Author Topic: Increasing 401k  (Read 8587 times)

Offline Serellan

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Increasing 401k
« on: October 09, 2008, 11:05:00 PM »
This may just be me...but I just increased my 401k contribution.  Why?  Buy low, sell high.  If we stay in a downturn over the next few years, I want to be buying into the market when it's low, so that when it goes back up I can benifit.

I'd rather be getting more into the market when it's crap than when it is peaking.

Just my opinion and actions, thoughts?

Offline Stein

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Re: Increasing 401k
« Reply #1 on: October 10, 2008, 08:18:15 PM »
I am seriously thinking about picking up some individual stocks.  I think the trick is to find stocks that are down 30% or more but really don't have any marbles in this crisis.  Microsoft comes to mind as well as others like Walmart and Costco.

I think what you want to find are solid companies with little debt, great revenue and low P/E ratios that sell stuff that will always be in demand.

I am also looking at royalty trusts but am having a difficult time with understanding how to evaluate their financials as they are a completely different beast.

So yes, I think there are some great deals to be had right now if you have the guts and do your homework.  For mutual funds, you may want to look at funds with managers that have been around for a long time and see what they did during the last two recoveries.

Offline BigDanInTX

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Re: Increasing 401k
« Reply #2 on: October 10, 2008, 10:43:07 PM »
Need to focus on Price to Earnings ratio.  Not a guarantee, but on average, it serves well.

Offline ModernSurvival

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Re: Increasing 401k
« Reply #3 on: October 11, 2008, 01:53:25 PM »
Right now think Dividends!  Profitable companies paying good dividends are on sale CHEAP.  Hence even if they don't rebound soon you still get a quarterly return.  That said my money is going heavily into ING Direct right not, I may not pick the exact bottom but I know this ain't it yet.

Offline DarkEyes

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Re: Increasing 401k
« Reply #4 on: October 11, 2008, 04:39:40 PM »
I've had to borrow a tin foil hat to post this, but do you think it's possible that with the way things are going, we could be headed down a road that is going to take us someplace we've never been before?  Have you thought that you might be throwing your money out the window?  For the time being, I have stopped my 401 contribution, haven't taken any money out of it, but with the money that would have been my contribution, I've been buying silver coins.

Offline Stein

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Re: Increasing 401k
« Reply #5 on: October 12, 2008, 11:31:29 PM »
I've had to borrow a tin foil hat to post this, but do you think it's possible that with the way things are going, we could be headed down a road that is going to take us someplace we've never been before?  Have you thought that you might be throwing your money out the window?  For the time being, I have stopped my 401 contribution, haven't taken any money out of it, but with the money that would have been my contribution, I've been buying silver coins.

It's possible, but I have decided to stay put with the 401(k) for several important reasons, roughly in order of importance.

1.  If I pulled it out and got it in cash or silver/gold, it wouldn't be enough to secure much of a life outside 6 months to a year.  I have emergency cash readily available for 6 months already ala Dave Ramsey.  Thus, it isn't a solution.

2.  I am still getting a 100% match up to 4% from my employer so I am actually still in the positive when I look at only money I have contributed.

3.  If everything somehow comes out alright, I don't want to shortchange my future (I try for win/win strategies if at all possible).

4.  Paying that tax would make me want to puke.

Offline ModernSurvival

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Re: Increasing 401k
« Reply #6 on: October 13, 2008, 05:37:25 AM »
Stein,  I would never suggest anyone withdraw early, what Serellen did was stop his contributions for now.  My view (I am not an advisor, yadda, yadda) is many don't have sufficient plain old savings in cash.  You should have 3-6 months of household expenses in cash you can get to easily at minimum.  Once that is done you worry about 401s, SEPs, IRAs, etc.

Everyone has to make their own choices but pulling our of a tax deferred account before retirement age should be a last ditch thing.  The penalties and taxes are insane,

Offline Stein

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Re: Increasing 401k
« Reply #7 on: October 16, 2008, 07:58:07 PM »
Yeah, until O-bummer puts through his bill to allow people to drain their 401(k)s.  I guess draining our homes of value isn't enough.

Sorry, just a bit angry that a presidential candidate would suggest to the masses that he is going to help them by giving them easy access to the last bastion of money available to most people.

Besides, if you sell you can't have fun on the roller coaster these days.

Offline ModernSurvival

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Re: Increasing 401k
« Reply #8 on: October 16, 2008, 08:12:29 PM »
Allowing people to raid 401Ks = full all out run on the market = death nail to the Dow, S&P and NASDAQ = Destruction of the U.S. economy. 

Of course this is the same jack ass that thinks raising taxes during a recession is a good idea, last idiot to do that was Herbert Hover!  You do remember what that caused right?

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Re: Increasing 401k
« Reply #9 on: October 16, 2008, 09:36:46 PM »
I am not an adviser either (bla,bla, bla) but I believe in dollar cost averaging.  Just keep putting some in every month.  Sometimes you buy high, sometimes low but over time you will do well.  Things seem pretty bleak now, but we will get through it.  If you sold your stocks at the market bottom in September of 1998 when the Dow was at 7539.07, you would have missed out on portfolio gains of 21.8 percent by the end of that year. 

Yes, this time is probably worse than 1998, but remember the ant that collects a little food every day.  Be diversified in your investments.  Over time you can buy stocks, mutual funds, metals, land, real estate, etc.  Just remember that building wealth takes time.

Offline DarkEyes

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Re: Increasing 401k
« Reply #10 on: October 17, 2008, 05:23:58 AM »
Not only does it signal the end of the economy, but I have heard alot of people say that they want out of their 401 because they have lost so much money.  If they pull their money out now, they are in bigger trouble down the road than the US economy.  My 401 has taken a beating, and it irritates me to hear some people say, "oh, it's not real money, it's value is based on what we think it's worth."  It sure looked like real money being deducted from my check every week.  BUT, as mad as I am about it, even I know that you only really loose when you get out of it. 

GroundPounder

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Re: Increasing 401k
« Reply #11 on: October 17, 2008, 08:12:34 AM »
What really irks me is the fact that I have done everything right, but am the one being penalized. I have worked hard, saved, not lived beyond my means, and have no consumer debt and now I am paying.  The people that lived beyond their means dont have anything to lose so this current crisis does not affect them as much.  In face, they will probably get help from the government to stay in a house they really cant affort.   >:(

Offline Turq1

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Re: Increasing 401k
« Reply #12 on: October 17, 2008, 02:44:20 PM »
The wife and I went thru Dave Ramsey's course about 6 years ago. Since then, all bills are paid (even the mortgage) and about a year's worth of cash is stashed in the bank/safe.

A little less than six months ago, I transferred all our 401K's into basically cash (although, still in the 401K). When asked at work about it, I told them up front I have no confidence in the stock market; they chuckled at me. Now, they ask when will I regain my confidence?

I am still with holding in the 401K but its going into that 1-2% cash account, its not much but its going up instead of down.

The pessimist in my head tells me that organizations with more smarts and money than I have are succeeding in manipulating the market and the prices of PM's to squeeze the last cent from a unsuspecting population.

As a Reliability Engineer, I strive to reduce risk and find breaking points; not to apply that to real life would be foolish.

Offline Stein

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Re: Increasing 401k
« Reply #13 on: October 17, 2008, 07:00:49 PM »
What really irks me is the fact that I have done everything right, but am the one being penalized. I have worked hard, saved, not lived beyond my means, and have no consumer debt and now I am paying.  The people that lived beyond their means dont have anything to lose so this current crisis does not affect them as much.  In face, they will probably get help from the government to stay in a house they really cant affort.   >:(

Yeah, I just got laughed at by a guy who took money out of his 401k to buy the family mountain bikes.  He has bikes and I have high blood pressure.

Oh well, the game is far from over.

Offline The Wilderness

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Re: Increasing 401k
« Reply #14 on: October 26, 2008, 01:17:28 AM »
Now is a good time to reallocate your 401k. I am not going to redistribute the holdings I have because they pay short term and long term capital gains during the fourth quarter, but I am going to change where the new withholdings go.


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Re: Increasing 401k
« Reply #15 on: October 26, 2008, 06:23:05 AM »
If I was a gambling man I'd say that the stock market has a looooog way to go before all the worthless paper gets cleared out.

The stock market needs to revert to pre-1980's levels.  Back than the price of a stock was based upon that company's long-term ability to profitably produce goods and services that provided actual value to customers.

Now stock prices are based more upon purely price speculation.  This happened because the government modified the tax structure during the 80's to force people to gamble their old-age savings in the stock market.  This resulted in a 100-fold increase in the amount of dollars chasing real value.  Injecting 100x more money into any market; the gun market, motorcycle market, tulip market, etc. makes that market behave like a cocaine addict who just shot up.  That price speculation still has to burn out of the system.


Offline Conductor71

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Re: Increasing 401k
« Reply #16 on: October 27, 2008, 12:56:24 AM »
The saga of my 401K is basically that at the beginning of the year I had a lot in it and over the first two quarters, I lost about 25% of it.  I tried to switch the money into "less risky" accounts but the carrier (Janus) did not have a single fund that wasn't losing money hand over fist.  I finally found a place called Everbank that allows 401K  rollovers into cds in foreign currencies and gold (American Eagles) in holding accounts.  It took a while to read through all the fine print and make sure I knew what I was doing but then I sent off the paperwork via fedex to Everbank and they sent out the rollover instructions to Janus.  Sounds simple, right?

Long story short, Janus held the funds an additional three weeks after receiving my instructions (during which they maintain I lost ANOTHER 25% of my money!) They said the dog ate the paperwork (well, pretty close, they said the post office ripped part of my signature off) but instead of calling me, they screwed around for a couple more days and then started playing phone tag with Everbank.  Literally, the day I called Janus to ask what the heck was going on, the account had x amount in it but they managed to take another 5% off before they released the funds saying that in the two hours the market opened that morning, i had lost another 5%!  Unbelievable.  All I can say is the folks involved are going to have some serious explaining to do to their maker if this is how they treated everyone's retirement account.

Ultimately, I'm just happy to be the heck away from Janus and in real cash accounts.  I've got about 20 years till retirement and now that we're on the Dave Ramsey plan (with modifications) I feel like we still have a chance at retiring with some dignity.

My husband tried to liquidate his account because it was a similar situation but his company said he could only do it for "hardship" loans (he just wanted to pay the penalties and reinvest in a roth).  Fortunately, he found some fund the park the money in -- at least for now.

I did want to mention that I had heard something about a special law that had been set up for 2010 only that would allow anyone to cash out their retirement accounts but split the tax payment due on it over two years.  I heard about this law on the money girl podcast much earlier in the year (back when they had the actual, very knowledgeable money girl on -- she's not there any longer). 

The earlier podcasts of the money girl (episodes 67 and prior) had some pretty interesting things to say about different ways to invest in gold etc. She even talked about FDIC insurance and the Fed -- definitely worth a listen and the best part is the episodes are like 5 minutes long.  Here's a link to the episode listing for those who may be interested...

http://moneygirl.quickanddirtytips.com/EpisodeList.aspx


Offline Sassmouth

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Re: Increasing 401k
« Reply #17 on: November 04, 2008, 12:04:52 AM »
I'm considering moving my Fidelity IRA into a regular account and paying the 10% while my portfolio value is down 50% from it's high. I can keep my investments in precious metals, energy, food and water for the long term and gain back the 50% and more and be free from the IRA restrictions. I am only 30 and have 40 years before I can get to this money without penalty. That's more than enough time to make up the 10%.

What worries me most is the possibility of the government stealing my retirement money to bailout social security, medicare or some other bankrupt entity. If you want to be frightened listen to the beginning of the second part of the third hour on the Financial Sense Newshour from last weekend. They talk about this possibility for the first 10 mintues or so:
http://www.netcastdaily.com/broadcast/fsn2008-1101-3b.mp3

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Re: Increasing 401k
« Reply #18 on: November 04, 2008, 01:00:33 PM »
I'm considering moving my Fidelity IRA into a regular account and paying the 10% while my portfolio value is down 50% from it's high. I can keep my investments in precious metals, energy, food and water for the long term and gain back the 50% and more and be free from the IRA restrictions. I am only 30 and have 40 years before I can get to this money without penalty. That's more than enough time to make up the 10%.


Standard disclaimer applies..i am not a financial adviser, yada, yada, yada.

If it were me I would not pay the penalty and do what you are describing.  You can invest in precious metals with an IRA.  You can even invest in physical US Gold Eagle Coins in a 401(k), you can buy into an EFT, or you can buy into mining stocks.  Personally I would prefer to go the physical route.  The catch is it has to be held by a custodian. 

Two companies that I know do it are below.  I have no relationship with them and have no experience dealing with them.  You can do some research on their website though.

www.sterlingtrustcompany.com
www.goldstartrust.com

As for the rest of the things you need I would work aggressively at finding sources of funding outside the 401(k).  10% is a lot to lose.

Offline RipTombstone

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Re: Increasing 401k
« Reply #19 on: November 05, 2008, 09:44:01 PM »
We had our 401K meeting at work last week, followed by individual meetings with the advisors. His biggest suggestion was to put more of mine into the international markets. They are low, but build quick he said. I am only 35, and have a nice bit of diversity in my 401k, so am not too worried. I am gonna do what he suggested and see what happens. It will end up about 20% in international, with the rest spread around.

Rip

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Re: Increasing 401k
« Reply #20 on: November 06, 2008, 07:59:49 AM »
Never a bad thing to have some international exposure in your 401(k).  I put around 20% in International myself.