Yea, I invest the 401K up to the company match too. It don't matter much from one stock fund to the next. Just look for one with low expenses.
Looking for Investment and Credit Advice Vol. i don't want to resell drugs
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Yea, I invest the 401K up to the company match too. It don't matter much from one stock fund to the next. Just look for one with low expenses.
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This advice cannot be stated enough!
They're also back on par with where they were at the peak in August 2007. When you're investing in the market, you're basically investing in the economy. Do you think that large companies will grow over the long run? What about medium, small, & international? Yes, there will be recessions, disasters, and other unforeseen events. However, it's doubtful that overall that we won't see innovations during our lifetime. Yes, Buffet & Mungar grew up in a different time, but they're also been HIGHLY successful during the downturn as well. They looked at undervalued companies with otherwise strong models like banks & household products and used uninvested cash to buy bigger stakes in them.
In a 401K, it's tax deferred, meaning that you'll pay on it when you start withdrawing at 59 1/2 when you're hopefully in a higher tax bracket. There is no "tax free", although Roth accounts aren't taxed, you're contributing with post tax dollars.
As far as funds? I like index funds that mirror the market (have a Beta close to 1) with a track record of at least 10 years and low fees. I also like funds that track multiple indexes like the Dow, S&P, Nasdaq, Small Cap, Mid Cap, & an International fund to take advantage of other economies and emerging markets.
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Wait so ill eventually have to pay taxes on my 401k?
That sucks, what rate do they tax it at if I have say 2 million?
That sucks, what rate do they tax it at if I have say 2 million?
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Just put your money in a cd. Not much you can invest in with 15k. Just keep saving. When you get to about 40-50k, than you can start doing some investing.. but for now, your return on investment wouldn't really get you much.
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I'd say the index would be on the rise, no?
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I've heard of the "don't pay off your full balance on CC to build credit" and when I looked into it, it comes up a lot under "Myths about Credit Score". So I refuse to follow that strategy. Paying money to credit card company when you have the funds to pay it all off is stupid imo. Considering there are other ways to build credit (student loans, auto loans, mortgage, etc). And Roth IRA is definitely the way to go for investment, the fact that you can withdraw contributions at any time is a plus since you will likely earn more than savings account and you can just put it into a mutual fund and let it sit.
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Want to point me to some index funds I should look at? I'm considering using my roth ira for 2012 on index funds because of the first reason (mirroring market).
Index funds just mirror the market and have low fees for that reason. I don't think there is a difference between index funds other than what index it is mirroring. (Dow, S&P)
Somebody can correct me if I'm wrong.
Of course. You never paid taxes on it in the first place so of course you will have to pay tax at some point. It's taxed at ordinary income rates based on your withdrawal rate.
You aren't going to withdraw all 2 million at once so you wouldn't get taxed until it's withdrawn, but if you get withdraw $60K in a year, you are going to have to pay taxes on it like regular wages.
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CD's are paying <1% now while inflation is running anywhere from 3-4%, so you're losing money with a CD since you're getting taxed in the interest you earn (unless the CD is in a retirement account). There are plenty of funds you can start investing in with as little as $1000. Unless you're looking to go to a brokerage, then they usually have a minimum. He should look into something like Sharebuilder, ScottTrade, or Etrade for low cost options with low initial minimums.
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Correct. Some funds are better than others though due to fees, or companies being more heavily weighted within the fund though. Like I said though, look at the Beta of the funds. the close to "1" it is, the closer it mirrors that specific index. The higher it is, the more volatile it is, the lower it is, the more calm and stable.
