and maybe you can even sense our lifestyles are probably comparable... I simply am not there.
marti1900

Re: 401 K

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No matter your age, stash away as much as you possibly can for your retirement. Even if you are in your twenties or thirties, retirement time comes much faster than you can imagine.The DH and I retired at 55. Yea us. I highly recommend it. LOL But you can never stop working if you don't have money.Marti in Mexico
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LanDroid

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Re: 401 K

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The bottom line, as your work crowd said, is DO IT! You simply cannot do better than doubling your investment instantly while gaining tax advantages. As to the specific investments, you can probably get quick advice on which are conservative and which are relatively risky. Go with your gut feel on how much risk you want to take - in general, since you're young, more risk pays off better in the long run. Pick 3 or 4 of the investments (perhaps one low risk and several higher risk) and distribute your money between them. Then get educated on investments and fine tune things later when you understand the system better. You might find Suzie Orman's books interesting because she considers emotional and other aspects of money that most others ignore. The Millionaire Next Door is a book I wish I had read at your age.But get started NOW to maximize it! Edited by: LanDroid at: 10/8/05 1:10 pm
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