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Old 10-09-2006, 10:03 PM   #1 (permalink)
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Location: Bay Area, California
401(k)

Hello.

I've got a 401(k) and I want to start putting all I can into it. However, I have NO idea how to maximize it's effectiveness.

It's through CostCo and T. Rowe Price.

I am currently living with parents, but am hoping to move to Washington soon. I currently have no car and am trying to save to get one. I earn $ 10.50 and work about 35 hours a week.

Thanks!
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Old 10-10-2006, 01:56 PM   #2 (permalink)
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Location: Ontario, Canada
Does your employer offer any matching funds of any kind?
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Old 10-10-2006, 02:58 PM   #3 (permalink)
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If they match, put at least that amount. What funds do they offer once your money is in the 401K?
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Old 10-10-2006, 05:21 PM   #4 (permalink)
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Location: Bay Area, California
Quote:
Originally Posted by Yakk
Does your employer offer any matching funds of any kind?
Yes, they do. I think they match half of what I put in. MIGHT be the full amount, I'm not sure.

Quote:
Originally Posted by kurty[B]
If they match, put at least that amount. What funds do they offer once your money is in the 401K?
Not sure what funds they offer. Honestly, I have over $ 2k in my 401(k), but only because I put in 20% of my check.

Other than that, I haven't done anything else. I beleive I can invest in CostCo's stock, but am not sure how that works.
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Old 10-10-2006, 08:25 PM   #5 (permalink)
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Talk to your HR Rep, see what your options are. I could go on about what I would do with your funds, but that would be catered to my style of investing, not necessarily yours. Find out what the stock option is, an old company I used to work for would do a stock option buy in every 6 months, just put a certain % of your paycheck towards it, and at the end of 6 months they would buy stock for 15% off the lowest price of the stock during that 6 month period of time (instant equity). I would not go all company stock with the fund though, that could be risky.

Find out what options you have available to yourself, and whatnot, Im sure there are others more financially investment savvy then myself here who could make suggestions, otherwise, maybe see about talking to an actual financial advisor.
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Old 10-12-2006, 11:23 AM   #6 (permalink)
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Location: Ontario, Canada
The amount of matching is important. Find how how much they will match, and at what rate.

Find out what your investment options are in the 401k.
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Old 10-25-2006, 10:18 AM   #7 (permalink)
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Location: North Carolina
One other thing to think about... my company does the match once a year. I'm not sure what happens if you leave the company before they do that. Might be worth thinking about. Also, keep in mind that you can't really use your 401k to buy a car, I'm guessing you realize that, but I just wanted to make sure you were aware of that.
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Old 11-02-2006, 12:37 PM   #8 (permalink)
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Location: Bay Area, California
Okay, I found out they match .50 cents for every dollar you put in, PER YEAR until it reaches $ 500.
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Old 11-02-2006, 01:14 PM   #9 (permalink)
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So, if you put in $1000, they'll match $500; but if you put in $1500 they'll still match $500?

Just want to make sure I'm reading it right.

Make sure you're getting at least $1000 in there a year.
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Old 11-02-2006, 01:45 PM   #10 (permalink)
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Location: Bay Area, California
Quote:
Originally Posted by kurty[B]
So, if you put in $1000, they'll match $500; but if you put in $1500 they'll still match $500?

Just want to make sure I'm reading it right.

Make sure you're getting at least $1000 in there a year.
That's right. $ 500 is their max amount per year. Last time I worked there, I had over $ 1000 in just 8 months, but my paychecks sucked.
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Old 11-02-2006, 02:21 PM   #11 (permalink)
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Yeah, first make sure you have enough to survive. Then try and make it so after a full year of work a tiny bit more than $1000 is deposited into it (or as much as you can get by without starving yourself).

As far as the money that's in the 401K, do you want to be aggressive with it (at the sacrifice of it fluctuating a bit), or do you want to be conservative, or a mixture of both?
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Old 11-02-2006, 09:33 PM   #12 (permalink)
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Location: Bay Area, California
I am willing to do whatever it takes to retire at the earliest age possible.

I'd like to be young enough to have fun with my money, not some old 70 year old in a retirement home pooping my diapers. :-P
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Old 11-10-2006, 02:19 PM   #13 (permalink)
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Current thinking is, if your employer offers it, to put your money into the Roth 401(k) plan as opposed to the tax deferred 401(k) plan. This is being recommended if you're not going to retire before the next ten years, which I'm assuming you're not going to be doing.

Your company's matching portion would still be taxed when withdrawn, but your contributions and their earnings would be tax-free when taken out.

Quote:
Originally Posted by kurty[B]

As far as the money that's in the 401K, do you want to be aggressive with it (at the sacrifice of it fluctuating a bit), or do you want to be conservative, or a mixture of both?
Consult with an investment advisor, but most of the time when you're not going to access the funds before 5-10 years you want to be fairly aggressive. Also, should you invest poorly (for example, 100% in Enron) you have many years of working to make up the losses.

Stock market historically returns 7-8% annually. Also, what will really kill you is the fees on the funds you chose. Make sure the fee ratio on the funds chosen is less then 1%. Vanguard funds are excellent and well-known for their low fees - making great returns is going to do you no good if you're coughing up the money to someone else.
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Last edited by gar1976; 11-10-2006 at 02:22 PM.. Reason: Automerged Doublepost
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Old 11-10-2006, 03:02 PM   #14 (permalink)
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Location: Ontario, Canada
DJIA numbers
Date Open High Low Close Volume Adj. Close*
10-Oct-29 346.66 355.63 345.63 352.86 4000000 352.86
2-Jan-70 800.36 813.56 797.32 809.2 8050000 809.2

What cost $1 in 1929 would cost $2.14 in 1970.

So, in 1929 dollars:
Oct 1929 was 352.86
Jan 1970 was 164.89

If you bought the DJIA in 1929, you would end up with stocks worth half as much in 1970.

Practically, the stock market has managed a high rate of return in the 1970s through 2000s.

.... this is rather strange. I'm missing data, that can't be right.
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