My husband and I are working for the same company with the both of us investing 13% a piece in 401K retirement. My husband is 49 and I am 39. The company only match up to 5% and has lately changed on their contributions from every month to yearly which means they will still match the 6% but, it looks as if we want be getting I good return in retirement. We really don’t understand the entire but, need advice on investing past what the company match . What is the safest option we should take? Should we continue invest the % that we have or should we take another route. And of course this is the only investment we have for know. Please give me some good investment ideas. Thanks

 

  • linlyons 9:09 am on February 3, 2010

    i did 15%, which was the max at the time.
    i got lucky, and i don’t have to work any more.
    that doesn’t always happen.

    a 401k is good, because you only take money out if you’re in trouble.
    in other accounts, that nice car seems tempting.

    depending on other your money, a Roth is good.
    considering how much the market is down, now is probably the best opportunity you’ll ever have.
    on the other hand, there are some pretty shaky corporations, so while you could do very well, you could also lose quite a bit if you’re not careful.

    i was dumb, and let my stock guy talk me out of buying BAC a couple months ago.
    today it’s not as good a deal.
    Citi, if it recovers, will be the best investment you’ll ever make.
    but "if it recovers" is A BIG IF.

    the same is true for several other corporations that are in trouble today.
    good luck.

    EDIT: paying off credit cards is a must.
    and never, ever, look at one of those payday type loans.

    paying off mortgage is more questionable.
    the market is up about 15% from it’s low.
    but your mortgage is probably only around 5-6%.
    stocks would have been more than twice as good.

    i’d still stick with stocks.

    Edit: i note that all answers except 1 have a thumbs down.
    and he thinks you need to diversify.
    diversify is good — sort of.
    it insures that you won’t do significantly better than, or worse than, the market in general.
    one good way to diversify is with mutual funds.
    mutual funds also have the advantage of having someone who gets paid to watch the market manage your money.
    that’s what i do.
    my brother likes Vanguard funds.

  • Sugar D 9:09 am on February 3, 2010

    Im sorry, I dont understand the investing either. Sorry.

  • barechickabarenare 9:09 am on February 3, 2010

    You still have a long time horizon until retirement, so you can’t just put it all in the ’safest’ option because the returns on fixed income funds may not even outpace inflation.

    Also, ask if there is someone who can give you advice on how to create adequate diversity. If your plan includes lifestyle funds start wtih those because those are good at diversifying your investments and taking appropriate risk (ie., the mix of stock funds, bond funds, and fixed income funds) based on your age.

  • madcityd0623 9:09 am on February 3, 2010

    A 401k has among the highest fees of any investment. This does not matter if you are getting your money matched, but if not, or for anything over the match, perhaps another investment would be better. You did not state how much you make but I would suggest the following steps.

    1. Cut back for 401k to the company match. Does not matter if it is monthly or annually.

    2. Open Roth IRAs for both of you and MAX them each year.

    3. If you still have money to invest, try opening a wrap account with the best of the best mutual funds. At least a brokerage account in mutual funds.

    When this is done you are putting money into tax now (wrap account) tax never (Roth IRA) and tax later (401k) accounts to give you maximum diversaificATION.

  • ALL 9:09 am on February 3, 2010

    In truth hardly anyone (including myself) has a good understanding of investment strategy. If not, you wouldn’t see literally all but one diversified stock mutual funds lose money in 2008.

    Hard to say what is safe, especially since you didn’t provide choices. As Warren Buffett says, so called safe investments will be the wrong place to be over then next decade because of loss of purchasing power.

    You should invest enough to get the company match, then invest more if you can use additional tax deferrals. If this is your only investment, then you don’t have an IRA. An IRA might offer you similar tax benefits, but give you more control and choice.

  • Thor 9:09 am on February 3, 2010

    Whether you invest past the match in your tax deferred account depends entirely on taxes. Which means your income. And not just current income but your estimation of your tax bracket in retirement as well.

    I say if you are in a low tax bracket with deductions you should invest the extra money over the match on a taxable basis until your taxable income is higher. Investing outside the plan increases that income.

    You can invest more pretax when your income is higher and it will be of a greater benefit then.

    But if you would end up spending it if it wasn’t automatically deposited in your plan or if you would take it out of a taxable investment, like for a new car, then you are better off salting it away where it is harder to access and there are penalties for drawing on it.

    Only you know if you can do that, stick to investing it outside the plan.

    Good Luck.

  • $so fresh so clean$ 9:09 am on February 3, 2010

    Contribute to get the 6% match. This is free money.

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