Financial advise from the more experienced...

Weasel · #1 09-29-2008, 09:43 PM

I am wanting to drop my 401k for a more stable option. As since I started with it it has been losing about 15 - 20% or more. It is only about a year and a half old, so I'm not worried about the penalties. But as of right now even the proverbial pillow case would be better financially.

My question is what would be some good options for me. I know a ROTH IRA is a decent option but I am less knowledgeable on this and am asking honest opinions and options. If it matters, I am 26 and would start at about $3000 to $5000 per year.

The dealership owner does contribute to the 401k, but not a set amount and it's only once a year. And I don't know if he would contribute anything if I strayed from the pack... but I am currently losing more per year than he contributes anyways, so it doesn't really matter.

What sucks is that I am also saving up to have a decent down payment on a house in about 4 years, and it looks like I'll be looking at about 18% interest by then... bastards!

As always, any help and honest opinions are greatly appreciated.

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Thunder22 · #2 09-29-2008, 09:53 PM

you're 25. stop looking at your 401k until you're 50.

contribute the maximum you can each year.

don't look at it again until you're 50.

did i mention don't look at it?

motordavid · #3 09-29-2008, 09:57 PM

Weasel,
Doesn't your 401k offer some investment options to select from?
Cash, cash equiv., and/or a bond fund(s)?

Not prying at what your 401 is currently invested in, but most
offer some options and the chance to change "selections" at least
a few times per year.

Roth is a no brainer, imo, for anyone under 50ish and still woikin...
though there is no guarantee the geniuses won't change/alter the
rules on Roth IRAs in the next decade or so.
GL,mD

Weasel · #4 09-29-2008, 10:05 PM

The current 401k just doesn't seem like the best option as I am losing such a high percentage and I do plan on changing it around next time I can, but I would rather a more stable gain option. Seems like throwing away money in a collapsing market. I know after it finishes crashing it will do alot better in the 401k then now, but I don't like throwing away my hard earned dollars and would rather a more stable option.

Is my lack of knowledge showing at this point? I probably sound like a damn rookie...

motordavid · #5 09-29-2008, 10:25 PM

Quote:

Originally Posted by weasel56

The current 401k just doesn't seem like the best option as I am losing such a high percentage and I do plan on changing it around next time I can, but I would rather a more stable gain option. Seems like throwing away money in a collapsing market. I know after it finishes crashing it will do alot better in the 401k then now, but I don't like throwing away my hard earned dollars and would rather a more stable option.

Is my lack of knowledge showing at this point? I probably sound like a damn rookie...

No, not a rookie response...just human nature when it seems and feelslike the end of all
our comfort zones. Couple that with looking a statement that shows hard earned/saved
dough eroding like a sand castle at high tide and we all wanna do something.

No xpert, but barring the utter collapse of the US economy, a balanced investment port.,
inc. index funds for equites, will usually give a nice nest egg over a few decades of saving.

Tossing all your dough into a cash fund is not my rec'd at your assumed age and stage in life, imo.

Broad stock indices are off ~30%+ since last fall, so unless one had a lucky dart toss or bought gold,
I don't know of many that are "ahead", regardless of their bs.

Not looking for a fund raising telethon, but try keeping a smile with true fixed income and a retirement
port off ~25% since last Oct., as I and anyone "retired", are in the midst of.

Save, save, save and you young guys will be able to buy a burger in 2050...don't save and that free
burger at the soup kitchen will not taste very good.
GL,mD

Weasel · #6 09-29-2008, 10:57 PM

Are the ROTH IRA's as fluctuant as the regular 401k's? I know the 401k varies depending on amount of risk etc. but they all seem to be losing at this point, but is the IRA still gaining rather than losing? If it is that much more stable I might want to pull the switch... but I don't know yet. Damn this economy and all the greedy bastards that caused it... and the democrats that backed and protected them. did I mention bastards yet?

tweak · #7 09-29-2008, 11:42 PM

A 401(k) and an IRA are simply tax designations on investments. The underlying riskiness of it are based upon the investments that you pick (typically a mutual fund).

If you are saving for a down payment on a house a Roth IRA is a good option because it allows you to pull up to $10,000 out for a downpayment IF you are a first time home buyer.

But I agree with Gresch, stop looking at your balances. NOW. Right NOW. Don't move it and don't touch it. You will assure your losses if you do so.

Current contributions on an IRA are $5,000 per person.

Whatever you do save. When the rebound happens it should be pretty grand.

Weasel · #8 09-29-2008, 11:54 PM

I will be saving for the house separately, probably in a money masters savings at the ASI credit union I bank at, as that has 3.9% interest last I checked. (I used that account for holding $5k for a secured loan to build credit... it worked GREAT and I only lost 1%)

So I guess for the time being I should just simply switch to a less aggressive portfolio and go back to the more aggressive when I feel the rebound is upon us... I guess I was just hoping for insight on a more stable, less known to the public option for securing my financial future. Trying to do good in a middle class situation... but it took some conscious efforts to get me where I am now financially as my credit had been screwed over by verison for a while, (fraud horror story there!) And I managed to bring my credit from a 560 to a 722 in a matter of 2 1/2 years with some wise decisions! Just want to keep making those wise decisions, especially when it comes to my financial future... ya know?

X5Flyboy · #9 09-30-2008, 12:07 AM

No matter what, YOU are going to have to learn more about stocks and how to invest - you are young and have plenty of time, also it's not a loss until you sell it - I've seen Phillip Morris (Altria, now) go from $19 to $57 within 2.5yrs - good, well run companies always come back - You have to learn what YOU are comfortable with - Some 401Ks out there offer real dreck (crap), really poor performing mutual funds - so it's up to YOU to learn if what your company offers is any good - right now the money you put in buys ALOT more than before, so don't stop investing - soon enough it will come back and be worth even more - But you still have to do homework, because IT'S YOUR MONEY!

Weasel · #10 09-30-2008, 12:24 AM

I guess I let it slip past me that the stocks bought now with money put out at the markets low point will make me more money in the future than the small amounts of money I'm worried about saving today... talk about not seeing the forest for the trees! And to boot, just found out one of my best friends is currently training to be a financial advisor and is alot more up on current economics than I am, someone else to help pull my head out of my ass!

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