Retirement Plan.... WTF

[Whostheboss]

Hello fellow E90post members, Finally i'm eligable at my current workplace to enroll in their retirement plan (401k thing) -

i will be doing 3%, which my company will match fully. Asset options are Cash, Bonds and Stocks ,My investment will be in Stocks.

Does anyone here have any further advice? or am i square?

[iatacs19]

put everything into 1 mutual fund, no need to over-diversify by choosing multiple funds.

check to see if they have a Roth 401K, and depending on your age you can try to do more than the 3%.

find out the vesting period for the employer match.

[jaserion]

Originally Posted by iatacs19

put everything into 1 mutual fund, no need to over-diversify by choosing multiple funds.

erm, i wouldn't do that. it really depends on your age. if you're in 20s/30s, you should put 70-85% of your contribution in stock/funds, and the rest in bonds, money market and etc.

i advise you to max your contribution (upto $15,500 for 2008), if not as much as possible. it's really a tax savings!

good luck. oh, never think that your 401k can be on auto-pilot. you need to check and diversify as needed.

[Whostheboss]

Originally Posted by iatacs19

put everything into 1 mutual fund, no need to over-diversify by choosing multiple funds.

check to see if they have a Roth 401K, and depending on your age you can try to do more than the 3%.

find out the vesting period for the employer match.

So everything just goes into one fund, like say Stocks? im 25yrs, the company matches my deduction fully upto 3%, so i should be looking at 4% ?? 5%??

[chuck92103]

Originally Posted by Whostheboss

Hello fellow E90post members, Finally i'm eligable at my current workplace to enroll in their retirement plan (401k thing) -

i will be doing 3%, which my company will match fully. Asset options are Cash, Bonds and Stocks ,My investment will be in Stocks.

Does anyone here have any further advice? or am i square?

My advice is get up to the 15% contribution rate as soon as possible. 3% is not much at all even with employer match.

The biggest mistake folks make is assuming they will work trough age 65. There are no guarantees with health or job security.

[iatacs19]

Originally Posted by Whostheboss

So everything just goes into one fund, like say Stocks? im 25yrs, the company matches my deduction fully upto 3%, so i should be looking at 4% ?? 5%??

the % you are comfortable with depends on your financial situation, only you know what that is. I personally would put away as much as you can.

if you have access to a good variety of mutual funds, then just pick one that is diversified. There is no need to complicate your 401k portfolio by spreading your money too much. Many times by diversifying too much you negate the benefits of actually investing in a mutual fund, as their strategies could be counter of each other. This does not mean you leave it on auto-pilot, you can move things around once a year, but for the most part, just stick with a fund that follows your investment goals and style.

[UncleWede]

The earlier you start putting lots of money in there, the faster it will grow!!! If you can afford 15%, do it. If you were putting 18% away (yours + company match) that's some serious cash to get your nest egg growing!!!

[Bimmer335i]

My company matches up to 5% but I contribute 8%. Good chunk of my paycheck goes into this TSP thing (it's a Federal thing, similar to 401k). They better not f*ck it all up, like Enron and sh&*t

[ideliver]

Put the MAX away...15.5k currently...with average returns...you will have several million dollars by retirement age...oh and keep fees to a minimum...mostl plans have an age appropriate option if you are the not the stock/mutual fund picker type

[Dascamel]

Agree, max that puppy out if possible.

[Maestro]

Yes max it out if you can afford it.

Because of the tax break you get, the $1000 a month you put into a 401k does not translate to $1000 less take home pay depending on your tax bracket it would be only $700 to $600 less each month.

I have always max it out since the beginning and today my 401K make up most of my net worth and the return has been better than a savings account or the houses I bought

[Lassaxi]

Originally Posted by iatacs19

the % you are comfortable with depends on your financial situation, only you know what that is. I personally would put away as much as you can.

if you have access to a good variety of mutual funds, then just pick one that is diversified. There is no need to complicate your 401k portfolio by spreading your money too much. Many times by diversifying too much you negate the benefits of actually investing in a mutual fund, as their strategies could be counter of each other. This does not mean you leave it on auto-pilot, you can move things around once a year, but for the most part, just stick with a fund that follows your investment goals and style.

Proof once again that no one should be getting their financial advice from a BMW forum...

[sillygoat]

Originally Posted by chuck92103

My advice is get up to the 15% contribution rate as soon as possible. 3% is not much at all even with employer match.

The biggest mistake folks make is assuming they will work trough age 65. There are no guarantees with health or job security.

he said it... get it up to 15%

it kinda sucks because you lose a lot of money but in the end itll be worth it because it adds up

[Glassy]

this thread seperates the adults from the kids.

[BMW!]

if my company's max is 3% (not sure) how can I put 15%? my work has Roth 401k should I use that instead of 401k? Will investing in stock > mutual funds?

[schadenfreude]

Originally Posted by BMW!

if my company's max is 3% (not sure) how can I put 15%? my work has Roth 401k should I use that instead of 401k? Will investing in stock > mutual funds?

The company match is 3%, but you can put in more. The first 3% is essentially "free money" since you wouldn't be getting a raise for not putting it away. You can put in as much on top of your first 3% as you want, as long as the yearly total is less than 15.5k.

As for investing in stock vs mutual funds, mutual funds invest in many stocks, which keeps risks down, but your potential returns are generally lower unless the whole market takes off. Investing in stock alone will limit your diversification (you generally can't afford to buy all 500 stocks on the S&P for example) but if the few stocks you buy do well, your earnings will be much better. Most experts recommend sticking with funds until you have a good idea of how things work.

[F2006]

Originally Posted by BMW!

if my company's max is 3% (not sure) how can I put 15%? my work has Roth 401k should I use that instead of 401k? Will investing in stock > mutual funds?

Usually the company sets a limit to what percentage they will match, but you can contribute a higher amount (althought there might be a maximum percentage of your paycheck that you can save, regardless of the company match).

The two basic rules are:
- Make sure you get all of your company's match (apparently 3% in your case)
- Maximize the fiscal benefit. You are contributing to your 401K with pre-tax dollars up to a maximum of 15,500 (this year, in the future this amount may be raised to account for inflation). This 15,500 does not include your company's match.

If you can afford it go for the full $ 15,500 amount. This way you will save $ 15,500 + 3% of your salary every year.

As far as the investment choice, 100% stocks is the way to go if you are very young. Avoid investing in your employer's stock (too risky). Make sure you check the expenses for your fund of choice. Index funds usually are better (lower expenses, better long term performance than most actively managed funds).

[Whostheboss]

Originally Posted by F2006

Usually the company sets a limit to what percentage they will match, but you can contribute a higher amount (althought there might be a maximum percentage of your paycheck that you can save, regardless of the company match).

The two basic rules are:
- Make sure you get all of your company's match (apparently 3% in your case)
- Maximize the fiscal benefit. You are contributing to your 401K with pre-tax dollars up to a maximum of 15,500 (this year, in the future this amount may be raised to account for inflation). This 15,500 does not include your company's match.

If you can afford it go for the full $ 15,500 amount. This way you will save $ 15,500 + 3% of your salary every year.

As far as the investment choice, 100% stocks is the way to go if you are very young. Avoid investing in your employer's stock (too risky). Make sure you check the expenses for your fund of choice. Index funds usually are better (lower expenses, better long term performance than most actively managed funds).

Considered

[BMW!]

should I go with my company's 401k plan or should I use Fedelitys?

[jlspeed29]

30% natural resources my friend!!!!! go balls out if you are in your 20's/30's!!!

[iatacs19]

Originally Posted by BMW!

should I go with my company's 401k plan or should I use Fedelitys?

I am guessing your company uses Fidelity to manage their 401K plans?

[BMW!]

Originally Posted by iatacs19

I am guessing your company uses Fidelity to manage their 401K plans?

it's through Merrill Lynch