Finance/Investing ITT

[ZM Blue Devil]

if you are not investing in your 401k you are making a big mistake, once you max that out then you can look at other options. 401k combines growth with tax savings or rather tax deferring, which is great.

Great time to buy some steady companies. Lot of great books out there on the topic, no quick wins.

[nando]

yes but you pay taxes on gains rather than contributions. that's what makes a Roth IRA or 401k so powerful. in 40 years when I have 1.5 million in my Roth IRA, the government won't be able to touch any of it. with the regular 401k, you'll likely be subject to 30% taxes or more. The reason you do both is because the employer match makes it worth it even though you have to pay taxes on it later when the amount is much larger. If your employer doesn't match 401k contributions then max out your Roth first.

I believe the max contribution is 16,500 for all of the 401k/IRA programs combined. They are all tax sheltered accounts, if you are maxing that out you are doing quite well.

[nando]

So do you suggest only putting up the company match in the 401k (3% of gross salary in my case), then taking the extra I'm putting in the 401k and switch to a Roth IRA or Roth 401k like Heeter suggested?

Currently I put 6% of my pay in along with my 3% company match, so I'm getting 9% of salary in my company 401k (with my allottments I earned a 12% return on my last quarter).

Should I take the extra 3% I'm putting in my company 401k and put it in a Roth account? Should I do any post-tax contributions to my company 401k?

I know I need to be putting in more than 9% of my earnings into retirement accounts, but I'd like to get some other things paid off first before I contribute more to savings and retirement.

talk to a financial adviser for that. ;) Personally I'd be putting the extra 3% into the roth, but there are tax benefits to both options.

9% overall isn't bad, I think I'm around 8% with matching. My eventual goal is like 16% which will happen when my student loans and credit cards are paid off :)

[rwh11385]

So do you suggest only putting up the company match in the 401k (3% of gross salary in my case), then taking the extra I'm putting in the 401k and switch to a Roth IRA or Roth 401k like Heeter suggested?

Currently I put 6% of my pay in along with my 3% company match, so I'm getting 9% of salary in my company 401k (with my allottments I earned a 12% return on my last quarter).

Should I take the extra 3% I'm putting in my company 401k and put it in a Roth account? Should I do any post-tax contributions to my company 401k?

I know I need to be putting in more than 9% of my earnings into retirement accounts, but I'd like to get some other things paid off first before I contribute more to savings and retirement.

Put it all in Roth 401k. That money should still be matched, although it will be placed in a regular 401(k) account. Confirm with HR or your plan rep.

Roth 401k's are relatively new (have been around since 2007), but I have not seen any benefit of a Roth IRA described over a Roth 401k. (Besides being able to say you maxed out a Roth IRA when bragging to people about your finances, I guess, if you are into that like Turf1600 was)


Like nando said, there are tax benefits to both forms of 401k, but I'd rather pay taxes now on earnings than on tomorrow's returns. This should be the lowest paid period of my life and I would rather maximize future benefits than minimize my current adjusted gross income.

[z31maniac]

Yeah, I just don't want to pay for their advice! I need to start doing some more research on the topic, I've always read a good rule of thumb is to do after-tax contributions if you think you will retire in a higher tax bracket then you are currently. Given my profession and little experience (not quite 2 years) it should be no problem for me to be making at least another 30-35% in the next 5 years.

Same here on the %, once I get stupid debt paid off, I'd like to eventually be putting 13-15% in my retirement and 5% in savings.

[z31maniac]

Put it all in Roth 401k. That money should still be matched, although it will be placed in a regular 401(k) account. Confirm with HR or your plan rep.

Roth 401k's are relatively new (have been around since 2007), but I have not seen any benefit of a Roth IRA described over a Roth 401k. (Besides being able to say you maxed out a Roth IRA when bragging to people about your finances, I guess, if you are into that like Turf1600 was)


Like nando said, there are tax benefits to both forms of 401k, but I'd rather pay taxes now on earnings than on tomorrow's returns. This should be the lowest paid period of my life and I would rather maximize future benefits than minimize my current adjusted gross income.

Thanks. I'll check into that tomorrow at work.

Let's say my company doesn't have a Roth 401k option, I should still put my 3% to get the match, then put all else in a Roth 401k?

[rwh11385]

Thanks. I'll check into that tomorrow at work.

Let's say my company doesn't have a Roth 401k option, I should still put my 3% to get the match, then put all else in a Roth 401k?

I believe they should, hopefully.

I assume you meant to say IRA at the end there. Yes, I'd get the full match from the company and put as much as you can in the Roth IRA up to $5000 or $5500 or $6000 or whatever it is this year.

If you end up closing on a house, you should have help shrinking your adjusted gross income, along with any student loan debt or whatnot so it's not like you totally need pre-tax contributions.

[nando]

I think my company only matches regular 401k contributions, but I'll have to check. If it matches both then I the only reason to do a regular 401k would be for a lower AGI. in any case I'm already putting twice as much into my Roth.

[z31maniac]

I believe they should, hopefully.

I assume you meant to say IRA at the end there. Yes, I'd get the full match from the company and put as much as you can in the Roth IRA up to $5000 or $5500 or $6000 or whatever it is this year.

If you end up closing on a house, you should have help shrinking your adjusted gross income, along with any student loan debt or whatnot so it's not like you totally need pre-tax contributions.

I would think, but thought I'd go ahead and ask, L3 is a pretty damn big company!

Actually walking out the door right now to go look at another house.

[Saul325is]

I started with VSE, which is virtual stock exchange...http://vse.marketwatch.com/Game/Homepage.aspx ...its a free stock exchange (which uses all real, live, and actual data), but you get fake money (100,000 up to a million)...trust me its a good start and you dont have to spend a penny! In this sporadic market, I would start here...I am a 5th year finance major at cal poly, and this helped me grasp the stock market theories as well as financial derivatives!

[Turf1600]

I started with VSE, which is virtual stock exchange...http://vse.marketwatch.com/Game/Homepage.aspx ...its a free stock exchange (which uses all real, live, and actual data), but you get fake money (100,000 up to a million)...trust me its a good start and you dont have to spend a penny! In this sporadic market, I would start here...I am a 5th year finance major at cal poly, and this helped me grasp the stock market theories as well as financial derivatives!

That's neat. Thanks for the link.

[gwb72tii]

me

[Vedubin01]

anyone need or want a Scottrade account please pm me. I recommend someone we both will get 3 free trades. Not much but hey.

Id almost call BS on J.R. with his claims to going from $300 march 09 to $14k today August 05 2009.

[nando]

well if you were buying financials and (select) automakers in march, sure. ford was what, $1.48 on march 9? last I looked it was near $9. same with citi, bank of america, etc.

[BobombETA]

I lost all my money daytrading back in October 08.

Since March 09, I started with $300, and am now up to $14k from trading on BAC, C, WFC, and FITB. I figure Ive roughly tripled my money in about 5 or 6 months.

I'm still kicking myself for not buying Citi stock when it was $0.99 a share in the beginning of March. It is probably still a good buy at ~$3.50 as it sits today.