401K

[MV88]

Hey .. I don’t know if any of you poker players out there have a 401k set up with there employers but I had a few questions about it. I’m lucky enough that my employer matches up to 5% of my pay check every week. I think you can also use that money to invest in some stocks. I know some are high risk, medium risk and low risk. Does anyone have any ideas in terms of which stocks would be smart to invest in? I think you do this all through Fidelity ... not too sure how all this works though.

[robbyd86]

Firstly, make sure you put in at least as much as your employer matches, it's free money, and pretty much like a raise.

If you have time to keep up with the market and all that, it might be a better idea to look into which stocks they have and move money around from time to time. Most investment places have funds like "target 2020" "target 2030" "target 2040 etc.". These are what I usually go with cause I don't like keeping an eye on everything.

How the target funds work is you pick the year you retire, for me it'll probably be 2050 unless i win the main event obv. So if you get the target 2050 it will start out with a pretty aggressive high(er) risk high reward strategy. Then as you get closer to retirement it shifts to safer stocks so you don't lose all that money. They typically make pretty good money over the long run, and that's what i use.

I'm sure you'll get some info on it, and will probably have a number you can call for a financial advisor. Sometimes it's free, sometimes it's a small fee, but not a bad idea to check it out and see what's right for you. Good luck!

[MV88]

thanks robby u da man

[Probability]

Ya, if you get matched dollar to dollar this is whats happening....

Instead of taking home $0.66 for every dollar you invest the whole dollar goes in tax free. Then after the match it's turned into $2.00. So for every $666.66 you put into the account $2,000 will actually end up in there.


It's so sick.

I would suggest putting it in an ETF since you don't incur any fees. 1.5% over 30 years can add up and a lof of the bigger mutual finds are basically index funds anyway since they have sooooo much money to invest. I think RedJoker suggested this in one of my recent blogs and he's the smartest stock person I know.

I suggest staying away from individual stocks since they are more risky and it's rare to find anyone who can actually beat the market. If you decide to spend some time learning about them then that's another story.

[RikaKazak]

Target date retirement funds are FANTASTIC for beginning investors.

Start there, then pick up "common sense on mutual funds" by john bogle, "four pillars of investing" by william bernstein.

Read those 2, pick your asset allocation. And just choose something VERY SIMPLE. Something like 100 - your age for you allocation. Then passively managed index funds ftw.

FWIW, if you never choose your own allocation, and only do target date, that's 100% fine.

[robbyd86]

Originally Posted by RikaKazak

FWIW, if you never choose your own allocation, and only do target date, that's 100% fine.

that's what i figured/hoped.

[RikaKazak]

Originally Posted by robbyd86

that's what i figured/hoped.

Vanguard target date = best of the best imo

Retirement saving isn't nearly as hard as people like to make it out to be. Just remember: 1.) have your allocation within your risk tolerance (or set and forget in a target date fund if you're capable of stomaching and sleeping during recessions/depressions) 2.) trying to beat the market is like playing HU with AEJONES or Durrr....sure you might do it/win, but it's a bad bet (unless you're luckychewy or someone, lol j/k j/k)

[bubsodian]

I was reading this and it says that if u borrow against fund such as 401k it is treated as a withdrawal. I know nothing about 401k but i thought it was interesting that even though ur not withdrawing ur still getting penalized in some way for holding the plan.

[steel108]

Originally Posted by bubsodian

I was reading this and it says that if u borrow against fund such as 401k it is treated as a withdrawal. I know nothing about 401k but i thought it was interesting that even though ur not withdrawing ur still getting penalized in some way for holding the plan.

For poker players, setting up a solo 401k is optimal for most and you can borrow against it without penalties; it's basically an interest free loan. You can deduct a ton with that option on your tax bill.

[WhiskeyFish]

Originally Posted by steel108

For poker players, setting up a solo 401k is optimal for most and you can borrow against it without penalties; it's basically an interest free loan. You can deduct a ton with that option on your tax bill.

A 401K loan is not treated like a withdrawal so you don't pay tax. It's not interest free but the interest rate is usually pretty low.

If your employer does a match, 401Ks are generally a good deal. Otherwise, IMO, they are only good for unsophisticated investors. Your options are usually stock funds and bond funds. Stock funds offer a mediocre expected return (~12%/yr) and high risk. Bond funds offer lousy returns and low to moderate risk depending on the fund.

By contrast, the professional investors that I know (myself included) usually look for returns in the mid-20's or better, and with lower risk than an equity (stock) fund. If you're going to take the time to study investing you shouldn't be settling for mutual funds. If you're just looking to passively invest your savings, then a diversified mix of low-fee funds is probably the way to go.