AuthorTopic: The future of a 401k  (Read 554 times)

Offline luciddreams

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The future of a 401k
« on: January 21, 2018, 10:23:02 AM »
I wanted to put this question to the Diner because I think I'll get a lot of good angels on the question, and because I think it has the potential to provide a lively bit of conversation.  The question I have is this: is it worth contributing to a 401K now?  I got automatically enrolled in my companies 401k when I signed on, and currently I'm contributing 4% of my gross income to it, and that amounts to an average of $160 a month...sometimes more, sometimes less, but that's a good average.  After a year I have the option to up this contribution to 8% (I think). 

With all of the deductions and taxes I lose approximately 22% of my income.  That's with claiming 6 on my W-2 as well, so I'm not sure how that will flesh out come tax time, which will be next year since most of this year I ran my business. 

The reason I'm questioning the 401k is because it seems that it's only worth doing if you buy the predominate paradigm.  I figure 20 years at best, and probably really just another 10 of BAU.  It's possible that trucking can provide me with a livable income for the rest of my life, but it's not very likely...still...possible.  Also, I don't really want to do this for the rest of my life.  At this point I'm driving OTR to get the mandatory experience that will unlock a universe of CDL positions that are more local.  You still need at least a year OTR, and 2-3 is even better.  I can definitely see doing this for a few years.  Yet the possibility remains that I may do it for 20.  I may stay with this company for 20.  If I do that than 20 years of 401k contribution can certainly assist in keeping myself housed and fed in my old age. 

$160 a month is just enough money to be worth considering.  It's $100 a month to pay for my oldest to train in Aikido.  Another $60 could buy some tasty adult beverages, or take us out to eat. 

It's a gamble, I know.  Does BAU last another 20 years?  Even if it does, that would be the point where I'd start collecting on my monthly contributions.  I can't figure out if I'm pissing this money away or not?  I had free medical and now I pay over $500 a month for it, and then I pay when we actually use it in copays and deductibles.  It's gotta be the worst fuckin' racket I'm aware of...Wealthcare.  It's free if you're poor and nominal if you're rich, but if you are blue collar it eats up a sizeable portion of your meager income. 

If BAU is going to end in the next 10 years than it feels better to me to just keep my money, since I'm already losing enough of it anyways.  The 401k is pretty much the only way I can increase my net income. 

So, what do you think Diners? 
« Last Edit: January 21, 2018, 11:42:18 AM by Eddie »

Offline Eddie

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Re: The future of a 401k
« Reply #1 on: January 21, 2018, 11:41:44 AM »
Do they match your contribution? If so, it's a no brainer. Do it. Free money. Usually there is matching money, but you have to stay onboard for a period of time or you lose that when you exit because you are not yet "vested". I think most plans are vested at a year now, but some might be 3 years. Read the fine print.

If it's all your money, then whether it's worth it depends on what the options are on investing the money. Do you have to use their chosen family of mutual funds? Can you buy any stocks you want to keep in your portfolio? Can you buy physical gold and silver in the 401K?

The wrong thing to do is to put the money in some index fund that tracks the S&P and forget about it. And this is exactly what most people with a 401K do. Do NOT make that mistake.
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Offline agelbert

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Re: The furture of a 401k
« Reply #2 on: January 21, 2018, 12:26:13 PM »
I wanted to put this question to the Diner because I think I'll get a lot of good angels on the question, and because I think it has the potential to provide a lively bit of conversation.  The question I have is this: is it worth contributing to a 401K now?  I got automatically enrolled in my companies 401k when I signed on, and currently I'm contributing 4% of my gross income to it, and that amounts to an average of $160 a month...sometimes more, sometimes less, but that's a good average.  After a year I have the option to up this contribution to 8% (I think). 

With all of the deductions and taxes I lose approximately 22% of my income.  That's with claiming 6 on my W-2 as well, so I'm not sure how that will flesh out come tax time, which will be next year since most of this year I ran my business. 

The reason I'm questioning the 401k is because it seems that it's only worth doing if you buy the predominate paradigm.  I figure 20 years at best, and probably really just another 10 of BAU.  It's possible that trucking can provide me with a livable income for the rest of my life, but it's not very likely...still...possible.  Also, I don't really want to do this for the rest of my life.  At this point I'm driving OTR to get the mandatory experience that will unlock a universe of CDL positions that are more local.  You still need at least a year OTR, and 2-3 is even better.  I can definitely see doing this for a few years.  Yet the possibility remains that I may do it for 20.  I may stay with this company for 20.  If I do that than 20 years of 401k contribution can certainly assist in keeping myself housed and fed in my old age. 

$160 a month is just enough money to be worth considering.  It's $100 a month to pay for my oldest to train in Aikido.  Another $60 could buy some tasty adult beverages, or take us out to eat. 

It's a gamble, I know.  Does BAU last another 20 years?  Even if it does, that would be the point where I'd start collecting on my monthly contributions.  I can't figure out if I'm pissing this money away or not?  I had free medical and now I pay over $500 a month for it, and then I pay when we actually use it in copays and deductibles.  It's gotta be the worst fuckin' racket I'm aware of...Wealthcare.  It's free if you're poor and nominal if you're rich, but if you are blue collar it eats up a sizeable portion of your meager income. 

If BAU is going to end in the next 10 years than it feels better to me to just keep my money, since I'm already losing enough of it anyways.  The 401k is pretty much the only way I can increase my net income. 

So, what do you think Diners?
 

I don't own any stock or have a 401k so you can ignore my rant (along with all the others who do own stock that will ignore it) if you wish. 8)

Let me start by saying I apologize for not getting you some good info on manufactured home lenders. I wrote to one and they never answered. So, I basically failed there. But, the Disguised Depression we are in may be of help to you and your family simply because there is massive price lowering pressure on ANY kind of middle class home, including manufactured and stick built. And yeah, that is VERY applicable to your investment in a 401k.

You obviously have a 401k, so let's talk about that. There are at least 5,000 public for profit corporations that sell stock in the the Banana Republic run by Wall Street known as the USA. If you are not part of the insider in crowd, the odds of making money in the market are severely diminished, but not altogether absent.

Most people do not know that the Stock Market has NEVER been a free market. The Securities and Exchange commission DECIDES (in a totally undemocratic and arbitrary elitist manner) whether you can own 15% or more of ANY corporation out there. That's right. They will NOT let you do that unless you are part of the in crowd.

Some may jump in here and yammer about China or the reason for that stupid rule being that they are "protecting" American interests. That's bullshit. The "interests" at Wall Street are the oligarchic interests, period. "Hostile" takeovers do not happen by chance or good luck. Yes, you may find all this irrelevant because you can never dream of having enough money to by 1% of GE or Exxon, never mind 15%, but it is really important for you to file that away in your memory banks. WHY? Because stock buying and selling liquidity is a function of the CONTROL the oligarchs wield that affects your investment decisions.

Assuming you have digested the FACT that the stock market is NOT a free market, let us talk about pricing. The formula they use is exclusively based on buying demand, as in an auction. That is, the fundamentals (debt to equity ratio, book value, gross revenue, published profits or losses, etc.) are peripherial data points the "analysts" use to publish their "buy", "Hold" or "sell" recommendations. The fact that the analysts ALWAYS put legal dislaimers in their recommendations must never be ignored by you or anybody else planning to buy or sell stock.

Then there is the issue of ethical behavior. Corporations lie 24/7 on their financial statements. It takes work to find out the truth. Also, many of them, like Walmart and Amazon, treat their people like indentured slaves. Others pollute the crap out of the environment and are respoinsible for infant mortality increases all over this country and, in some case, the world. Of course, in addition to an increase in infant mortality, the biosphere and humans of all ages are negatively impacted by the use of the air, water and land as an "externality" (socializing the costs and privatizing the profits ). The really BIG polluters have some of the BEST and RELIABLE dividend paying track records.

All the above said, let us say you don't have time to go whole hog on stock markert analysis and you just want to make enough money to boost you up to a middle class existence. IF that is what you want to do, and you do not care HOW any corporation gets their profits (i.e. you want to make money without concerns over the ethics of a profitable corporation), then you need to do the following:

1: Do a high dividends search of stocks with a liquidity of at least one million stock shares bought and sold per business day. Low liquidity leads to pump and dump or short and distort fun and games. This is the scourge of penny stocks. They are manipulated even worse than the big boys, so stay away from penny stocks. Also low priced stocks, (per share) not technically defined as "penny stocks", can be manipulated by big pocket hedge funds. There isn't a lot you can do about that, but the best defense is high liquidity.

2. Check out how long the ones with high dividends have been in business. If they have been around for a decade or more AND their debt to equity ratio is not too high, they can provide fairly reliable dividends. The prison industrial complex has some very high paying dividend stocks. I think that it is absolutely criminal to buy their stock, but it is legal and profitable.

3. IGNORE the stock price during high vix (volatility where the market dives thousands of points or jumps a lot in a short period). You will get your dividends, more or less, reliably. DON'T sweat the price as long as the corporation is SOLVENT (i.e. low debt to equity ratio).

4. KNOW what you want and STICK TO IT. If you decide you want to profit slowly by dividends, don't get suckered by a broker offering to lend you a large amount of money on margin based on a stock PRICE per share that is going up like a rocket. It can go down just as fast. 🌠 AND you will then be hit with interest charges on the margin loan. Broker margin loans are HIGHWAY ROBBERY! Don't EVER borrow on margin, capisco?   

There's more, but you can chew on that for a while. As to anyone that comes on here and says the pricing formula in the stock marker reflects actual value, see below. Artificial scarcity is one of the biggest scams that have polluted the brain washed capitalist mind of Americans. It has succeeded in herding them this way or that, to the point of going nuts trying to buy something just because a herd of greedballs is buying it too. It's mostly bullshit.

« Last Edit: January 21, 2018, 01:04:07 PM by agelbert »
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Online RE

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Re: The future of a 401k
« Reply #3 on: January 21, 2018, 01:28:08 PM »
Definitely worth it if the employer matches the contribution.  They did at JB Hunt.

The main thing in our current situation is you have to know when the time has come to cash out and GTFO of the Stock Market Dodge.  So you have to stay on top of the Collapse Newz on a daily basis.  When this sucker blows, it's likely to blow VERY fast.

Just to remind you of how fast it can happen, here's Ben Lichtenstein calling the 2010 Flash Crash of the S&P 500.

<a href="http://www.youtube.com/v/AFyeg6aANcc" target="_blank" class="new_win">http://www.youtube.com/v/AFyeg6aANcc</a>

One of these times, it is not going to bounce back up.  A Dead Cat will only bounce so many times.


RE
« Last Edit: January 21, 2018, 02:51:27 PM by RE »
SAVE AS MANY AS YOU CAN

Offline BuddyJ

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Re: The future of a 401k
« Reply #4 on: January 21, 2018, 02:57:17 PM »

So, what do you think Diners?

If your employers match, it is basically free money you are leaving on the table if you don't. My parents are traveling the world on their 401k savings, the wife and I have borrowed against ours on occasion, just to splurge a little to do one of those bucket list type activities, some companies let you borrow against it without penalty to put money down on a house, the advantages are just huge. Ultimately, it turned out that there were surprising near term benefits to having the thing, it wasn't as though it was just another saving for retirement vehicle.

Another surprise was the availability of fund types to put the money into. You could get wild with small cap international investment, or just put something in guaranteed growth funds, so you can juggle the risk you prefer.

And there is one other advantage as well..insurance. Should collapse, the kind that I have been worried about since The Population Bomb turn into yet anther half century of BAU....well...the money won't hurt!! :emthup:

Offline Surly1

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Re: The future of a 401k
« Reply #5 on: January 21, 2018, 04:23:22 PM »
I wanted to put this question to the Diner because I think I'll get a lot of good angels on the question, and because I think it has the potential to provide a lively bit of conversation.  The question I have is this: is it worth contributing to a 401K now? 

You've already received some really sound advice, and I have very little to add. But I'll add it.

1) If there is an employer match, and you are not matching or exceeding the match, you are literally leaving money on the ground. That would be a big mistake.

2) As noted elsewhere, once you are vested it's your money. Think of it as an enforced savings account. $160/mo. can seem like a lot, but after a while you won't miss it.

3) Whether or not BAU continues, and for how long, depends on the ability to predict the future. We are all gathered around this electronic campfire because we are convinced that TS will HTF very soon. Calling exactly when, though, requires a predictive ability noticeable absent in this pissoir.



4) Many 401ks allow you to borrow against the proceeds.

One sure thing is that for BAU to operate in any way, trucks need to run in order to satisfy our just-in-time appetites. And that means you.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Online RE

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Re: The future of a 401k
« Reply #6 on: January 21, 2018, 06:30:27 PM »

So, what do you think Diners?

If your employers match, it is basically free money you are leaving on the table if you don't. My parents are traveling the world on their 401k savings, the wife and I have borrowed against ours on occasion, just to splurge a little to do one of those bucket list type activities, some companies let you borrow against it without penalty to put money down on a house, the advantages are just huge. Ultimately, it turned out that there were surprising near term benefits to having the thing, it wasn't as though it was just another saving for retirement vehicle.

Another surprise was the availability of fund types to put the money into. You could get wild with small cap international investment, or just put something in guaranteed growth funds, so you can juggle the risk you prefer.

And there is one other advantage as well..insurance. Should collapse, the kind that I have been worried about since The Population Bomb turn into yet anther half century of BAU....well...the money won't hurt!! :emthup:

:hi: back from Lurkerville BJ!  :icon_sunny:

RE
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Offline Nearingsfault

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Re: The future of a 401k
« Reply #7 on: January 21, 2018, 10:12:21 PM »
I wanted to put this question to the Diner because I think I'll get a lot of good angels on the question, and because I think it has the potential to provide a lively bit of conversation.  The question I have is this: is it worth contributing to a 401K now?  I got automatically enrolled in my companies 401k when I signed on, and currently I'm contributing 4% of my gross income to it, and that amounts to an average of $160 a month...sometimes more, sometimes less, but that's a good average.  After a year I have the option to up this contribution to 8% (I think). 

With all of the deductions and taxes I lose approximately 22% of my income.  That's with claiming 6 on my W-2 as well, so I'm not sure how that will flesh out come tax time, which will be next year since most of this year I ran my business. 

The reason I'm questioning the 401k is because it seems that it's only worth doing if you buy the predominate paradigm.  I figure 20 years at best, and probably really just another 10 of BAU.  It's possible that trucking can provide me with a livable income for the rest of my life, but it's not very likely...still...possible.  Also, I don't really want to do this for the rest of my life.  At this point I'm driving OTR to get the mandatory experience that will unlock a universe of CDL positions that are more local.  You still need at least a year OTR, and 2-3 is even better.  I can definitely see doing this for a few years.  Yet the possibility remains that I may do it for 20.  I may stay with this company for 20.  If I do that than 20 years of 401k contribution can certainly assist in keeping myself housed and fed in my old age. 

$160 a month is just enough money to be worth considering.  It's $100 a month to pay for my oldest to train in Aikido.  Another $60 could buy some tasty adult beverages, or take us out to eat. 

It's a gamble, I know.  Does BAU last another 20 years?  Even if it does, that would be the point where I'd start collecting on my monthly contributions.  I can't figure out if I'm pissing this money away or not?  I had free medical and now I pay over $500 a month for it, and then I pay when we actually use it in copays and deductibles.  It's gotta be the worst fuckin' racket I'm aware of...Wealthcare.  It's free if you're poor and nominal if you're rich, but if you are blue collar it eats up a sizeable portion of your meager income. 

If BAU is going to end in the next 10 years than it feels better to me to just keep my money, since I'm already losing enough of it anyways.  The 401k is pretty much the only way I can increase my net income. 

So, what do you think Diners?
First off I am a market hater and debt phobe so my opinions are shaped by that.
In 2009 I found this book:
Enough Bull: How to Retire well without the stock market, mutual funds, or even an investment advisor
By David Trahair. He has 6 rules.
1 Avoid Personal Financial Disasters.
2 You Donít Need the Stock Market or Mutual Funds.
3 Buy a Home and Pay Off the Mortgage.
4 Reducing Expenses Doesnít Have to Be Painful.
5 Forget RRSPs Until Your Debt is Paid Off.
6 Ask Yourself if You Really Need an Investment Advisor
The book is getting long in the tooth but its points are valid. I've grown past it by this point but it affected everything I've done since financially. The biggest take away for me was trusting financial professionals who make money selling you things is crazy. I have many friends who have debt who's interest rates exceed their rate of returns from their investments after fees. Both products were packaged up and sold to them by the same helpful financial professionals.  Questions I would ask are:
Are you debt free with a contingency fund?No? wait, Yes? proceed
Do you need the money now for other important things? Yes? wait, No? Proceed
Can you afford to have the money locked up in case the market corrects and you have to leave it stranded for a decade? No? Wait, Yes? Proceed
what are the management fees of the fund? Who runs it?
up to what amount will the company match funds?
How free are you to choose your portfolio?
how long until you can take it out without penalty?
How much taxes will it save you now?
Will it exist when you want it?
Late night musings...
Cheers,  David B.
If its important then try something, fail, disect, learn from it, try again, and again and again until it kills you or you succeed.

Offline K-Dog

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Re: The future of a 401k
« Reply #8 on: January 22, 2018, 01:11:17 AM »
I have a bank account set up as a 401K.  I can't make regular contributions to it because it is a CD.  This is the result of savings from previous employers.

At work I contribute to a 401K which is invested by 'professionals'  and no doub't they lose my money while making some for themselves.  But between taxes saved and employer matching funds it is hard to see how I can lose big.  Were I to loose my job I'd get my paws on the 401 K money I'm contributing now and combine it with what I already have banked in a new CD as soon as I could.  If we have a big crash and I lose a big chunk before I can move it that means I'm still working and that is a silver lining.  There is a chance of becoming unemployed and having a crash before I can move the money but that chance is not so big, I hope.

My point is that there is a way to invest 401K money so it won't be lost but currently my rate of return is only 2%.  I'm sure that is not keeping up with inflation but at least my investment can't be tanked 50% by a stock market crash. 

Save what you can.  The more you save the more security you will have regardless of what happens.  As you get older this matters more and more.
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline jdwheeler42

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Re: The future of a 401k
« Reply #9 on: January 22, 2018, 12:19:56 PM »
You got some Pretty Darn Good advice already, but there are a couple of points missed:

If you are eligible for the 8880 Retirement Savings Contributions Credit, you could be saving up to 1$ in taxes for every 2$ you contribute to your 401k.  Whether that applies and exactly how much you could get depends very much on your personal situation.

An excellent idea for just about anyone is to open a Roth IRA as soon as you are allowed to.  That way you can start the clock on the 5 year waiting period to make tax-free withdrawals.  Then when you are done working and you have a low income year, you can roll all or part of your 401k into your Roth and minimize your tax payment.

As always, this advice is of a general nature and cannot be used to avoid tax penalties (Circular 230 notice).
Making pigs fly is easy... that is, of course, after you have built the catapult....

 

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