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I’ve been in and interested in stock market so long (one year shy of forty years) I can remember when Mutual Fund pages in my home town paper were just one page! (The DOW was under 700.) Now it looks like there are more Mutual Funds then there are stocks listed on New York stock exchange. I wonder how many billions of investor dollars are supporting these funds. How many investor dollars are supporting all brokerage firms? How many times has 401(k) monies been given to a ‘financial expert’ to manage after retirement, then three years later $400,000 is down to $200.000 (Yet, financial expert is still driving around in a new Lexus). I could tell you stories from people I know, who have retired and aren’t so happy with these experts, but I bet you know some stories of your own. (Why, I bet I could even write a book on subject!) Do you know what you’re going to do with your 401(k) money when you retire? If you are going to hand it over to a financial expert to manage, see if you can get names of some of his/her clients. See if you can call some of expert’s clients, tell them what you’re planning to do and ask them if they’re satisfied with expert’s performance. Or you could talk to those people you’ve once worked with, have retired, and went with a financial advisor or planner. Try to get some reference from a live body that has already been there, rather than just a bunch of statistics thrown at you by expert.
Today’s 401(k) plans are excellent vehicles for saving money and here’s what I like about mine: I like 10 percent contribution being a tax write-off (some plans, sixteen percent). I can contribute up to 16 percent, but 6 percent would have to be after-taxed dollars.
I like that monies made in a 401(k) are tax-deferred.
I like company’s 70 to 100 percent company match (it differs every year with my company) up to 6 percent of my contribution.
I like option to move my money (every business day, if I wished) into my company’s stock or an Interest Income fund, Bond fund, Mutual fund or Index fund, at no cost.
I like option to roll-over into an individual IRA account, twice a year, any after-tax and company matched dollars put into my 401(k), with no penalties or fees, even while I am still employed with company. This allows me to select individual stocks and allows dividends from those stocks to be rolled-over automatically into more shares of each company, also at no cost. (However, there are commission fees for purchases of stock. Dividend purchases only are commission-free. In my book 'The Stockopoly Plan' I explain how to purchase stocks commission free.)
