401Ks

[RyanbabZ71]

Ok in about 2 wks i am going to be setting up a 401K. I figure i am going to put 8-10% of my pay plus my employers matches 6%.

 

Any help or suggestions for you that have been through it? It goes through fidelity

 

Thanks

[PhilB]

Diversify!

 

I don't know what Fidelity will be offering in the 401k plan that your employer has. The best thing for you to do is to spread your investments to reduce your risks.

 

Good Luck!

 

Phil

[Lance Link]

I use Fidelity for my 403B (non-profit 401K). I was almost entirely in the Ginnie Mae Fund from early 2000 until mid-March '03, then went 95% back into equity funds. I'm currently in their Blue Chip Growth Fund (30%), Aggressive Growth Fund (25%), Fifty Fund (20%), Overseas Fund (20%), and the Ginnie Mae Fund (5%). The Aggressive Growth Fund is a fund-of-funds comprised of other Fidelity growth funds, the Fifty Fund is more value-orientated, and the Overseas Fund does not invest in Japan. I made 11% for the period 1/1 through 5/31, even better since 6/1. I'm looking for a Fidelity high-yield bond fund to take the place of the Ginnie Mae fund.

 

I'd recommend any of the funds mentioned- check them out on the Morningstar reports. Fidelity has done well for me.

 

Good luck!

[RyanbabZ71]

thanks guys

 

also i heard you can borrow from your 401K (up to 50K?)

 

Once you take it do you have to pay taxes on it and how long do you have to pay it back? Just wondering because i plan on possibly buying a house in the next yr or 2 and i figure it could come in handy just in case

[Lance Link]

Not sure about the tax rammifications on a 401K loan, but I would highly recommend not borrowing that way. Put the money away and use it when you retire- there's tons of first time homeowner programs out there to take advantage of. Borrow from the 401K as a last resort.

[HillHound]

You can borrow from it. Mine's through a major national investment/insurance corporation and you can borrow a certain percentage of your total holdings. You pick how long you want to pay it back over up to a max of 5yrs and the interest rate is 8%. Interesting thing is that you pay the interest right into your 401K account. There are no tax hitches on a loan-only if you withdraw $$ early.

 

Diversify and read all of the info on the different investment options before you decide how to allocate your contributions. Don't panic over short term losses and don't try to micromanage it. That's my advice-I've had mine for 13yrs and it's amazing how fast it grows, especially after the first 5 yrs or so.

[R Dogg 56]

After reading all the posts, I have a few questions: When is the best time to set up a 401(k) ? Would it be wise to wait a while after getting a good-paying job to do so? I would imagine doing so before you get out of college is a bad idea to say the least, huh?

[timk49]

I should have taken the money I invested and burried it in the back yard instead. I'd be way ahead of where I am now.

[Shaners]

I put 7% in mine, and GE matches 0.50/dollar. My best advice is to diversify, and leave it alone.... Like was already mentioned, it's amazing how fast they grow after about 5 years!

[z71ff]

Never plan on borrowing from your 401(k). Especially for a new purchase.

If you should leave your employer (your choice or not) while it is outstanding, the balance is immediately payable. This is money to be put away and kept there. If you are not about to LOSE your house and you take from your retirement acct, you're a fool.

 

The best time to start is early. I funded my first 401(k) with my first employer while still in school at 20. I worked for a company that didn't offer a plan for about a year and a half (which is when I bought my house, so I wasn't tempted anyway). I now work for a competitor of Fidelity in the retirement market. The offer a very nice plan with a great match and many options for investment.

 

As a unlicensed employee of a financial services co, I'm not going to give any advice on your investment choices, but do take the advice of diversifying and staying focused on the long term. You can't touch that money until you are 59 1/2. Good Luck.