401K help!!! help help help

[Albies5]

Hi, Im 25 years old and just started investing in my companies 401k literally before this whole mess happened- its only been a few months-and now theres only a few hundred dollars in the account -and now i just dont know what to do.
- I put About 120-150 dollars a month go into the account
- The company doesnt really match but contributes a bit- but i have been told that this year will NOT put any money in.

So my questions are
1. do i stop my 401k deductions- not withdraw but just stop the deduction? so i dont lose any more money and just keep the money i would be contributing in my paycheck?
2. do i lower the amount coming out- right now its 5% but only about 60-70 bucks a pay period come out- im not really so much full time?
3. do i leave everythign as is- but change the way its allocated- ie. conservative, moderate.....?

I know these questions have been asked alot - but any help would be much appreciated!! thanks- let me know if this is enough info

[jIM_Ohio]

This can be a tax decision in addition to an investment decision.

What is your gross pay (annual) and yearly taxable income?
In general you want 15% of your gross going to an IRA or retirement plan.

My wife's company stopped the 401k match and we still contribute because we need the tax savings and we invest 20% of our gross pay every year for retirement.

[GREENBACK]

Based on the info provided I would definitely stay in as it looks like you're a long ways from retirement and you can accumulate quite a bit cheaply right now. Not sure of your salary but if you're not recieving much of a match and you're in a lower income bracket like 15% you may want to look at a roth IRA. If you can max that out then look to your 401k.

You need to figure out your invester profile to determine your risk tolerance. Don't let current market conditions determine this. Whatever you do I would never just sit on the sidelines at your age. If you're 30 plus years from retiring you are in a very good position to do really well but it may not look like it for a few years.

[Albies5]

Originally Posted by jIM_Ohio

This can be a tax decision in addition to an investment decision.

What is your gross pay (annual) and yearly taxable income?
In general you want 15% of your gross going to an IRA or retirement plan.

My wife's company stopped the 401k match and we still contribute because we need the tax savings and we invest 20% of our gross pay every year for retirement.

jim- im not really looking at it now for the tax benefits. im really looking at it from a wealth generating mechanism. i gross about 43k a yr- but just put 5% each pay period.

[Albies5]

Originally Posted by GREENBACK

Based on the info provided I would definitely stay in as it looks like you're a long ways from retirement and you can accumulate quite a bit cheaply right now. Not sure of your salary but if you're not recieving much of a match and you're in a lower income bracket like 15% you may want to look at a roth IRA. If you can max that out then look to your 401k.

You need to figure out your invester profile to determine your risk tolerance. Don't let current market conditions determine this. Whatever you do I would never just sit on the sidelines at your age. If you're 30 plus years from retiring you are in a very good position to do really well but it may not look like it for a few years.

Greenback- ya luckily im on the younger side of retirement- but sincei just started this whole thing has been a mess and i just dont want to be losing crazy money. i gross about 45k/yr. i guess i could go with a roth- but since i have the 401k i dont know if i shoudl stick with it or just going for a roth.

i feel like i can be more aggressive b/c i am younger- and thats what i started at- but switched it to moderate or conservative- i forgot once things got real hairy. do you think i shoudl switch it back? change the amt contributing? or leave it alone? thanks

[sweeps]

It wouldn't matter if you were investing in a 401k or a Roth. It matters what the underlying investments are -- in this case, stocks.

Right now things seem dreadful, the worst in a lifetime perhaps. But it will turn around eventually. If you were 60, you should be panicking. But you're 25. This is the best opportunity you could have ever hoped for.

You should be investing in stocks through your 401k (or Roth if you choose) as aggressively as you were before, if not more so.

[boosami]

Leave it as agressive. The cheaper the stock gets in the short-term, the more you'll be purchasing. Then you'll hold more stock once prices go up in the future. Keep the contributions going in as normal, and ignore any short term gains/losses.

[Albies5]

sounds like some good advice. i think im also not so 401k savvy- so im not sure how everything works. but this has been helpful and reassuring. thanks!

[jIM_Ohio]

Originally Posted by Albies5

jim- im not really looking at it now for the tax benefits. im really looking at it from a wealth generating mechanism. i gross about 43k a yr- but just put 5% each pay period.

short sighted thinking, IMO.

Because if you look at taxes at same time you invest, you can possibly invest more money and pay less in taxes.

Making investment decision in isolation of taxes will cost you money sooner or later.

[GREENBACK]

Originally Posted by Albies5

sounds like some good advice. i think im also not so 401k savvy- so im not sure how everything works. but this has been helpful and reassuring. thanks!

The reason I suggested you look at a roth IRA is the way the tax equation works if you don't know this. You aren't paying taxes on money you are contributing to your 401k but you will when you start withdrawing this money. With a roth you pay today but won't when you withdraw if Obama and his cronies don't change the rules(no joke). If you believe you will be in the same tax bracket at retirement and you're getting at least some money from your employer I'd consider staying with your 401k. If you plan to make a lot more money down the line(higher tax bracket) then contribute to a roth for now while you're in a lower bracket but consider changes at some point. Only you can determine this. This is not a static do it and forget it plan unless you think your salary will always be about the same as now.

[yorkinvestmentreport]

Continue to invest a portion of your salary and continue to invest in the market. You have 30 - 40 years until you retire. People end up lagging the overall market because they usually withdraw at the worst possible time. Keep in invested and stop watching the daily swings. They can drive you crazy

[TBH]

Whether you put the money in a 401k or a Roth, 5% of your income is too small an amount to be investing. You should be putting in at least 10%, preferably 15%. If you can't make such a big jump right away, raise your contributions by 1-2% every six months, or every time you get a raise, until you are at 15%.

Keep investing, though. It may be frustrating in the short term as the market continues to lag, but when the market recovers you'll see some nice gains. Right now, it may be best to focus on raising the percentage you're putting in, and try not to look at the balance.

[autoxer]

When the market goes down, think about it like a sale. Would you rather pay $10 / share or $20 / share. If you buy them cheaper, you will have more of them.

When investing in stocks for long term, you shouldn't pay too much attention to the short term fluctuations.