<< <i>no taxes due if loan repaid before retirement. Gains earned in the ROTH would be tax free. Keep in mind you would lose any income generation from the loss of funds in the 401K but should more than make up for it with the tax free gains in the ROTH. >>
paying a 'double tax' (paying back the loan with taxed income) was what ive heard is a reason to not take a loan, unless its an emergency.
i was only thinking about a $5,000 loan as thats the annual amount i can contribute to mine. possibly repeat annually?
i would take that out and deposit it into my current ROTH. seemed to have some potential since ive already 'saved' this $$.
i would keep contributing to the 401K, while paying myself back @ 8%.
my company currently matchs 4%, next year it will be 5%
<< <i>paying a 'double tax' (paying back the loan with taxed income) was what ive heard is a reason to not take a loan, unless its an emergency. >>
Not sure the loan repayment is taxed income but even if it is you are going to pay taxes on it whether it goes toward the loan or not. Also, edited my last post with more info. Also, 15% matching is great, but many cases of high matching of contributions involve a 401k that is fully vested in only the company's stock. In this case strength of company becomes important.
Don't forget, some of the greatest returns on CDs are being offered by banks that are the most risky.
If you are getting a 15% match dollar-for-dollar on your contributions, it's a no-brainer to keep putting money in the plan. That is an immediate 100% return on your money.
But you can still access the money. Check your summary plan description carefully to see under what circumstances plan loans are available. Don't confuse hardship withdrawals with loans. Generally there aren't any requirements/limitations to take out a loan, other than the $50,000 loan limit under law. I took out a loan a year ago to finance an investment property.
If you leave your company and don't repay some or all of the loan, you'll owe regular income tax on the amount you didn't repay, plus a 10% penalty. If you are concerned about government confiscating your 401(k) at some point -- which is not a crazy fear -- then you may be OK with just paying the tax now and getting at least some of your money out.
Here's an example of the math: If you and your employer had each put in $50,000 over the years (total of $100,000) and you took out $50,000 as a loan and immediately left the company, you would owe ordinary income tax plus a 10% penalty on the money you didn't repay. That would be -- let's say -- 25% in regular income tax plus a 10% penalty, so a total of 35% of the $50,000 would get taken by government. But you got $50,000 from your employer in "free money," so you still keep 65% of that.
That's why I would keep doing the match but take out a loan, if at all possible.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
Thank you again to all for the knowledge and advice.
secondrepublic, I think I'm leaning towards almost exactly what you're advising if I understand it correctly. Keep the contributions going at current level, take a "loan' that has a 4% return payment fee and buy some pm's...because I am becoming more convinced that I will be able to pay back that 4% rather easily holding pm's (mainly Ag), an hopefully relatively quickly. I found out that if I make a % contribution change, it stays at whatever I decide to contribute til January. Only one "elective" change like that is allowed per year (unless I qualify for a hardship). So it doesn't make sense to stop contributing at current level as long as the Co. maintains their match. I think i've at least come to that conclusion LOL. Anyway, I'm still debating it all.
keep the info. coming in on this thread folks. I believe this thread could be referred to by many as they ponder similar strategies.
To forgive is to free a prisoner, and to discover that prisoner was you.
I did similarly to you, except using my loan to buy real estate. Am repaying it at 3.75% interest -- all of which goes right back into my own plan account. Plans generally allow up to a 5-year repayment period so you can spread out the repayments.
If you were planning to "bail money" out of the plan and not repay it (just paying the taxes plus 10% penalty) you can really only do that if you leave your employer before the loan is paid back. Otherwise they automatically keep taking out the repayments from each paycheck.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
Actually, a big part of the U.S.'s problem is borrowing from others -- not from ourselves. If all our government debt was domestically-owned that would be a different story.
As to the 401(k) issue -- borrowing from yourself and paying yourself interest seems smarter than giving the bank that money. JMO.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
POM, as others have said 15% is a great match- best I've heard of. My company matches 5%. I contribute over 15%.
Rather than stop completely, I'd suggest lowering your contribution %age to a level where you don't miss the money. That way you won't think about it for the next 25 years, which is what you need to do to let it grow. Perhaps you could rationalize it as insurance against the continued price appreciation of alternative investments, and the insolvency of SS.
If I were you I'd keep contributing to get that full match, and try not to think about it. The rest is unknowable, handwaving, speculation, and not worth thinking about.
The investments therein is a separate and separable question. You can index invest through whatever ETFs or mutual funds are available, use a targeted maturity fund, or select a third-party allocation/rebalancing service to make the selections for you. Schwab uses an outfit called Guided Choice which decides allocation and rebalancing based on an interpretation of modern portfolio theory and the concept of an "efficient frontier". After making my own picks the last few years I recently handed the selection over to them. I'm happy with it.
I'll just reiterate what most here (and just about every financial advisor you talk with would say): max out your 401(k) matching contribution. That's step 1.
You say you actually have more money above the 15% that you could contribute, well, why don't you use THAT for PMs?
Assuming your company has good mutual funds to invest in (my old company did theirs through Vanguard, and we had the Vanguard 500 fund, for example) you should just allocate your money to those funds and rebalance once or twice a year. This should NOT be money to play with.
The downside to borrowing money from your account is that you will miss out on any gains that your funds make during that period. So if you borrow $10,000 and buy silver bars, and over the next six months, silver drops in price 10%, while your funds go up 10%, that's a big hit you just took. Of course, it could also go the other way. Or both could go up, or both drop.
No one can predict the future. PM's have had a great bull market for the last 10-12 years and may continue roaring ahead. Overall, stocks have done better than PMs over just about any timeframe BESIDES the last 10-12 years, so if I HAD to make a prediction, I'd say stocks not PMs.
Full disclosure: I'm also in my mid-40s. I was laid off two years ago. I moved my 401(k) to an IRA, but kept the same funds. I had a pension, which as moved to an IRA with a trading account and have been investing that in stocks, including SLV and AGQ at one point or another. The 401(k) is up about 40-50% since the market collapse two years ago. My trading IRA is up about 98% since July of 2009.
I cringe at every dime I ever put in a 401k. But I'd do what it takes to get the 100% match. I'd do that now with the understanding that 2 years from now HR will "improve" the plan and reduce the match.
Sir please step away from the IRA One of the reasons I was able to retire at 54 was my IRA. If they are matching you it's return is pretty hard to beat. Find some extra money to stack with, but don't give up the IRA. You CAN"T assume that the government is going to "confiscate" your funds and IMHO that is poor advice. Who knows what will happen before you retire. If the country comes apart it won't matter. Is it possible that they are going to try and take a piece of it? Well of course, but I would rather go into my 50's with a nice investment portfolio than without. Someone said they lost a bundle in 2008, well if they left it alone, and were properly diversified, they should have it all back now. My stocks and bonds , well diversified and international. with REITS and PM's, have done fine the last 8 years. As good as PM's, no, but it did well the ten years before PM's took off and you should be in for the long haul. I 've been living on mine for eight years and I still have what I started with.
<< <i>So it's 2011 and you made it back to even from 2008. 3 years wasted way i see it. Not counting the 2002 hit.
By all means take the match I agree. 401k manna from heaven crap~ I do not agree >>
Read my post again, I didn't say I was back to where I was in 2008, my bonds, international stock, PM's and REITS were enough to offset my '08 losses, I didn't suffer the meltdown that many did, it's called diversification And it is the most likely way to make money over time, if you put everything on the nose of that nag, you better hope he comes in first.
Timing the market never works. Just yesterday I bought a silver ETF right as it peaked. Then sold it an hour later as it crashed. Had I just held onto it, I'd be up $500 instead of down $1000. I literally bought at the top and sold at the bottom for the day. :-p
I still have not decided to do this, although it is extremely hard not to with silver falling like a rock.
My main reason is my personal performance, me managing the 401k, since August '10, which is when the Silver Bull run really starting ramping up, is 27.61%...so I'm doing pretty damn good shifting things around with what the Plan offers, and I can only make 2 moves a month. So with that said, do i continue to do what i do with the 401k, growing it at hopefully this same rate and getting a 15% match from the Company
OR
Take the loan at 3.75% payback to myself rate to get cash to buy Silver being that it's run since August '10 was roughly 300%?????? With this dip in Silver, would this be wise, or should I stay the course with the 401k being that 27% gains and a 15% match of what i contribute aint too shabby either?
The burning question that wakes me up at night is, is this dip really worth doing something like this at this stage of where Silver is at? Any and all advice is welcomed, again.
To forgive is to free a prisoner, and to discover that prisoner was you.
Although tempting, I say don't touch the 401k, keep contributing the max, and buy metal like crazy with what you can spare. I think a good diverse portfolio is nice. Keep trading in your 401k like you're doing and sit on the Ag and Au for a good many years.
Just mho.
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Someone said they lost a bundle in 2008, well if they left it alone, and were properly diversified, they should have it all back now. My stocks and bonds
I also left my 401k alone during the 08 collapse. Broke even just last year. The only reason was government intervention.
I believe we will be in for another major collapse and the government will have exhausted any means to help the markets regain their losses.
Like others have said, you have the best matching plan I have ever heard of. I think you would need two tin foil hats if you decided not to get the full match. Plus, even though many on a "metals forum" might disagree, you have much more diversification even with a basic plan, than just buying metals imho, which will undoubtedly have stocks in many funds that do have natural resource exposure., if you want to borrow reasonably against your 401k, to buy physical metals, then go for it, but take full advantage of the match, it's really a very easy decision.
Plus, even though many on a "metals forum" might disagree, you have much more diversification even with a basic plan, than just buying metals imho, which will undoubtedly have stocks in many funds that do have natural resource exposure
Excellent point. I seem to think that there is not that much being that there are only 7-8 Funds I think, but you're right, that's more than a pure Metals play. Good point.
To forgive is to free a prisoner, and to discover that prisoner was you.
If you really want to be a hard core stacker, only contribute the max that will be matched. Don't s end anything that isn't matched by the company into the 401k.
Personally, I send in 15% to my 401k. Which is more than the 6%match of the company. I like having the large 401k balance. Personally, I increased my 401k contributions from 6% to 15% in April 2009. That helped me bounce back much faster from the crash of 2008.
I think metals are a good play, but I only spend "mad money" on them. There is less fear o the dips as the money is discretionary.
Lastly, I liked what the previous poster was saying about going into retirement with a sizable well diversified portfolio. It feels good. Now, talk to me in 30 years when I am 60 and if everything is eaten up by inflation, and I pay more in taxes on 401k withdrawals than I would pay now in income tax and I will be the first to admit I was wrong.
If you really want to be a hard core stacker, only contribute the max that will be matched. Don't s end anything that isn't matched by the company into the 401k.
Personally, I send in 15% to my 401k. Which is more than the 6%match of the company. I like having the large 401k balance. Personally, I increased my 401k contributions from 6% to 15% in April 2009. That helped me bounce back much faster from the crash of 2008.
I think metals are a good play, but I only spend "mad money" on them. There is less fear o the dips as the money is discretionary.
Lastly, I liked what the previous poster was saying about going into retirement with a sizable well diversified portfolio. It feels good. Now, talk to me in 30 years when I am 60 and if everything is eaten up by inflation, and I pay more in taxes on 401k withdrawals than I would pay now in income tax and I will be the first to admit I was wrong.
At that point, I will just be a bitter retiree. >>
You might not be able to retire, and your 401K might be in treasuries, if still in existence, and you're prob. right on the tax brackets situation 30 years from now.
Do your best to avoid circular arguments, as it will help you reason better, because better reasoning is often a result of avoiding circular arguments.
1) Set up a cash emergency fund to help cover bills and expenses 'just in case' something happens. 2) Keep on plugging away at the 401(k), contributing at a minimum whatever it takes to get the full company match. 3) Diversify. Silver will not run forever. Neither will Apple, or tulips, or JDSU, or cotton, or...
It sounds like the plan is quite inflexible, and in that sole respect not too great. But the match is great. You'll just have to tailor the management strategy to the advantages and disadvantages of the plan. I suspect that an account that only allows 2 trades per month would be better off without attempts to trade. Heck, my account has t+1 settlement, and that's a deal-killer for me to trade it!
If you really want to be a hard core stacker, only contribute the max that will be matched. Don't s end anything that isn't matched by the company into the 401k.
Personally, I send in 15% to my 401k. Which is more than the 6%match of the company. I like having the large 401k balance. Personally, I increased my 401k contributions from 6% to 15% in April 2009. That helped me bounce back much faster from the crash of 2008.
I think metals are a good play, but I only spend "mad money" on them. There is less fear o the dips as the money is discretionary.
Lastly, I liked what the previous poster was saying about going into retirement with a sizable well diversified portfolio. It feels good. Now, talk to me in 30 years when I am 60 and if everything is eaten up by inflation, and I pay more in taxes on 401k withdrawals than I would pay now in income tax and I will be the first to admit I was wrong.
At that point, I will just be a bitter retiree. >>
You might not be able to retire, and your 401K might be in treasuries, if still in existence, and you're prob. right on the tax brackets situation 30 years from now. >>
If this is the case, by the time I am 60 the real income generating property will hopefully be able to allow me enough incOme to retire.
I guess, we won't know for a while. The plan with my wife and I is to get one piece of property a decade in our life. And the plan is to have these free and clear of a mortgage upon retirement.
I stopped contributing past my match point 3 years ago. Given the rules applies to my 401k today, and futures potential changes, I am less than 100% convinced any of my 401k will be available to me when it should be promised.
I'm going to be a little bit harsher than most of the other posts. Anyone trying to tell you the government is going to take away your IRA/401K is either incompetent or an outright liar, either way you should not pay any attention to them. That is a sure fire way to start a revolution, and the banksters would not be happy since they would lose all those fund management fees. Remember, if it's not good for the banksters The Bernank?Congress doesn't think it's good for America.
Walking away from matching contributions, plus the ability to get tax deferred gains would be the worst mistake of your life. But a 401K is not something you just throw money in and not manage. I actively manage my regular investment accounts on a daily or weekly basis, and I check on the 401K account at least once a month to look at returns in each of the available funds and make changes when I deem it time. In 2008 when the economy seemed to be tanking and I was not sure what was going to happen I moved everything to cash in the 401K's, I lost about 15% from the peak value but am up 67% since January 2009 by switching 100% to value funds. Since then I moved 50% to cash for about 4 months in 2010, I missed the absolute peak but also missed most of the dip. I went back to fully invested in Oct. 2010 and now am thinking about moving some back to cash.
I don't think anyone -- at least no one who is intelligent -- is arguing the government is going to confiscate 401(k)s. That would be far too crude. But there are things that government can do "at the margins" which allow it to put its hands in savers' pockets. They could require that X percentage be invested in "safe" assets like Treasuries. It would lead to litigation, but the courts would probably allow it -- on the theory that the government is allowed to set conditions on the kinds of investments that are allowed, in exchange for the tax deduction the government gives you on contributions into the plan.
Or they could impose a special surtax on withdrawals, either from all plans or on individuals who have high incomes/high balances. I happen to think that's also a likelihood with Roth IRAs, notwithstanding the current law which treats them as tax-free. There are a lot of things they can do. I think it's naive to assume that a government hungry for revenue won't try to take some bites out of 401(k) assets, which are probably the biggest pile of easily tracked and highly liquid wealth in this country.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>I'm going to be a little bit harsher than most of the other posts. Anyone trying to tell you the government is going to take away your IRA/401K is either incompetent or an outright liar, either way you should not pay any attention to them. That is a sure fire way to start a revolution, and the banksters would not be happy since they would lose all those fund management fees. Remember, if it's not good for the banksters The Bernank?Congress doesn't think it's good for America.
Walking away from matching contributions, plus the ability to get tax deferred gains would be the worst mistake of your life. But a 401K is not something you just throw money in and not manage. I actively manage my regular investment accounts on a daily or weekly basis, and I check on the 401K account at least once a month to look at returns in each of the available funds and make changes when I deem it time. In 2008 when the economy seemed to be tanking and I was not sure what was going to happen I moved everything to cash in the 401K's, I lost about 15% from the peak value but am up 67% since January 2009 by switching 100% to value funds. Since then I moved 50% to cash for about 4 months in 2010, I missed the absolute peak but also missed most of the dip. I went back to fully invested in Oct. 2010 and now am thinking about moving some back to cash. >>
Even in the worst of times, I'm not sure I'd look at Argentina, Bulgaria, and Hungary as precedents for political moves in the US.
It is certainly possible that the US would effectively end the 401k concept prospectively, so that new contributions are not allowed and future investment gains would be taxed. This would likely increase withdrawals and generate withdrawal penalties for a while.
<< <i>I don't think anyone -- at least no one who is intelligent -- is arguing the government is going to confiscate 401(k)s >>
Ok, I'll apologize for the tone of my post, a long day with some idiots at work can cause me to be unreasonable. I can agree that the congress and their bankster cohorts may try to find a way to access some taxes on the 401k's, but if you are getting 100% interest on your contribution you simply can't beat that, and that does not include any gains you might make on the investments.
You fund your 401k to get the full match your company provides. I can't think of any circumstances when this wouldn't be the best course of action over the long term, all else being equal and of course barring circumstances of living hand to mouth, which i don't think anyone reading this forum is in.
You should max your matching contribution. Its free money. Keep in mind that most 401Ks have a closed system of mutual fund options. It is a well known fact that mutual funds have been raped the last 20 years with more than half the profits getting stolen in management fees. Some members of congress have investigated and tried to change it but the Wall Street boys are too powerful. Convert to an IRA as as soon as you get out.
All of these "pooled" type savings, etc are designed for the benefit of the managers not the savers.
maybe I'm really naive/ignorant on that, but how do you do that without quitting or getting fired from your job/company that contributes to the 401k? I don't plan on doing either for a long time. As always, advice is appreciated and thanks to all of you for your ongoing comments regarding this.
To forgive is to free a prisoner, and to discover that prisoner was you.
When he was 64, Dad's job was "sold" by the county to the city. He got the glory of re-applying for his job and working another 5 years before qualifying for retirement. But for years and years the city has failed to pay their portion to the pension.
So as i thought, there is no other way to rollover a 401k into any kind of IRA other than to quit or get fired? Neither is an option for me.
I believe that is correct. POM, one good way to educate yourself on IRAs and rollovers is to go onto Vanguard's or TRowe Price's website and download their info on IRAs and rollovers.
Q: Are You Printing Money? Bernanke: Not Literally
Well...I have decided to go thru with the loan. Against the advice of some close friends and family members as well as from some here, all of which i value the advice, I did it today. Hope to get the funds within a week. The main thing that made me to decide to do it is, this dip in Silver. I have a fear that Silver will fall to the low $20's, but at least i will have a subsantial amount of cash in hand to load up on Silver when if/when that happens. Just because I will have the funds now to make much larger purchases, doesn't mean I will be spending it freely. I have set up some very strict guidelines for myself to follow with regards to purchasing. The trick will be, will I have the diligence to stick to them
The way I look at it is it's not costing me anything to do this being that I am paying myself back the 3.75% interest that I am being charged. The Plan says that I am only able to access 55% of my total balance, so I feel that is a good rule in place. I cannot lose all of my 401k by doing this. In the meantime of this endeavor, I will still be conbtributing to my 401k, but at a less %, which will still be fully matched. If after a certain period of time, it isn't working out, I can pay off the loan without penalty. If I do get myself upside down after a certain period of time, at least I will still be contributing towards the "retirement plan" and gettiing $ for $ match while doing so. Although I have done fairly well managing the Plan as best as I can under the rules it allows me to (18% in the last 4.25 years I've been in it), I feel I owe it to myself to pursue this being that I've done ok with Silver dealings I've done.
With regards to Silver, I buy, to sell, to take those profits from selling, to buy an amount to put back, stash or whatever you want to call it. I have been able to "put back" 10 oz. with the profits for every 85 oz. I've flipped. There was a time when I had it down to every 80 oz, I could put back 10 oz. but margins have tightened so I'm up to 85 now. I don't think that's too bad. Now the plan is to ramp that up with more quantity purchases. Sure, more risk, but more possible gains too. I've had a dealer in the area been telling to do this for awhile. He will give me better buy prices if I buy more volume. There are several dealers in the area that I can sell to, so selling wont be a problem. I've built up many trading relationships locally as well as here on the BST. I may end up being a "glorified middle man" for all of them, but it surely will be worth my while, or else I wouldn't be pursuing this.
Wish me luck...I'm sure i'll need some of that too.
To forgive is to free a prisoner, and to discover that prisoner was you.
Comments
<< <i>no taxes due if loan repaid before retirement. Gains earned in the ROTH would be tax free. Keep in mind you would lose any income generation from the loss of funds in the 401K but should more than make up for it with the tax free gains in the ROTH. >>
paying a 'double tax' (paying back the loan with taxed income) was what ive heard is a reason to not take a loan, unless its an emergency.
i was only thinking about a $5,000 loan as thats the annual amount i can contribute to mine. possibly repeat annually?
i would take that out and deposit it into my current ROTH.
seemed to have some potential since ive already 'saved' this $$.
i would keep contributing to the 401K, while paying myself back @ 8%.
my company currently matchs 4%, next year it will be 5%
<< <i>paying a 'double tax' (paying back the loan with taxed income) was what ive heard is a reason to not take a loan, unless its an emergency. >>
Not sure the loan repayment is taxed income but even if it is you are going to pay taxes on it whether it goes toward the loan or not. Also, edited my last post with more info. Also, 15% matching is great, but many cases of high matching of contributions involve a 401k that is fully vested in only the company's stock. In this case strength of company becomes important.
Don't forget, some of the greatest returns on CDs are being offered by banks that are the most risky.
Give Me Liberty or Give Me Debt
If you are getting a 15% match dollar-for-dollar on your contributions, it's a no-brainer to keep putting money in the plan. That is an immediate 100% return on your money.
But you can still access the money. Check your summary plan description carefully to see under what circumstances plan loans are available. Don't confuse hardship withdrawals with loans. Generally there aren't any requirements/limitations to take out a loan, other than the $50,000 loan limit under law. I took out a loan a year ago to finance an investment property.
If you leave your company and don't repay some or all of the loan, you'll owe regular income tax on the amount you didn't repay, plus a 10% penalty. If you are concerned about government confiscating your 401(k) at some point -- which is not a crazy fear -- then you may be OK with just paying the tax now and getting at least some of your money out.
Here's an example of the math: If you and your employer had each put in $50,000 over the years (total of $100,000) and you took out $50,000 as a loan and immediately left the company, you would owe ordinary income tax plus a 10% penalty on the money you didn't repay. That would be -- let's say -- 25% in regular income tax plus a 10% penalty, so a total of 35% of the $50,000 would get taken by government. But you got $50,000 from your employer in "free money," so you still keep 65% of that.
That's why I would keep doing the match but take out a loan, if at all possible.
By the way, there is no double taxation of loans from a 401(k) plan -- this article explains why double taxation is just a myth.
secondrepublic,
I think I'm leaning towards almost exactly what you're advising if I understand it correctly.
Keep the contributions going at current level, take a "loan' that has a 4% return payment fee and buy some pm's...because I am becoming more convinced that I will be able to pay back that 4% rather easily holding pm's (mainly Ag), an hopefully relatively quickly.
I found out that if I make a % contribution change, it stays at whatever I decide to contribute til January. Only one "elective" change like that is allowed per year (unless I qualify for a hardship). So it doesn't make sense to stop contributing at current level as long as the Co. maintains their match. I think i've at least come to that conclusion LOL.
Anyway, I'm still debating it all.
keep the info. coming in on this thread folks. I believe this thread could be referred to by many as they ponder similar strategies.
I did similarly to you, except using my loan to buy real estate. Am repaying it at 3.75% interest -- all of which goes right back into my own plan account. Plans generally allow up to a 5-year repayment period so you can spread out the repayments.
If you were planning to "bail money" out of the plan and not repay it (just paying the taxes plus 10% penalty) you can really only do that if you leave your employer before the loan is paid back. Otherwise they automatically keep taking out the repayments from each paycheck.
Oh wait, future revenue will pay that debt.
If not, borrow again...
As to the 401(k) issue -- borrowing from yourself and paying yourself interest seems smarter than giving the bank that money. JMO.
<< <i>As to the 401(k) issue -- borrowing from yourself and paying yourself interest seems smarter than giving the bank that money. JMO. >>
If you are going to pay interest pay it to yourself. It's guaranteed 4% or better.
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Rather than stop completely, I'd suggest lowering your contribution %age to a level where you don't miss the money. That way you won't think about it for the next 25 years, which is what you need to do to let it grow. Perhaps you could rationalize it as insurance against the continued price appreciation of alternative investments, and the insolvency of SS.
If I were you I'd keep contributing to get that full match, and try not to think about it. The rest is unknowable, handwaving, speculation, and not worth thinking about.
The investments therein is a separate and separable question. You can index invest through whatever ETFs or mutual funds are available, use a targeted maturity fund, or select a third-party allocation/rebalancing service to make the selections for you. Schwab uses an outfit called Guided Choice which decides allocation and rebalancing based on an interpretation of modern portfolio theory and the concept of an "efficient frontier". After making my own picks the last few years I recently handed the selection over to them. I'm happy with it.
You say you actually have more money above the 15% that you could contribute, well, why don't you use THAT for PMs?
Assuming your company has good mutual funds to invest in (my old company did theirs through Vanguard, and we had the Vanguard 500 fund, for example) you should just allocate your money to those funds and rebalance once or twice a year. This should NOT be money to play with.
The downside to borrowing money from your account is that you will miss out on any gains that your funds make during that period. So if you borrow $10,000 and buy silver bars, and over the next six months, silver drops in price 10%, while your funds go up 10%, that's a big hit you just took. Of course, it could also go the other way. Or both could go up, or both drop.
No one can predict the future. PM's have had a great bull market for the last 10-12 years and may continue roaring ahead. Overall, stocks have done better than PMs over just about any timeframe BESIDES the last 10-12 years, so if I HAD to make a prediction, I'd say stocks not PMs.
Full disclosure: I'm also in my mid-40s. I was laid off two years ago. I moved my 401(k) to an IRA, but kept the same funds. I had a pension, which as moved to an IRA with a trading account and have been investing that in stocks, including SLV and AGQ at one point or another. The 401(k) is up about 40-50% since the market collapse two years ago. My trading IRA is up about 98% since July of 2009.
No Do-Overs in this game.
You CAN"T assume that the government is going to "confiscate" your funds and IMHO that is poor advice. Who knows what will happen before you retire. If the country comes apart it won't matter. Is it possible that they are going to try and take a piece of it? Well of course, but I would rather go into my 50's with a nice investment portfolio than without. Someone said they lost a bundle in 2008, well if they left it alone, and were properly diversified, they should have it all back now. My stocks and bonds , well diversified and international. with REITS and PM's, have done fine the last 8 years. As good as PM's, no, but it did well the ten years before PM's took off and you should be in for the long haul. I 've been living on mine for eight years and I still have what I started with.
By all means take the match I agree. 401k manna from heaven crap~ I do not agree
<< <i>So it's 2011 and you made it back to even from 2008. 3 years wasted way i see it. Not counting the 2002 hit.
By all means take the match I agree. 401k manna from heaven crap~ I do not agree
Basically earned the same money twice. Had you gotten out in 2008, you would have doubled your money by 2011.
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<< <i>So it's 2011 and you made it back to even from 2008. 3 years wasted way i see it. Not counting the 2002 hit.
By all means take the match I agree. 401k manna from heaven crap~ I do not agree
Read my post again, I didn't say I was back to where I was in 2008, my bonds, international stock, PM's and REITS were enough to offset my '08 losses, I didn't suffer the meltdown that many did, it's called diversification
My main reason is my personal performance, me managing the 401k, since August '10, which is when the Silver Bull run really starting ramping up, is 27.61%...so I'm doing pretty damn good shifting things around with what the Plan offers, and I can only make 2 moves a month.
So with that said, do i continue to do what i do with the 401k, growing it at hopefully this same rate and getting a 15% match from the Company
OR
Take the loan at 3.75% payback to myself rate to get cash to buy Silver being that it's run since August '10 was roughly 300%??????
With this dip in Silver, would this be wise, or should I stay the course with the 401k being that 27% gains and a 15% match of what i contribute aint too shabby either?
The burning question that wakes me up at night is, is this dip really worth doing something like this at this stage of where Silver is at? Any and all advice is welcomed, again.
Although tempting, I say don't touch the 401k, keep contributing the max, and buy metal like crazy with what you can spare. I think a good diverse portfolio is nice. Keep trading in your 401k like you're doing and sit on the Ag and Au for a good many years.
Just mho.
Too many positive BST transactions with too many members to list.
I also left my 401k alone during the 08 collapse. Broke even just last year. The only reason was government intervention.
I believe we will be in for another major collapse and the government will have exhausted any means to help the markets regain their losses.
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Plus, even though many on a "metals forum" might disagree, you have much more diversification even with a basic plan, than just buying metals imho, which will undoubtedly have stocks in many funds that do have natural resource exposure., if you want to borrow reasonably against your 401k, to buy physical metals, then go for it, but take full advantage of the match, it's really a very easy decision.
Excellent point. I seem to think that there is not that much being that there are only 7-8 Funds I think, but you're right, that's more than a pure Metals play. Good point.
Keep sockIng it away in the 401k.
If you really want to be a hard core stacker, only contribute the max that will be matched. Don't s end anything that isn't matched by the company into the 401k.
Personally, I send in 15% to my 401k. Which is more than the 6%match of the company. I like having the large 401k balance. Personally, I increased my 401k contributions from 6% to 15% in April 2009. That helped me bounce back much faster from the crash of 2008.
I think metals are a good play, but I only spend "mad money" on them. There is less fear o the dips as the money is discretionary.
Lastly, I liked what the previous poster was saying about going into retirement with a sizable well diversified portfolio. It feels good.
Now, talk to me in 30 years when I am 60 and if everything is eaten up by inflation, and I pay more in taxes on 401k withdrawals than I would pay now in income tax and I will be the first to admit I was wrong.
At that point, I will just be a bitter retiree.
<< <i>IMHO
Keep sockIng it away in the 401k.
If you really want to be a hard core stacker, only contribute the max that will be matched. Don't s end anything that isn't matched by the company into the 401k.
Personally, I send in 15% to my 401k. Which is more than the 6%match of the company. I like having the large 401k balance. Personally, I increased my 401k contributions from 6% to 15% in April 2009. That helped me bounce back much faster from the crash of 2008.
I think metals are a good play, but I only spend "mad money" on them. There is less fear o the dips as the money is discretionary.
Lastly, I liked what the previous poster was saying about going into retirement with a sizable well diversified portfolio. It feels good.
Now, talk to me in 30 years when I am 60 and if everything is eaten up by inflation, and I pay more in taxes on 401k withdrawals than I would pay now in income tax and I will be the first to admit I was wrong.
At that point, I will just be a bitter retiree. >>
You might not be able to retire, and your 401K might be in treasuries, if still in existence, and you're prob. right on the tax brackets situation 30 years from now.
1) Set up a cash emergency fund to help cover bills and expenses 'just in case' something happens.
2) Keep on plugging away at the 401(k), contributing at a minimum whatever it takes to get the full company match.
3) Diversify. Silver will not run forever. Neither will Apple, or tulips, or JDSU, or cotton, or...
<< <i>
<< <i>IMHO
Keep sockIng it away in the 401k.
If you really want to be a hard core stacker, only contribute the max that will be matched. Don't s end anything that isn't matched by the company into the 401k.
Personally, I send in 15% to my 401k. Which is more than the 6%match of the company. I like having the large 401k balance. Personally, I increased my 401k contributions from 6% to 15% in April 2009. That helped me bounce back much faster from the crash of 2008.
I think metals are a good play, but I only spend "mad money" on them. There is less fear o the dips as the money is discretionary.
Lastly, I liked what the previous poster was saying about going into retirement with a sizable well diversified portfolio. It feels good.
Now, talk to me in 30 years when I am 60 and if everything is eaten up by inflation, and I pay more in taxes on 401k withdrawals than I would pay now in income tax and I will be the first to admit I was wrong.
At that point, I will just be a bitter retiree. >>
You might not be able to retire, and your 401K might be in treasuries, if still in existence, and you're prob. right on the tax brackets situation 30 years from now. >>
If this is the case, by the time I am 60 the real income generating property will hopefully be able to allow me enough incOme to retire.
I guess, we won't know for a while. The plan with my wife and I is to get one piece of property a decade in our life. And the plan is to have these free and clear of a mortgage upon retirement.
In the mean time, keep on stackin'
Warren Buffett and Robert Kiyosaki would probably disagree.
Walking away from matching contributions, plus the ability to get tax deferred gains would be the worst mistake of your life. But a 401K is not something you just throw money in and not manage. I actively manage my regular investment accounts on a daily or weekly basis, and I check on the 401K account at least once a month to look at returns in each of the available funds and make changes when I deem it time. In 2008 when the economy seemed to be tanking and I was not sure what was going to happen I moved everything to cash in the 401K's, I lost about 15% from the peak value but am up 67% since January 2009 by switching 100% to value funds. Since then I moved 50% to cash for about 4 months in 2010, I missed the absolute peak but also missed most of the dip. I went back to fully invested in Oct. 2010 and now am thinking about moving some back to cash.
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Or they could impose a special surtax on withdrawals, either from all plans or on individuals who have high incomes/high balances. I happen to think that's also a likelihood with Roth IRAs, notwithstanding the current law which treats them as tax-free. There are a lot of things they can do. I think it's naive to assume that a government hungry for revenue won't try to take some bites out of 401(k) assets, which are probably the biggest pile of easily tracked and highly liquid wealth in this country.
<< <i>I'm going to be a little bit harsher than most of the other posts. Anyone trying to tell you the government is going to take away your IRA/401K is either incompetent or an outright liar, either way you should not pay any attention to them. That is a sure fire way to start a revolution, and the banksters would not be happy since they would lose all those fund management fees. Remember, if it's not good for the banksters The Bernank?Congress doesn't think it's good for America.
Walking away from matching contributions, plus the ability to get tax deferred gains would be the worst mistake of your life. But a 401K is not something you just throw money in and not manage. I actively manage my regular investment accounts on a daily or weekly basis, and I check on the 401K account at least once a month to look at returns in each of the available funds and make changes when I deem it time. In 2008 when the economy seemed to be tanking and I was not sure what was going to happen I moved everything to cash in the 401K's, I lost about 15% from the peak value but am up 67% since January 2009 by switching 100% to value funds. Since then I moved 50% to cash for about 4 months in 2010, I missed the absolute peak but also missed most of the dip. I went back to fully invested in Oct. 2010 and now am thinking about moving some back to cash. >>
Interesting.
Don't think Govt. can't confiscate your 401k. It has already happened many times over in some form around the Globe.
It is certainly possible that the US would effectively end the 401k concept prospectively, so that new contributions are not allowed and future investment gains would be taxed. This would likely increase withdrawals and generate withdrawal penalties for a while.
<< <i>I don't think anyone -- at least no one who is intelligent -- is arguing the government is going to confiscate 401(k)s >>
Ok, I'll apologize for the tone of my post, a long day with some idiots at work can cause me to be unreasonable. I can agree that the congress and their bankster cohorts may try to find a way to access some taxes on the 401k's, but if you are getting 100% interest on your contribution you simply can't beat that, and that does not include any gains you might make on the investments.
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Keep in mind that most 401Ks have a closed system of mutual fund options. It is a well known fact that mutual funds have been raped the last 20 years with more than half the profits getting stolen in management fees. Some members of congress have investigated and tried to change it but the Wall Street boys are too powerful. Convert to an IRA as as soon as you get out.
All of these "pooled" type savings, etc are designed for the benefit of the managers not the savers.
maybe I'm really naive/ignorant on that, but how do you do that without quitting or getting fired from your job/company that contributes to the 401k? I don't plan on doing either for a long time. As always, advice is appreciated and thanks to all of you for your ongoing comments regarding this.
If I had only knownthe benefits of a government job when I was young.........
Be selective about that government job...
I believe that is correct. POM, one good way to educate yourself on IRAs and rollovers is to go onto Vanguard's or TRowe Price's website and download their info on IRAs and rollovers.
I knew it would happen.
Well...I have decided to go thru with the loan. Against the advice of some close friends and family members as well as from some here, all of which i value the advice, I did it today. Hope to get the funds within a week.
The main thing that made me to decide to do it is, this dip in Silver. I have a fear that Silver will fall to the low $20's, but at least i will have a subsantial amount of cash in hand to load up on Silver when if/when that happens. Just because I will have the funds now to make much larger purchases, doesn't mean I will be spending it freely.
I have set up some very strict guidelines for myself to follow with regards to purchasing. The trick will be, will I have the diligence to stick to them
The way I look at it is it's not costing me anything to do this being that I am paying myself back the 3.75% interest that I am being charged. The Plan says that I am only able to access 55% of my total balance, so I feel that is a good rule in place. I cannot lose all of my 401k by doing this.
In the meantime of this endeavor, I will still be conbtributing to my 401k, but at a less %, which will still be fully matched.
If after a certain period of time, it isn't working out, I can pay off the loan without penalty. If I do get myself upside down after a certain period of time, at least I will still be contributing towards the "retirement plan" and gettiing $ for $ match while doing so.
Although I have done fairly well managing the Plan as best as I can under the rules it allows me to (18% in the last 4.25 years I've been in it), I feel I owe it to myself to pursue this being that I've done ok with Silver dealings I've done.
With regards to Silver, I buy, to sell, to take those profits from selling, to buy an amount to put back, stash or whatever you want to call it. I have been able to "put back" 10 oz. with the profits for every 85 oz. I've flipped. There was a time when I had it down to every 80 oz, I could put back 10 oz. but margins have tightened so I'm up to 85 now. I don't think that's too bad.
Now the plan is to ramp that up with more quantity purchases. Sure, more risk, but more possible gains too.
I've had a dealer in the area been telling to do this for awhile. He will give me better buy prices if I buy more volume. There are several dealers in the area that I can sell to, so selling wont be a problem. I've built up many trading relationships locally as well as here on the BST. I may end up being a "glorified middle man" for all of them, but it surely will be worth my while, or else I wouldn't be pursuing this.
Wish me luck...I'm sure i'll need some of that too.