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Re: 401K update
Board: Money and Investing
Reply to: #15719 by Moonduck
Feb 1, 2006 9:22am
Thread (disabled) Board
Quote I guess I get confused about the 401K here at my work. Some guy came and talked to us about it, but I had a meeting in the middle of that and missed out. What I understood was that I get to play with how my money is invested? My tax person told me that I should do it and it will help with my taxes as well.

Moonduck


Hi Moonduck

Search out www.bobbrinker.com and on his home page there is a function for finding his radio program in your area. The name of his program is Money Talk. He also has a listing for some basic books that will get you started. If you stay in the no load index Vangard fund family then it will be pretty hard to go wrong. One thing to consider is placing some funds outside IRA or 401K as well. When you need to start cashing in IRA or 401K then it is taxed at what ever rate you fall into. If you cash in assets outside of your IRA or 401K then it comes under capital gains(if you have held it over 1 year) and that rate could be far less. So best thing to do is max out retirement funds and kick in some in other accounts.

Don
Re: 401K update
Board: Money and Investing
Reply to: #15731 by Don and Gwen
Feb 1, 2006 9:49am
Thread (disabled) Board
Thanks for the advice, I'll have to give that radio program a try. Surprisingly some of this made sense, I knew about cashing in and paying taxes on it. I think that Vangard thing is an option for us. I just know that there were pie charts that had "safe" bets and "more dangerous" bets and high pay offs and low ones, and jeez louise, I just don't know!

Is this why places like Edward Jones exists? I've never thought about my retirement until lately (altho I'm still young) and I know my dad had a really good pension, so he never dealt with any of this kind of stuff. One of my friends here at work participates and says he doesn't notice it coming out of his check, but it does add up big time. I just know that I when I get to retirement age, I'll have the choice to do it and to not work. I want to enjoy my golden years to the max!

Moonduck
Re: 401K update
Board: Money and Investing
Reply to: #15732 by Moonduck
Feb 1, 2006 9:55am
Thread (disabled) Board
Quote I just know that I when I get to retirement age, I'll have the choice to do it and to not work. I want to enjoy my golden years to the max!

Moonduck


We be there!!!!!

Don
Re: 401K update
Board: Money and Investing
Reply to: #15713 by Kaaren the Vampire Slayer
Feb 1, 2006 10:25am
Thread (disabled) Board
Quote My old boss had me raise my 401k by 5% when he gave me a raise.


Putting a raise into your 401K is definitely a good way to painlessly save.

Another good way, is to increase it 1% every 3 months, if your plan allows that. Extremely painless, even on a limited income.
Re: 401K update
Board: Money and Investing
Reply to: #15719 by Moonduck
Feb 1, 2006 10:35am
Thread (disabled) Board
We have a pseudo-401K through work and we can direct our percentages of our contributions to 5 different types of funds:

Government Securities Fund (low risk, low return)
Bond Index Fund (low risk, low return)
Common Stock Index Fund (higher risk, higher return)
Small Capitalization Index Fund aka 'small cap' (higher risk, higher return)
International Stock Index Fund (higher risk but diversified to a larger extent, higher return)

If your work 'matches' your contributions--try to max out your contributions to the limit. Our employer doesn't match (YUCK!) so it isn't the best investment for us but we still contribute to it above what we put into our IRAs and Educational Savings Accounts each year because it does provide a slight tax benefit to us each year.

If you can direct your contributions to funds like I've listed above, then the ratio of how you direct your funds might be different depending upon your age/stage in life. We're mid30s with kids (no debt) so we're going aggressive with our investments (higher risk, higher return) and have decided on a split between the Common Stock, Small Cap and International Stock--it's up to you to decide on how you split it. We're something like 40%-C, 30%-S & 30%-I, but we tweak it every now and then. As you age, you modify your investments by heading towards the lower risk, lower return type funds--to help 'protect' your investments as you'll be more likely to withdraw from them as you near retirement.

If you have to choose a particular fund (or array of funds) for your 401K (which is probably how yours is set up) keep this in mind, too. You may want to diversify (in fact, that's what Bob Brinker will tell you too!) between a couple different funds if you're allowed. Don't have any more than 4% of your entire investment portfolio in one single stock (or type/family of stock). If you exceed that amount, you're more likely to take a major punch if that stock dives (look at Google's performance today alone as a good representation of why you should apply this rule!). Try to find funds that are in different families (the families are generally similar to the 5 types I've listed above) so they don't 'overlap' or invest in similar types of stocks/bonds. By doing this, you'll spread your 'risk' across the spectrum of the market and reduce your 'exposure' to downward trends in a single sector of the market (usually tech stocks do this alot).

Hope this helps,

dvn2r ckr

Good books to help learn more about this:

Eliminating debt so you have more to invest:
Dave Ramsey's "Financial Peace Revisited"
http://www.daveramsey.com
daily 3-hr radio show, even available on internet archives for free from his site

Investing without much effort: Lewis Schiff & Douglas Gerlach's "Armchair Millionaire"

MoneyTalk with Bob Brinker:
http://bobbrinker.com/
Radio talk show is 2-5 hours on Sat/Sun

AND I love books by Peter Lynch--

"One Up on Wall Street"
"Beating the Street"
and his books on investing for kids--he explains it in really easy to understand terms!!!
Re: 401K update
Board: Money and Investing
Reply to: #15737 by daelphinus
Feb 1, 2006 10:56am
Thread (disabled) Board
Quote AND I love books by Peter Lynch--

"One Up on Wall Street"
"Beating the Street"


Yeah, I really enjoyed those two book as well. =)

If you've ever read anything by Warren Buffett, it's pretty fascinating as well. He doesn't have any books (well, none that he's written, at least--lots of books about him, though!), but his annual reports are very interesting and educational and worth a peep every now and then. =) Not as easy to read as Peter Lynch's books, but very fascinating!

http://www.berkshirehathaway.com/

-- Ryan
Re: 401K update
Board: Money and Investing
Reply to: #15739 by Green Tortuga
Feb 1, 2006 12:08pm
Thread (disabled) Board
In my non-letterboxing life (could there be such a thing?) I write about books for an investment magazine. These are a few of my favorite personal finance/investing books (beyond the ones previously mentioned):

Personal Finance for Dummies and Investing for Dummies, both by Eric Tyson

The Only Investment Guide You'll Ever Need by Andrew Tobias (there's a newly updated edition)

The Millionaire Next Door by Thomas Stanley and William Danko - a very eye-opening book about why the people you think are really rich just might not be and how to follow the example of true millionaires to build your own wealth.

If you invest in mutual funds, you MUST read something by John Bogle (founder of Vanguard). His latest book, Battle for the Soul of Capitalism, is a scary and scathing look at the industry and the reforms he thinks are necessary.

If you're trying to figure out how much you'll need for retirement, the just-published book The Number by Lee Eisenberg gives a unique, funny and philosophical take on the subject. I had a lot of fun reading that one.

For parents wanting to teach their kids about money, I really like Raising Financially Fit Kids by Joline Godfrey and The First National Bank of Dad by David Owen.

There are a lot more books I really admire but time prevents me from making a truly comprehensive list. I have more shelves of financial books that should be legally allowed - if you're thinking about reading/buying anything in particular, I'd be happy to offer up my opinion if I've read it so just ask.

TurtleMcQ
Re: 401K update- Books
Board: Money and Investing
Reply to: #15742 by TurtleMcQ
Feb 1, 2006 1:13pm
Thread (disabled) Board
How about Arm Chair Millionare by Silent Doug?

Don
Re: 401K update
Board: Money and Investing
Reply to: #15713 by Kaaren the Vampire Slayer
Feb 1, 2006 1:13pm
Thread (disabled) Board
I have been putting the max into my 401K since 1989 and I have a nice little nest egg there! I used to date a stockbroker and he would help me make the decisions on what options I should direct the money to...

Unfortunately, my company does NOT match contributions in any way, shape, or form. Of course you can't blame them when they are bankrupt most of the time! Darn Airlines!!

My Dad was the one who told me to do the 401K in the beginning when I first got my job. If you have always contributed money to it, you never miss it! And he could see the handwriting on the wall as far as pensions and social security!! I am amazed at the number of Flight Attendants who did not do the 401K in the beginning and are just now thinking about it after 15 years of working!! Especially since many of them plan to try to retire within the next 10 years.

-Amanda from Seattle
Re: 401K update
Board: Money and Investing
Reply to: #15746 by Amanda from Seattle
Feb 1, 2006 2:25pm
Thread (disabled) Board
Quote Unfortunately, my company does NOT match contributions in any way, shape, or form. Of course you can't blame them when they are bankrupt most of the time! Darn Airlines!!


Thankfully, mine matches 50% of what I put in, so it helps out a lot.

I never thought about retirement, until my old boss really pushed it. My parents both did not plan for theirs. Dad is 61 and has barely anything for retirement. :( I don't want to have to keep working until I am 70 or more....unless I really want to, not because I HAVE to.
Re: 401K update
Board: Money and Investing
Reply to: #15751 by Kaaren the Vampire Slayer
Feb 1, 2006 2:37pm
Thread (disabled) Board
Quote Thankfully, mine matches 50% of what I put in, so it helps out a lot.

It really makes me crazy when I think of all the money I COULD have had! If USAirways matched contributions! WOW. But I am lucky that I have been doing what I have been!

I had an old boyfriend who was bamboozled that I had so much money taken out of my paychecks and put into 401K. (And this was in the early 90's) He couldn't see why I would do that! I told him that I didn't think HE would be taking care of me when I was 80 years old!! I was right about that! :-) He is long gone.
:-)
-Amanda
Re: 401K update- Books
Board: Money and Investing
Reply to: #15745 by Don and Gwen
Feb 1, 2006 3:21pm
Thread (disabled) Board
Quote How about Arm Chair Millionare by Silent Doug?


There's another one of his books I'd be more likely to recommend first. :-)

TurtleMcQ
Re: 401K update- Books
Board: Money and Investing
Reply to: #15757 by TurtleMcQ
Feb 1, 2006 6:14pm
Thread (disabled) Board
Quote There's another one of his books I'd be more likely to recommend first. :-)

Not going to toot your own horn???
Try Investment Clubs For Dummies by Silent Doug and TurtleMcQ!! OR

NAIC's Official Guide: Introduction to Successful Investing by TurtleMcQ

-Amanda from Seattle
Re: 401K update- Books
Board: Money and Investing
Reply to: #15765 by Amanda from Seattle
Feb 2, 2006 5:26am
Thread (disabled) Board
Wow! Thanks to everyone for all the suggestions and help. I'm actually looking forward to a trip to the library this weekend to see if I can find some of these or interlibrary loan them.
I'm starting to get intrigued with the idea of saving money and playing with it tax free so that I don't HAVE to work if I don't want to when I get there.
Luckily I have a few months before I can sign up and get started on it to learn about what I'm actually doing!

Moonduck