No politics- How’s your 401K doing for you?

[Wolf359]

Originally Posted by Ws6
This thread makes me want to figure out how to get a 401K. Can you get one without an employer being a part of it?


You don't need an employer to save money. Most don't do that much of a match anyway maybe 3-5% and you're limited by the funds that they allow.

But for normal investing, first you max out your 401k, then your IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account. The sooner you do it, the more time is on your side.

 

[javacontour]

Yep, company match and perhaps the company picks up some of the fees that an individual investor might pay.

There is nothing in my 401(k) that you cannot buy from a broker.

Originally Posted by Wolf359
Originally Posted by Ws6
This thread makes me want to figure out how to get a 401K. Can you get one without an employer being a part of it?


You don't need an employer to save money. Most don't do that much of a match anyway maybe 3-5% and you're limited by the funds that they allow.

But for normal investing, first you max out your 401k, then your IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account. The sooner you do it, the more time is on your side.

 

[LoneRanger]

I'm in a 457b not a 401k so can't comment.

 

[javacontour]

Originally Posted by LoneRanger
I'm in a 457b not a 401k so can't comment.

 

[csandste]

Originally Posted by Wolf359
Originally Posted by Ws6
This thread makes me want to figure out how to get a 401K. Can you get one without an employer being a part of it?


You don't need an employer to save money. Most don't do that much of a match anyway maybe 3-5% and you're limited by the funds that they allow.

But for normal investing, first you max out your 401k, then your IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account. The sooner you do it, the more time is on your side.


Take an employer match on your 401/403/457 then do a Roth to the max allowed. You can over save in a tax deferred plan and get slammed in retirement. See my earlier post about having my income taxes double in retirement.

And you need an employer who offers a 401K. If they don't match just fund your Roth to the maximum, then pay capital gains on regular investments.

 

[LoneRanger]

Originally Posted by javacontour
Originally Posted by LoneRanger
I'm in a 457b not a 401k so can't comment.

I opened the 457b in 1996 as a plan to supplement the state government administered defined benefits pension plan. I was on the job seven yrs before I finally opened the 457b in 1996. No employer match on it since we have the state pension plan. Should've opened it on day 1 !!! Youthful folly.

 

[Wolf359]

Originally Posted by Railrust
Originally Posted by Wolf359
Originally Posted by Pew
When you guys say 20% or 30% YTD, what does that mean? I have a 401k setup through my work but I've never had the time to really study into it.


Year to date means total return since January 1 2019.

You will notice that most people quote returns that aren't really beating the S&P 500. For instance in the Fidelity fund listed below, the expense ratio is .015 which beats Vanguard Index 500 Admiral as their expense ratio is .04. Year to date return is 29.81%

https://fundresearch.fidelity.com/mutual-funds/summary/315911750


I didn't realize Fidelity was actually lower than Vanguard. Wow. I've been kind of brainwashed into thinking vanguard is the cheapest around. I knew Fidelity was low too, didn't realize they were that low...might have to look into investing with them (my employer offers many different alternatives and Fidelity is one).


Fidelity actually has some zero costs index funds like a large cap one that seems to track the S&P 500 pretty closely so far this year. They also have a lot of funds where their expense ratio is less than Vanguard.

https://fundresearch.fidelity.com/mutual-funds/summary/315911628

https://www.fidelity.com/mutual-funds/investing-ideas/index-funds

 

[Wolf359]

Originally Posted by javacontour
Originally Posted by LoneRanger
I'm in a 457b not a 401k so can't comment.

Technically I don't have a 401k, rolled that over into a Fidelity IRA years ago. I just do IRA/Roth IRA investing along with the cash account. Too bad the old stock market thread got deleted.

 

[Alfred_B]

The taxes are at historical lows currently so tax deferred vehicles for saving might be risky in the long term.

 

[csandste]

Originally Posted by LoneRanger
Originally Posted by javacontour
Originally Posted by LoneRanger
I'm in a 457b not a 401k so can't comment.

I opened the 457b in 1996 as a plan to supplement the state government administered defined benefits pension plan. I was on the job seven yrs before I finally opened the 457b in 1996. No employer match on it since we have the state pension plan. Should've opened it on day 1 !!! Youthful folly.

At least when I retired, there seemed to be a very limited choice in 457 plans. ICMA and the mayors association come to mind. We used ICMA and as CEO, I always had a lot of trouble ferreting out fees which were pretty hard to find. I transferred everything into my IRA on retirement, but lots of people stayed with the 457 and I suspect they wound up paying quite a bit of money without knowing so. Not to denigrate getting into one. You get what you can get. If I had to do it over again, I would have taken the 457b to the match, not the max. ICMA did offer a pretty healthy selection of reasonably priced funds.

 

[maverickfhs]

Originally Posted by SLO_Town
I've been out of the market for almost 15 years now, sitting on cash. In hindsight, this has probably been the wrong choice. But, we own everything we have, including two homes that we bounce back and forth between. We have zero debt. In that sense, I feel very fortunate.

Scott


Curious, what else you would have done differently? Roth IRA, rentals or something else?

 

[maverickfhs]

Originally Posted by Wolf359
Originally Posted by Ws6
This thread makes me want to figure out how to get a 401K. Can you get one without an employer being a part of it?


You don't need an employer to save money. Most don't do that much of a match anyway maybe 3-5% and you're limited by the funds that they allow.

But for normal investing, first you max out your 401k, then your IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account. The sooner you do it, the more time is on your side.


Could you please elaborate on IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account? Thank you

 

[slo town]

Originally Posted by maverickfhs
Originally Posted by SLO_Town
I've been out of the market for almost 15 years now, sitting on cash. In hindsight, this has probably been the wrong choice. But, we own everything we have, including two homes that we bounce back and forth between. We have zero debt. In that sense, I feel very fortunate.

Scott


Curious, what else you would have done differently? Roth IRA, rentals or something else?

Leverage myself by taking out low interest rate mortgages on both houses, and then using that cash to invest in the market. In hindsight the stock market gains would have been far greater than the interest costs on the mortgages. My wife and I have no pension so Social Security will be our only source of regular income. But, we are sitting on a 7 figure cash pile, and once again we have no debt. So in a way leveraging with mortgages is a moot point. We had the cash to invest but instead parked it in CDs.

In hindsight we could have done better, but I'm happy with how our long term strategy worked out. If I had any regrets, I would have saved even more.

We accomplished this while being a single income family. Both my wife and I are college educated professionals. I worked the first "stint" so she could raise our children. I retired from a Fortune 100 company at age 52 after a very well compensated 25 year career. My wife has been the income earner for the last 15 years. She retires in 2 months. Yay!!!!

Had we done the duel income thing I might have the V12 Aston Martin Vanquish I so cherish! And the twin engine aircraft I always wanted!!! But I'm not feeling deprived. Life's been good to us.

Scott

 

[ArrestMeRedZ]

Originally Posted by Ws6
This thread makes me want to figure out how to get a 401K. Can you get one without an employer being a part of it?


To the best of my knowledge, not really. Unless you form an entity of your own and pay yourself out of it, the best you can do is max out your IRA/Roth IRA.
In essence you can become your own employer. And that comes with a lot of headaches.

Some really brilliant comments in this thread. I echo the mistake of not rolling enough into my Roth while working, and having over emphasized my 401k (now rolled into IRA). I had most of my investable money in real estate and figured my retirement accounts would only amount to pin money, enough for hobbies and travel. Big mistake. Now that I'm retired, in the time before I have to take minimum distributions, I'm rolling as much as I'm comfortable with into a Roth IRA each year.
With the market gains, I've not been able to bring my IRA down to the level I'd like. On the other hand, the Roth has come up nicely. I don't know what is the optimum mix, but I'm shooting for regular and Roth IRAs to have the same amounts when I have to start minimum distributions.

 

[Wolf359]

Originally Posted by maverickfhs
Originally Posted by Wolf359
Originally Posted by Ws6
This thread makes me want to figure out how to get a 401K. Can you get one without an employer being a part of it?


You don't need an employer to save money. Most don't do that much of a match anyway maybe 3-5% and you're limited by the funds that they allow.

But for normal investing, first you max out your 401k, then your IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account. The sooner you do it, the more time is on your side.


Could you please elaborate on IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account? Thank you

You can't do a Roth IRA if you make too much money. Then you have to do a regular IRA.

If you file taxes as a single person, your Modified Adjusted Gross Income (MAGI) must be under $135,000 for tax year 2018 and $137,000 for tax year 2019 to contribute to a Roth IRA, and if you're married and file jointly, your MAGI must be under $199,000 for tax year 2018 and $203,000 for tax year 2019.

 

[maverickfhs]

Originally Posted by Wolf359
Originally Posted by maverickfhs
Originally Posted by Wolf359
Originally Posted by Ws6
This thread makes me want to figure out how to get a 401K. Can you get one without an employer being a part of it?


You don't need an employer to save money. Most don't do that much of a match anyway maybe 3-5% and you're limited by the funds that they allow.

But for normal investing, first you max out your 401k, then your IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account. The sooner you do it, the more time is on your side.


Could you please elaborate on IRA/Roth IRA if you can depending on your tax bracket, then regular investing in a cash account? Thank you

You can't do a Roth IRA if you make too much money. Then you have to do a regular IRA.

If you file taxes as a single person, your Modified Adjusted Gross Income (MAGI) must be under $135,000 for tax year 2018 and $137,000 for tax year 2019 to contribute to a Roth IRA, and if you're married and file jointly, your MAGI must be under $199,000 for tax year 2018 and $203,000 for tax year 2019.



then regular investing in a cash account - that's more of an investing in the stock market, I assume?

Also in a situation where one has an option to choose one, which one it would/should be? Roth or traditional?

 

[Wolf359]

Originally Posted by maverickfhs
then regular investing in a cash account - that's more of an investing in the stock market, I assume?

Also in a situation where one has an option to choose one, which one it would/should be? Roth or traditional?


Depends on your tax bracket. Roth if you have the extra money. You basically pay taxes on it now but that's like investing more money than the limit. Then you don't pay taxes on it when you withdraw it. Laws and tax rates may change but long term tax free growth beats paying taxes.

You can just buy those mutual funds mentioned just by sending in the money to the mutual fund. I recommend dollar cost averaging, you can pick the day of the month to invest so you can can schedule it whenever you get your paycheck. Then you can invest a fixed amount every month. I think I mentioned before how I invested 2k every year for about 7 years in an IRA back in the 90s. That 14k turned into 45k by the time the market collapsed in 2000. Went down to 25k at the very low point. Was still ahead. People were telling me to get out back in 96. I made more money staying in that I would have if I had gotten out. The problem is that people think they know when to get out, but not when to get in. People have been saying to get out for the last 2 years and look at where we are today. Market is up again today although I expect like previous years, it will take a small dump at the end of the year when some funds re-adjust for end of the year reporting requirements then it usually recovers after the new year.

If you want to keep it simple, just do an S&P 500 fund. Over 75% of managed funds can't beat it and the ones that do can't do it every year.

 

[Mr Nice]

Wolf,

It depends on you age if you're willing to lose 55% of your IRA balance (your personal story).

If you are 45 years old that's not really a problem.... If that happens at 65 years old BIG PROBLEM.
Again, any investment game plan depends on your age and risk tolerance.

In the Dot Com explosion I lost about $60K and learned my lesson the hard way. I earned an MBA in DUMB from the school of hard knocks. ...¤ ...± 🤣. That's a Dave Ramsey joke.

 

[Andrew1972]

Originally Posted by Mr Nice
Wolf,

It depends on you age if you're willing to lose 55% of your IRA balance (your personal story).

If you are 45 years old that's not really a problem.... If that happens at 65 years old BIG PROBLEM.
Again, any investment game plan depends on your age and risk tolerance.

In the Dot Com explosion I lost about $60K and learned my lesson the hard way. I earned an MBA in DUMB from the school of hard knocks. ...¤ ...± 🤣. That's a Dave Ramsey joke.


You do t lose anything till you withdraw money. Age 65 you can still take on risk as you'll live 20 more years likely and won't pull it all at once.

I rarely look at balance statement.

 

[Wolf359]

Originally Posted by Mr Nice
Wolf,

It depends on you age if you're willing to lose 55% of your IRA balance (your personal story).

If you are 45 years old that's not really a problem.... If that happens at 65 years old BIG PROBLEM.
Again, any investment game plan depends on your age and risk tolerance.

In the Dot Com explosion I lost about $60K and learned my lesson the hard way. I earned an MBA in DUMB from the school of hard knocks. ...¤ ...± 🤣. That's a Dave Ramsey joke.


If you're willing to swing for the fences, you have to put up with the risks of striking out. I never felt it was real til I took it out anyway, the numbers can change by the thousands and sometimes on a daily basis. It was still way more than sticking it in a CD. Basically I was up 3.2x, then when it dropped, down to just being up about 1.8x. It also came back but took a little while to come back and I think I'm way up since, never sold it. Lost track of exactly what it should be now due to buying/selling/adding to it over the years.

Oh yeah, I didn't learn anything from the 2k bust, took another beating in 2007/2008. But I'm way up since then. I know people who got out last year and missed out on this year's 30% run.