"Todd H." <t[at]toddh.net> wrote in message news:841wmdsbfi.fsf[at]ripco.com...
- quote -

"tax free" DOES NOT EQUAL "tax deferred" and, believe it or
not, there are legitimate situations where simply following your
advice is, in fact, quite foolish.

"Todd H." <t[at]toddh.net> wrote
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Todd, the numbers on which you need to particularly focus
are paying 5% to 15% on dividends and capital gains in a
regular, taxable account now vs. paying potentially a lot
more in taxes on all the 401(k) withdrawals, since they are
taxed as income, and so at a much higher rate. Are you even
aware of this difference? Run the numbers. They are why the
most popular wisdom is (1) contribute up to matching in a
401(k); (2) contribute to the max to a Roth IRA; and (3)
consider continuing contributing to the 401(k), but with a
lot of caveats for (3).

"Elle" <honda.lioness[at]nospam.earthlink.net> writes:

- quote -

I agree that investing in accounts with high expenses can be a losing
proposition, but to ignore the tax free contribution aspect just
because an entire 401k contribution isn't matched by a company is
foolish, IMO.

Best Regards,
--
Todd H.
http://www.toddh.net/

"Todd H." <t[at]toddh.net> wrote
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Investing in a 401(k) that has high expenses and is not
matched is a huge mistake. Because of the low tax rates on
dividends and capital gains right now, a taxable account
will often be preferable.

The federal 2006 limit for 401(k) contributions is $15k,
BTW, with a catchup provision for those over 49 of an
additional $5k. For 2007, this rises to $15.5k, though
catchup amount stays the same.

"Joe" <joe.goglia[at]comcast.net> writes:

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Hi Joe,

Your 401k is an investment account, quite likely, investing in shares
of mutual funds or stocks, or some such.

Increases in account value will come from:
a) contributions made during the statement period. A certain
amount of every paycheck goes into the account to buy new
shares of whatever investments you've selected (or have
been selected by default)

b) increase in value of the shares you own. In an absurdly
simple example, say your 401k buys 100% of Stock foo. If
stock foo begins the month at $10 a share, and ends the
month trading at $20 a share, you'll see your "account
value" more than double for that month.

Note that the account value you see on the statement is where you're
at on paper. That value doesn't turn into actual money until you sell
the securities, and of course, your account value can decrease if the
securities in which your money is invested really tanks in value.

- quote -

Your 401k balance is quite low. Your cash balance is comparatively
quite high. Unless you're near retirement, this isn't the mix you
really if your goal is to accumulate savings for retirement. You're
wise to consider a more aggressive investment mix if you have long
time horizons and have time to recover if a given investment tanks in
the near term.

If you're young, you should also see if you can't contribute the
maximum 18% (up to whatever the annual cap is now) into your 401k.
You can always roll it back later, but time value of money and all,
investing early is widely considered the wise way to go so you benefit
from the compounding of gains over the long time horizons of your
investments.

Best Regards,
--
Todd H.
http://www.toddh.net/

In article <ONSdnUIPzLhFHgTYnZ2dnUVZ_tOmnZ2d[at]comcast.com> ,
"Joe" <joe.goglia[at]comcast.net> wrote:

- quote -

In general, investments that take more risk have more potential return.
If you play it safe, such as i the savings account, you get very little
reward. What you need to do is find a balance that you can life with.
You cannot be too safe, since inflation will eat your gains, and you
cannot be too risky, your may lose it all and have to eat dog food
when you retire.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

Joe, have you any idea what your 401(k) is invested in? E.g.
stock, mutual funds? Also, how much of what you put into
your 401(k) is matched by your employer? Do you have any
credit card, car, or mortgage debt? If so, what are their
interest rates and lengths?

I suggest you start lurking here to learn about where else
you can store some of that $32k so as to best benefit you.
Like a Roth IRA, for one.

Then maybe we can talk about something known as "asset
allocation."

currently, I have 32k saved in high yielding savings account which earns
over 125 dollars a month, I earn about 4 dollars a day in interest.


now, with my 401k, I only have a balance of 2300 dollars and on some days I
notice the balance will increase from 2 dollars to 20 dollars. what is
causing my money to grow in my 40k to increase by that amount compared to my
high yield savings account? I just want to know what factors are causing my
money to grow in my 401k. i am considering taking a large portion of my
funds and putting it into an agressive mutual fund with either fidelity or
vanguard.

sorry, if my question is kind of vague