My 401(k) allocations...... still the place to be!

[mjp28]

Any 401(k) like my wife's 401(k), even on the verge of losing the 50% match is still the place to be, why? Tax breaks alone -plus- an easy way to invest in pretty good investments with virtually NO fees (outside of actual inside fund fees).

Start with your tax bracket, even if your fund makes 0% you get that amount off your gross income, plus lower state taxes as a bonus.

If you put $2000 in your fund and in the 25% bracket you save $500 right there plus ~$60 state, $560 in taxes, and MORE yet if you itemize, your AGI is less so your 7.5% Med, 2% business hurdles get lower so you get an even bigger refund.

Matching funds are pure gold increasing the whole works up, you can easily make an annual 30-50% return depending on your specifics.....try getting that anywhere!

Remember you are collecting shares. Dividends, ST and LT Capital gains plus time start really compounding your account.

Her allocation, we are early 50s, I'd be more aggressive if I were 20s-30s.
I will move into more cash and bonds ~every 1-2 years in steady movements.

15% guaranteed 3% min cash fund
15% Bonds
20% Int funds, might bump that up again a bit

The remaining 50% equally in Big, Mid, Small funds, both growth and value.

[AutoModGod]

Can't disagree.  I have faith that the market will return to levels of a year or two ago, so now is a good time to accumulate shares.

Preparing for retirement has gotten a lot more difficult in the last several years.  In addition to our 401Ks tanking, many companies are doing away with their 401K matching programs.  Many componies are discontinuing their pension plans too.  Add on that most companies no longer offer paid retiree medical benefits (passing the buck to the taxpayers who will fund retiree medical benefits via Medicare) and the amount of money that one needs to retire has increased tremendously.

[mjp28]

Preparing for retirement has gotten a lot more difficult in the last several years.  In addition to our 401Ks tanking, many companies are doing away with their 401K matching programs.  Many componies are discontinuing their pension plans too.  

Oh yes, my wife's 30+ year pension is still good but now frozen. Her 50% match looks like it will be gone soon....that I'll miss, FREE MONEY! 50% of 8% of her pay, geezzzz.

I was just looking at her portfolio, the INT FUND only has a 0.79% expense ratio, that's great on any fund.
Her cash fund is 3.59% YTD, 4.29% life of fund. Better than any CD right now.

For people who are really nervous about the market I'll tell them stay in, even go 50% cash 50% bonds (especially if you're within 10 years of retirement) but stay in.


And do NOT borrow from it! The payback rules can be harsh.

[mjp28]

I first posted this 6/18/09 DOW was 8555.
Now 10,000 (+/-)

Again if you stick it out in the low times, invest the same money you will get more shares for the buck.
That is dollar cost averaging.

More shares in your account buy even more shares, (whether dividends, S/T, L/T gains, etc.).
That's compounding.

Just remember to watch your account, adjust periodically, maybe once a year (+/-) depending on your goals, risk tolerance. AND the older you are you might want to pull a little gain into cash or bonds within your 401(k).
That's smart.