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I like the 401k with matching because it does grow tax free until you retire and it’s a pre tax investment so it brings your taxable income down every year. I’ve had mine since 2005 and it’s weathered the 2008 crisis and the 2020 crisis. Basically, the dollars I invested in 2009-2014 have all tripled just by putting them in mutual funds instead of individual stocks.26
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The best you can do with your money for the next decade + is termed. "keep your powder dry". The bull market is over and we don't have quantitative easing to pop up the market. Use the next couple of years to convert any $ in traditional IRA/401k to Roth because taxes are going up & the market is going down. Find a few quality stocks and set orders (limit) to buy stocks on every correction and whatever $ you have in the market no, should be 8n cash o cash equivalents. When the air clears from COVID, people will realize that the baby boom generation that has kept the market bouyant for the past 20 years are no longer making contributions to their retirement account, in fact, they are taking distibutions. Don't jump on high dividend. Dividends can be suspended, cut esp. if they are high. If you are looking for dividends look for companies who kept paying dividend between 2008-2010. Companies w/ a history of raising dividends are good to look at. Growth stocks use debt to finance there early years before they become profitable, With quantitative easing gone rate are going to float to where they naturally would be. If you can afford to take the tax ht nw, I;d be converting traditionl IRAs/401k into Roths. Individual taxes were not made into law like corporate tax cuts. Trump used a process called reconciliarion which can go no longer than 9 years. With the money given away during COVID and the hit on income taxes - which has not done much of anything- will go away. The $ lost when Trump cut corporate taxes had expected companues to use the savings on wages, R&D, new hires. Things which would have improved the economy as a whole.. Instead, companies used them almost exclusively to buy back their own shares which drove the share price up. Doesn't seem bad un til you realize the C-Suite packages rely heavily on stock grants and options as part of the remuneation package. Buying the shares back was an easy way to make the share price higher which benefited the officers if the company but no one else. So the only real beneficiaries of the trump tax cuts were the already overcompensated CEOs, CFOs, CIOs in the C-suite. The individual taxes will probably be as low as they will be for decades in the next 3-4 years. If you can afford the tax hit, converting assets to Roths is probably the single most surefire way of planning for your financial future Once they are Roth's any $ taken will be non-taxable as long as its the principle and all capital gains gains the $ are also non-taxable after 5 years. Saving for a down payment on a residence andif you can afford it, investment real estate will be a bright spot. A fixed rate mortgage will cost the same in 30 years as it does now. Property taxes can go up b ut at least they remain deductible. If you live in an area that looks like it's improving, yo probably [can get deals now. Once rates go up housing prices will stabilize as the total amount of money you can spend on a house will be less since more of it will be going to the interest portion of the payment. There will likely be the gold bugs coming back once interest rates start to rise. I would avoid it, gold is inert does nothing to increase it's value. The majority of people on this forum, including myself, are not in the investment class that can benefit from increases in the price of art but pric es for that remained stable during the last bear market. I like sticks that are not followed by analysts or mutual fund/ ETF institutional buyers. You need to do you own research on them but fund managers are hopelessly antiquate in their view if the market, Everyone ants to be holding the same 10 stocks. When the efficient market hypothesis works, it does with companies that everyone follos. You find moonshots in the OTC less known stocks but if you go that way you need to know how to read balance sheets, income statements etc.0
In Aus it’s different in that 401k (called superannuation here) is mandatory for employers to contribute 10% of your salary anyway so my priorities would be different…
Generally though I contribute an extra 5% of my salary to super, invest 5% (originally this was real estate but now I do shares) and 10% to savings.
Savings is both long and short term - holidays, cars, big purchases and enough if we were to lose our jobs for a few months. If we didn’t have other investments then I’d be more strict on what we could spend from this account22
1. Don't get a fiscally irresponsible spouse.
2. Invest BEYOND "401-Pray" (as in "Pray that this works out.")
3. Invest in your health! Instead of wasting money on bad food and video games, eat right, exercise, and get enough sleep and peace of mind / lower stress. Why? Because fucking medical bills will wipe out that savings when you are old... if you live in a backward country like the US that doesn't have a nationalized/single-payer health system. So, the healthier you are, the less you have to pay in the long run.
4. Invest in an EV and green technologies so you are not at the mercy of the fossil fuel and utility industries.23
I've got a personal Roth IRA and a SIMPLE IRA that my employer matches 3% of my wages. My wife has a public employee pension and a 403(b), and we have a 529 account for our son's college savings. We also have a chunk of money in a CD account to pay for an upcoming kitchen renovation.
My IRAs and my wife's 403(b) are down this year, but they're still up around 43% over the life of the accounts. Markets go up and down, but over time the trend has always been up. When you're young it's better to invest in riskier funds that have the greatest potential for growth, and switch to a less risky portfolio of bonds and stable stocks closer to retirement.11
If in company like say Pfizer or Halliburton etc and they match funds then may be 401K. Sometimes, some companies will offer and match Roth 401k.
Roth: 1. no penalty on pulling monies out at emergency 2. taxes are taken out on front end rather than retirement.
-Taxes never go down especially with Nannie and Freedom limiting State of Biden and Democratic Leftists.
401K: pre-tax dollars taxes paid at retirement.
Banks: 🤷🏻♂️. Two friend that loves their 401 at credit Union.-one federal and one “local” kind of credit union.4
My opinion refers to teh United States; other countries may be different.
Of your choices, A-401K (or IRA or Roth IRA) is the best way to save, especially if your company matches a percentage of your contributions. Note, however, that a 401K is intended for retirement, and there are substantial penalties for early withdrawals (there are some exceptions, for example: buying a home).
The best way to save overall is a combination of 401K (or IRA) and savings in a bank or credit union (note: credit unions often offer higher savings interest rates than banks, and may not require minimum balances). Use the bank money without penalty when needed and leave the retirement money untouched until retirement.2
A for sure if that applies. B is good but sign up for high interest accounts. I think most banks offer this, just research your bank. Example mine, you can get a regular savings account, but you can also get a high interest savings account. Why that just isn't the standard is stupid to me lol, but whatever.
C - you can do this, some of the older generation have done this. Some don't trust banks, etc. But you'll only be saving money, not having your money work for you by getting interest etc. If you want that, you can also consider stocks/bonds.
D - really doesn't apply. It's for tax purposes generally, but unless you're a millionaire, it's not necessary.3
Well I have some money at home, but that's really not much.
I have in total 3 bank accounts, one is my main and I use it for daily stuff, one I save money to leave it there for emergencies and one I save money on there to invest them into shares but I haven't done that yet, I was planning on doing that in a few months but I'm not sure right now lol12
401k! It's not even a contest. But and IRA is generally better than a 401k because 401k usually have higher fees. 401k are just another fringe benefit. Conventional wisdom says that if the 401k your emoyer offers has a matching percentage. That you should invest just enough to get the full match and then put the rest into an IRA.
Don't get too spooked by what the economy is doing rn. Sure if think this going to be a sustained drop ( kind of like 2008) then by all means move the bulk of your money into more stable holdings) but understand long term investing is about compounding interest of many many years. You're going to have some bad ones. But the good ones should more than make up for it.13
I have not invested in my 401k since retiring at 42 so three years now... only put in 83K of my own money its valued over 238K now... sure I can't touch until I am 59, but I lucked out I have a pension and 401K and will get Social Security when I turn 62... but I might wait until 67 to draw on Social Security.11
Gold and silver investment, when done right, can earn you dividends while shaving off dollar devaluation.12
Saving generally isn't good if it's just sitting in a traditional savings account at a bank. Your money doesn't grow through compound interest. I just switched over to a HYS account and as far as 401k I have an IRA instead. But I'm going to see if I can get my ira money switched over into a 401k because my job has matching and I want to accumulate larger interest on my money and invest in index funds.26
I have the option to put money into a 401k but I’m opted out of it for now because I’d rather have all the money I can get because I need it at the moment.
but once I’m stable finically and have a little nest egg set up I’ll probably start putting money into it.2
It really depends how you want to manage it for your life and how it works for your particular job. How I understand it anyway. I haven't been fully schooled on any of it, but I'd prefer to keep a safe full of a huge chunk of my money and then another full of gold I traded my money for. If you can keep up with it yourself it's most reliable in my opinion.4
I never keep more than a couple grand in savings, any extra goes into investments in my TFSA or RRSP (basically our equivalent of a 401k)
Even a high interest savings account usually doesn’t keep up with inflation21
IRA or Roth IRA account. Drop in twenty bucks a month and by the time you retire you have a huge bundle after the interest.33
I started saving for retirement when I got married 26 years ago. I have mostly done well. The best years were when Trump was in the White House. Coincidence?13
Although not widely known, and individual can have both an IRA and a 401k and take advantage of the tax breaks offered by each.11
Investing in stocks. 401k can disappear. Same with bank. The interest you make is so little it won't add up to anything. You’d be better off putting your money in long term stocks that increase tear by year and pay dividends.2
I really don't know how I would invest, I probably just rather save up for the time being I don't entirely trust banks as much and I barely understand what a four one k is. But I definitely don't understand what investing entirely is! 🤷🏾♂️2
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Im going to assume that you meant invest in stock market in general when you said invest in 401K. Stock market >>> Savings account if your timeline is greater than 5 years. But even specifically to a 401K, most employers match your contribution up to 10% of your paycheck. Meaning if you make $2K a month and contribute $200 to your 401K, your employer is also contributing $200 making it a $400 contribution
Too be honest this time period now is looking like the best point in time in the last 2 years to start investing
Right she can't go off of what he coworkers say. She's gotta research for herself. If he's heavily investing in Stock that's why he's experiencing some losses. You win some , you lose some when dealing with stock. If she doesn't get the 401k together now she's going to be stuck in the future especially with the way this economy is going.
Do you know anything about rollovers?
Yeah its weird to see soo many responses here of people who don't seem to know why investing over them long term is going to provide much greater growth than keeping their money in a savings account or god forbid hiding money under a mattress like some people seem to be suggesting. Its a shame they don't really teach the benefits of investing while in school.
Not exactly sure what you mean by rollovers
I'm baffled as well. It's pretty scary the way they're living. The lack of financial literacy is concerning. Their money is just sitting in a bank collecting dust it's not moving at all.
But then again what if they die before seeing the money or don't have enough now in their bank account to survive?, I guess people want to see their money now
@Uptowngirl88 i definitely prefer to see my money now. I should care about earning interest but i kinda dont. I've always had that “what if i could die before retirement” mindset
@DizzyDesii in a way I have that mindset too but then again putting that money away helps to prevent you from blowing it. That's why I tossed mine into an ira. I can't touch that money until I'm like 50. I used to spend thousands of dollars at chumash casinos with my aunts, arcades, and shop at luxury boutiques. I used to blow 4k a month. So if u know you're that type of person to where money slips out of your hand then yeah I'd say 401k, ira, a cd.
Then put the money in an IRA or even a regular brokerage account and invest with that, plus have the option of withdrawing the money if you need to (although note there is a penalty for withdrawing from IRA before you turn 59.5)
Like there's really no good reason to keep money in a regular saving account (0.5% return yearly) compared to just investing in the S&P500 (~8% average return for last 30 years; 27% return for 2021) if you don't need it in like the next 5 years
Right do something with it
@Uptowngirl88 i love casinos and shopping but I've never touched my savings. I’ll spend a check but not the portion i save. If im gonna open anything, it needs to be something i can access whenever. I refuse to just put back for something i can't access 20+ years
Then again, with a regular investing account you can access the money at any time and with an IRA the penalty is 10% if you withdraw before you turn 59.5
That's not too shabby. Thats why I chose it. Kinda thinking of looking into a cd
They taught us all this in college in 2015 but i legit didn't try to remember any of this stuff
@DizzyDesii you have a point that's kinda scary knowing you can't access emergency money for 20 years
@Uptowngirl88 i shouldve done a CD considering i haven't touched the money 5+ years
@DizzyDesii you still can
@Uptowngirl88 nah cause i intend to touch it next year