starting a 401k

They will probably have a description of the funds when you get whatever packet it is they give you. They probably have Target Funds available to you which might be to your advantage it you don't know much about any of this. If you are young I would avoid (just my opinion) what you might call a "stable" fund because although there might be less risk in them, there is also less return and if things go haywire like they did a few years ago there would still be time for everything to get back on track. No matter which way you go, the important thing is to start saving while you are young and keep it up, and although you can do this outside of your employment, it's easy and automatic when they just take it out of your check.

 

Talk to a person that is affiliated with your companies Program, you should be able to get that info from your HR person easily. Talk to them about your goals , and what your future plans may be. I'll tell you what I did after the one year wait was over...I started at the maximum allowable amount that I could put in , did it affect my pay as far as take home went, yep, it did..but I decided that if I wanted a decent retirement then I needed to get myself prepared. You can do the same, once you see that fund start to grow , you'll want to save more and more...sometimes it hurts a little , but when you get that 1st 100,000 in there it really takes off.

My wife and I lived our lives by this rule/s...pay God His share..1st...then pay yourself (save)....live with-in your means and your retirement will be a breeze. It worked out for us , I retired in 2011, and I'm only using the interest income from my 401K for us to pay what little bills we have....my wife is still working , at least til 2014, then she will retire. My entire SS check goes into a savings account right now, it can be done...just have to be willing to work at it and save while you are young ...Good Luck!

 

Pete,
If your company matches you are forest Gump not to do it. were else can you make 100 percent. if you put in 200 and they put in 200 you just gained 100 percent. Also 401K are tax free that's another 30 some percent pending your tax bracket. Einstein was once asked what is the greatest invention man kind has ever invented. People thought he would say splitting the Atom or Planes. Einstein's answered compound interest!

The younger you start the more you make. Put it in a aggressive fund and forget about it. the Market always rebounds, even in 2009 crash it has came back, those that panicked and got out lost, those that stayed the course never lost, may not have made money but still never lost.

 

If you do that , you will be tempted to pull it out for almost anything....once its in the 401K there are only limited ways for you to access it....real emergencies , they are set up like that so you have a retirement account....put at bit into savings, but the 401K is the way to go for your retirement.

 

put in what the company matches only.

a roth is better for the rest of your funds.

 

I put most of my 401K in the higher risk funds because the return was better. I put most in overseas Asian funds because Asia was starting to boom and is really booming now. Also, drivers I worked with would panic and pull their money out of a 401K if the stock market dropped; sometimes taking a loss. I would do just the opposite & increase my contribution while stocks were low. My 401K was very successful & when opportunity presented itself was able to invest in rental property with it and the profits. So, yes, go for the 401K; but, be disciplined and don't touch it other than to make adjustments. Don't withdraw any until you retire and you will have a rewarding retirement.

 

If you have good credit, buy the house now. House prices are at historical norms (though youre getting much more home as far as features/size) and mortage rates are at historical lows. Seriously. Over 30 years you can expect a conservative 6% roi (after inflation) from the stock market -- more than double what you'll pay in mortgage interest (so borrow the maximum, build a 6 month cushion, and then invest all but the minimum payments elsewhere).

As for stocks, if you want to be involved do yourself a huge favor and read:

Intelligent Investor
Security Analysis
Common Stocks & Uncommon Profits
Irrational Exhurberence
Fooled by Randomness
One Up on Wall Street


And Warren Buffett's shareholder letters: http://www.berkshirehathaway.com/letters/letters.html


It may seem like a lot of effort, but it'll be well worth it. The $0.02 summary is buy a great company that you understand at a good price and hold onto the stock indefinitely. Don't check on the price, don't worry about market corrections -- you only care about the fact you own a piece of a great company.

Those who "trade" almost always fail to beat the market due to transaction fees. This includes financial managers! There is another book "Where are the Customers' Yachts?" that deals extensively with this, but the title is summation enough.

 

Being young I would wait about a year. With the stock market as high as it is there will be many losses in the next year.

A 401K serves one purpose of a long term investment for retirement. It's either that or try how to figure out how to live on Social Security which is way down in the poverty level. Do you want steak or ramen noodles?

Most employers will match 4% of your income dollar for dollar. But you have to stay with them 5 years or they take their share back. I'd do like others said take advantage of the company match and put another 4% in a Roth IRA. Check into annuities also. There are some good deals out there. You can't go wrong with real estate. The earlier you pay your house off the better off you will be.

Many young people have no choice but to live paycheck to paycheck or just want too have fun and procrastinate on the important stuff. Unless you croak early you have to prepare for retirement if you want to have one.