What exactly is going to be problematic?
Also, why would you forego an ability to contribute pre-tax? If you are contributing whatever the max is, that's 4-5 grand of additional investment.
Starting 401k near the highs in a bull market?
- Thread starter heavenskrow
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What exactly is going to be problematic?
Also, why would you forego an ability to contribute pre-tax? If you are contributing whatever the max is, that's 4-5 grand of additional investment.
When/if employment ends, the account MUST be properly transfered to ANOTHER equivalent tax-advantaged account, or penalties (and perhaps fines), as well as possible maintenance fees will be accessed. Is it "difficult"? No not really. But you need to know those ins and out.
Company matches are USUALLY maxed at 1% to 3% of EMPLOYEE WAGES/INCOME. A 4 or 5 grand pre-tax contribution is unlikely as far as the max company match is concerned. Beyond maxing to the company match, MOST company 401k's carry limited investment options, AND higher than average management fees than an individual can achieve through a self-directed tax-equivalent vehicle. Not maxing to the company match is leaving money on the table. Anything beyond, is better invested through a self-directed vehicle.
Thank you for this. Makes me second guess investing into my company's 401k plan .
Let's say I was starting to contribute 401k at the top of 2007 or 2000 or Oct 1987.....it wouldn't be smart unless I had seen we were gonna take out the peaks of the top in the following years.
Let's say I started contributing to my 401k in Japan at the peak in 1990.... I still wouldn't have recovered after 30+ years correct?
Also hindsight it would be better to start 401k at the low of the market vs the current levels correct?
I still have a 401k from a prior employer sitting in the same fund at the same place. Only issue is to not forget about it.
You are still 28 and you have long investing period ahead. Tax advantage space is yours to loose, if you don't utilize it.
At your age saving is the most important thing. If there is any matching from company, then that is gravy. You should atleast invest equivalent to matching contribution.
Search for my previous post regarding this. Japanese investor would have come ahead. Just need to have good asset allocation in place.
Transferring from 401k to IRA is just a click of a mouse. Do not listen to scare mongers. In IRA you get lot more flexibility compared to 401k, also you get asset protection in IRA. Creditiors can not touch IRA, even during bankruptcy (in some states completely and partially in some)
Edit: Here is the chart till 2013. Diversified Japanese investor would have been ahead lot earlier
https://www.elitetrader.com/et/thre...st-index-investing.297648/page-9#post-4528944
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I would not be surprised if you said for a 65 year old. But for a 28 year old??? Damn, what's with this hostility about NOT FOMOing in at the top?
Smart money index is back at 1990 levels on BT (i.e., in cash, bonds). Are you seriously telling this fellow to do what all the dumb money are doing which is to pull up a 10 year chart on the SPX, extrapolate it, and maybe buy calls into a panic rally? Come on!
you can tell who the good traders are in this thread. They are the ones who recognize tax advantages, compounding, and free money opportunities.
bad traders will focus on the wrong things like a small amount of fees or some bookkeeping.
bad traders will focus on the wrong things like a small amount of fees or some bookkeeping.
I would not be surprised if you said for a 65 year old. But for a 28 year old??? Damn, what's with this hostility about NOT FOMOing in at the top?
Smart money index is back at 1990 levels on BT (i.e., in cash, bonds). Are you seriously telling this fellow to do what all the dumb money are doing which is to pull up a 10 year chart on the SPX, extrapolate it, and maybe buy calls into a panic rally? Come on!
He has 35 to 40 investing years ahead of him. Those long years is ideal to extract risk premium. You are telling him short risk premium. Forget all the chart non-sense. Show me any 40 year period, where investors have lost money in US.