Need advice on 401k.

[riviera1992]

Hi all, I stopped contributing to my 401k about 6 months ago since I learned how bad the economy would get and so far after all the ups and downs the balance is pretty much the same.
I'm debating if I should start again since my employer matches 6% I'm wondering if it's enough to offset any stock market losses. Morgan Stanley mutual funds suck. For every winning stock there's an equal loser so the only growth was from my employer's free money.
If I don't start contributing again, I'll certainly be paying taxes next year.

Any suggestions?

 

[Zippyjuan]

Do you think stocks will be higher again at the time you sell you shares in retirement? Do you think you can do better than six percent- guaranteed after taxes- in any other investment right now? I would still continue the contributions now. Especially if it is an automatic investment plan. If you stop putting it in and say you will invest on your own, chances are you will not invest any or at least not as much as you are now and will end up with less in the future when you need it. If you do not like the fund you are in, they should have several different options for you.

The important thing on stocks is are they worth more on the day you sell them than on the day you bought them. It does not matter what it does in the meantime. Any losses or gains in between only exist on paper and are not actually realized until you sell.

 

[apc3161]

I agree with what Zippy said.

401k's are great, not only because they offer a tax free solution, but also because your employer matches you.

 

[muh_roads]

When you stopped, were you moving the money you weren't putting in and moving to gold/silver or another currency other than USD?

If not you shouldn't ever stop contributing. If you are worried about the market, then don't play in any funds with your 401K. Move it into a 'Stable Asset' which they should all provide. They don't really gain much interest but they don't lose either...(inflation not taken into consideration of course.) Take advantage of the employers 'free money' match. It's better than nothing. Stable Asset should always be available for those who want to wait out a crappy market.

I agree with what Zippy said.

401k's are great, not only because they offer a tax free solution, but also because your employer matches you.

Unless the laws are changed by then, it will still be taxed when it is time to withdraw in your retirement years.

 

[angelatc]

Unless the laws are changed by then, it will still be taxed when it is time to withdraw in your retirement years.

I've always loved that factoid that rarely gets mentioned. Of course the theory is that your income will be in the lowest bracket after retirement, so you'll be making less, but if we all get bumped up to the 70% tax bracket when the socialists take over....

 

[riviera1992]

I've always loved that factoid that rarely gets mentioned. Of course the theory is that your income will be in the lowest bracket after retirement, so you'll be making less, but if we all get bumped up to the 70% tax bracket when the socialists take over....

Yes, this was my thinking. I have 8 years to go and if or when the dollar crash and if..if...if... we don't have a crystal ball to know how bad things will really get.

Thank you all for the good advice. I suppose that if my employer give me $50 and half of it gets lost, I still have $25 of free money. Hopefully.

 

[muh_roads]

I am personally sitting in two funds. One is entirely made up of oil stocks, the other is made up of gold mining stocks and other stocks involving special minerals.

I'd prefer these oil and gold mining stocks to not be US companies but there is only so much a person can do.

Even during the recession of 2002 when almost everything lost, the oil stocks still were just barely in the green...but year after year they always do well. Even if the price per barrel of oil goes down (which I don't see how it can) them oil companies still rake in the profits.

In a perfect world I'd love to direct my 401K into an IRA and just start a new 401K account. I'd definitely go play with Peter Schiff if I could. Can't do anything until I quit this job sadly. People should be allowed more freedom with their 401K's. It is sort of annoying, especially now. So I can understand your frustration.

 

[madengr]

At least put in the 6% of your salary to get the match. Otherwise it's like throwing away free money.

 

[rapidtrends]

Hi all, I stopped contributing to my 401k about 6 months ago since I learned how bad the economy would get and so far after all the ups and downs the balance is pretty much the same.

I am not a big fan of the equity markets right now. I am not saying there will not be winning plays, but for the average person who does not have the time nor inclination to get a PHD in trading without losing your blessed assurance, its not a good place to be right now.

Overall we are going to see a downward trend in the markets for some time to come, and as the 85 million baby boomers start sucking liquidity out of the markets to fund retirement and medical expenses, it doesnt take a rocket scientist to realize its going to come down like the Hindenberg. All IMO, of course.

Add to this the fact that we are currently inflating the money supply at over 16% a year, and you must realize that if your investments are not growing at that rate or higher, you are going backwards.

Go google "Self Directed IRA" and learn about how they work. You can roll the money into precious metals without taking the tax hit.

 

[Zippyjuan]

If you are concerned about equities you could put money into bonds. But in those it is important how the fund handles bonds. Do they hold the bonds until they mature or do they trade them (check the portfolio turnover rate). Bond fund returns tend to be in the opposite direction interest rates. If interest rates rise, then it is harder to sell a bond with a lower interest rate to someone else so they have to be resold at a loss so if a fund trades the bonds and the interest rates go up, the value of shares in their fund will drop. If they keep the bonds until they mature, they are guaranteed the income and will give steady if modest returns. I do agree that the market will probably not be headed up strongly for several years. I also am pretty certain that interest rates will go up in the next year or so- perhaps over a couple of years. Most of my money is in dividend paying utilities.

 

[jonahtrainer]

I would just sock away capital into physical gold every month if I were you. Physical gold is risk-free; subject only to exchange rate risk. For the past 6 years you would need to earn at least 30% per year in US$ terms to meet the risk-free rate of gold. That means your 401k, etc. should be earning at least 55-60% to compensate for the risk of moving your capital out of gold. Very few, if any investments, are currently performing that well. Most investments are performing horribly. Don't get sheared

 

[Zippyjuan]

Gold is not totally risk free either. Like anything else, it depends on when you buy. If you bought gold at its last peak in 1980 you still would not have broken even today- even against fiat dollars after allowing for inflation. If you do not adjust for inflation, you can just about exchange one ounce of gold then for the same amount of Federal Reserve Notes today- 28 years later. Is gold peaking now again- or will it stay where it is or go even higher? Back then people were saying it could go as high as $2000 an ounce. It never got there. I am skeptical because I did buy gold then.

 

[muh_roads]

I am not a big fan of the equity markets right now. I am not saying there will not be winning plays, but for the average person who does not have the time nor inclination to get a PHD in trading without losing your blessed assurance, its not a good place to be right now.

Overall we are going to see a downward trend in the markets for some time to come, and as the 85 million baby boomers start sucking liquidity out of the markets to fund retirement and medical expenses, it doesnt take a rocket scientist to realize its going to come down like the Hindenberg. All IMO, of course.

Add to this the fact that we are currently inflating the money supply at over 16% a year, and you must realize that if your investments are not growing at that rate or higher, you are going backwards.

Go google "Self Directed IRA" and learn about how they work. You can roll the money into precious metals without taking the tax hit.

He can't do an IRA because he is still with his employer.

 

[Matt Collins]

Hi all, I stopped contributing to my 401k about 6 months ago since I learned how bad the economy would get and so far after all the ups and downs the balance is pretty much the same.
I'm debating if I should start again since my employer matches 6% I'm wondering if it's enough to offset any stock market losses. Morgan Stanley mutual funds suck. For every winning stock there's an equal loser so the only growth was from my employer's free money.
If I don't start contributing again, I'll certainly be paying taxes next year.

Any suggestions?

Check out this guy. He does a weekly radio show and gives free advice every Saturday afternoon - http://paulwinkler.net/ I produce his show.

 

[rapidtrends]

He can't do an IRA because he is still with his employer.

Ahhh bummer. Havent had a job in many years so stuff like that slips my mind.

 

[rockandrollsouls]

I agree with what Zippy said.

401k's are great, not only because they offer a tax free solution, but also because your employer matches you.

Yes...you beat me too it. When you're not maxing out your missing free money...typically 50 cents on the dollar.