Saturday, July 09, 2005
My finanial advice to you
I am not a CPA or licensed broker, but I can give you some very good advice that everyone should take: If you work for a company that has a 401k or 403b program (they are basically the same, 401k is for prrofit organizations like stores and banks and 403b is for non profit organizations like schools and hospitals)you should contribute. Some small companies have SEP IRAs or SIMPLE IRAs. They are similar to 401k and 403b. It you are thinking 'I can't afford to put into a 401k right now' you're probably wrong. The money that comes out of your check and goes into your 401k or 403b is PRE TAX MONEY. That means your employer puts the money into your account BEFORE Uncle Sam can touch it. It's one of the tax benefits of the plans. You are then taxed for whatever is left. Another bit of advice is find out how much your company will match and only contribute that much. For example, Nationwide matches up to 6% of my paycheck going into my 401K. So, I only but in 6%. Sure you can same more it you put in more, but the big perk is the extra money that your employer wil match. If you're thinking, "6% per pay isn't that much, so why bother," well, you're right and you're wrong. 6% is a small enough amount that it doesn't really effect your pay check too much, but it's a big enough amount, with your employer matching it, that you can save some serious money. After only a year, putting in 6% per pay, I have over $4000 in my 401k. I'm just kicking myself for not starting sooner. It's worth it!! The only down side is that you need to work for a certain period of time in order to get all of the money that your employer puts in for you. Usually, five years. You still get all of the money that you put in (plus interest) but if you leave your company before you are fully vested (when they will let you keep all of the money) you will only get a certain percentage of the employer money. Another thing to watch for is when you start getting money out of your 401k, it will be taxed by the government. But, it you move it to an IRA to keep saving, it can't be touched by Uncle Sam. Like I said, I'm not licensed, but I know alot about annuities and other forms of savings, so, if you have questions, ask me.
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4 comments:
Can't aggree more. We have 401k here, I've been putting money in for prob 6 years and I'm up to over 20k in it now. My company matches 50% of up to 6% not too bad, and basicly I've made an extra $1000 from them already this year.
It was hard to start, but now I'm just used to it and don't miss the money at this point. When Gretchen and I got married we bumped it up to 8% and I'd love to add more if we start making more money and pay off other debts. The eariler I can retire the better is all I can say.
I really need to fill out my 401k paperwork. I became eligible in April and I keep saying "I really need to fill out that paperwork..." I have to pick an investment direction though, and I have no idea what any of them mean. There's 14 choices listed including SIT US Govt Sec Fund, Schwab MarketTrack All Equity, Oppenheimer Global. Can you give me some advice as to which one(s) to pick?
Amy, I can take a look at your 401k stuff if you want to. You may want to check to see if the plan offers any investment models. For example, I am in a moderately aggressive model, which means I am in a mix of stocks and bonds. It all depends on what you want your 401k to do. I would maybe suggest some bond funds and stock index funds, if they are available. Also, you can usually get something that shows fund performances. You could looks at that and see how the available funds are doing. Let me know if you need more help.
You know what's cool about my 403b? Apparently if I put in 5%, the University doesn't just match it....they put in 10%. Cool, huh? I'm just now going to be eligble for it in August. I'm going to do it fer sure even though I think I won't be staying too long here. I figure I might as well do it while I can.
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