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FINRA regs actually do work for you. Your employer is required to set up a reasonable selection of investment options, ranging from a money market to company stock to a menu of mutual fund offerings, ideally through a low cost fund family (we used Vanguard for years). Employee education must be offered as well, although the employer may not advise you directly. Unfortunately, most employees do not take the time to learn about the plan or the options available to them. My suggestions?
1. Know the rules. Try to take advantage of all the free money (the match) available.
2. Know the options. Diversify. You don't want a money market fund, and you may not want all company stock.
3.Know where you stand. Read your plan summary. Balance your investments. If a high flying fund has soared to unsustainable levels, take some of the gain and move to more predictable options. (remember the tech bubble? real estate collapse?)
90% of 401K gains go to the top 10% of 401K participants. That's because they understand the rules of the game.
11. Not only are your contributions tax deferred (if not a roth), you may also qualify for Form 8880 Savers Credit. A powerful incentive for those who struggle most to contribute. The nonrefundable credit has the power to knock your tax down to zero. Check to see if you might qualify.
12. $17,500 (for those not yet 50 years of age) is the maximum TAX DEFERRED amount you may contribute to your 401(k). You may continue to contribute as after-tax contributions. If you are in such a position, however, do read up on highly compensated employee rules of your plan.
13. Don't borrow or take contribution holidays. You are risking and compromising your senior self's security.
14. Don't get discouraged - after a few years you will see a huge compounding effect.
15. Hold steady in downturns and consider increasing your contribution while markets are on sale - really makes a good difference. If you have heard the term 'dollar cost averaging' buying on sale lowers your average share cost. That is a good thing.
16. Unsure about the multitude of funds to choose from? An age indexed choice, if available, may be just the right place for your contributions. These funds gently move more conservative as you near retirment for you.
Keep an eye on the Federal Reserve. Bernanke is propping up Wall Street with the infusion of 85 billion a month of printed new money. It has to come to an end soon or our economy will continue to sputter along because the 1 %, who have a love/hate relationship with Obombus, our socialist leader, who blames them for his poor economy, while taking all of the campaign money he can get from them for his Democrat/Socialist party; are getting richer. When the "feed-sack" is empty the market will tank and their goes your money. Buy some gold or silver, maybe 10% of your portfolio. Gold and silver will never be zero, while the dollar will be zero if this madness continues on a monthly basis. Also all of these college educated idiots that profess to be economist, apparently did not learn that John Maynard Keynes, method of using stimulus money to fix a recession, does not work, has never worked and will never work. Capitalism is the only way to fix the economy, quit the over-regulation, over taxing of the businesses that want to provide jobs and grow, and watch the economy start to grow, revenues will come pouring into Washington and the deficit will shrink because people will be earning a living as opposed to being given a living. It is a fact: less taxes, more revenue, more taxes less revenue. Perhaps those Communist Econ Professors should resign because they are inept propaganda teachers. Let Freedom Ring, and get Obamites out of our lives.
Okay the fees charged are not an average of .63% as quoted in this piece. That is the quoted fee of the mutual funds. On top of that the fees paid to the 401K administrators is is in the neighborhood of 1% even after some companies pick up some of these fees it is closer to 1.5% if your company does not pick up these fees. Now the fees for the mutual fund to trade and do whatever they do to generate money for all their friends and banking contacts on Wall Street approaches 2%. Thus you are paying a total of at least 3.63% each year win or lose in the market for the right to let someone else hold your money, this is the least you are paying and could be in the 5% range. Throw in inflation even at low rates of 1.5% and you have to make 5.25% to 7.5% every year to just protect your principle.
No wonder the average return on 401K funds after inflation is under .5% yes that is point 5 or 1/2 of one percent over the last 10 years worse if you go back to 1998 it is negative since then.
Oh wait that is when banks were allowed to become brokers (remember Glass Stegall Act was dropped then). Only the 1% on Wall Street get rich off of 401Ks. Roll yours into a bank fund that you control investing in and buy long term stocks with decent dividends and let it ride. After you get over $100,000 in the account the only fees you pay are the ones you decide to do when you buy or sell a stock, or EFT if you are a gambler.
In light of the "last economic downturn"....Nothing like "gambling" with your retirement.
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[BRIEFING.COM] The stock market began the last week of July on a quiet note with the S&P 500 ending less than a point above its flat line. Like the benchmark index, the Dow Jones Industrial Average (+0.1%) also posted a slim gain, while the Russell 2000 (-0.5%) and Nasdaq Composite (-0.1%) lagged throughout the session.
The major averages were awakened from their weekend slumber with an opening retreat that pressured the S&P 500 below its 20-day moving average (1975). Even though ... More
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