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Originally Posted by 67pro-street
First of all I would like to give a big thanks to the OP and all who have contributed to this thread. I have spent the past week or so reading through all 140 pages and I have learned more about sound financial planning in this past week than I have in the past 26 years of my life!
So here's my situation. I am 26, been working at an oil refinery for the past 3.5 years and have been contributing to my companies 401k plan since i started. Until now, i thought that as long as i put as much money into my 401k as possible and just "forget" about it, i would be living a 'coush retirement. All my company offers is mutual funds or target date retirement funds and bonds. I have spread my investments throughout my available options and the biggest gainer so far has been my S&P investment, except for last year my bonds did exceptionally well. My company matches up to 7.5% and over the past 3.5 years i have worked my way up to putting 20% of my paycheck into my 401k.
I also bought a house ~2.5 years ago and it has depreciated some, but nothing to make me run for the hills so I feel comfortable that I can ride out the storm and eventually come out ahead. My 401k currently has ~50k in it but now i want to open a Schwab account and start making my money work for me! I have enough saved in my bank account that I would feel comfortable putting ~10k into my Schwab account, but I still want to do some more research into which companies i would like to invest in. When I do so, I plan to take Greg's advice of starting with 2k in 5 different companies.
Now here's my question/dilemma. Since I have the power of time on my hands and since a Schwab account offers me so many more options than my company's 401k, should I "borrow" money (say 15-20k) from my 401k plan and use it to invest into my Schwab account? I would not do this right off the bat as I have so much to learn and I dont want to "learn" with that much money...but say a year or two from now, would that be a good idea? I realize that i have to pay some sort of tax penalty on that money taken out and also have to pay the amount taken out back, with interest. But my reasoning is that it seems like if i could be earning 8-10% or more in a Scwab account with that money i would still come out ahead after paying the fees. Plust i would have time/power of money combo??
I also realize this is a car building site, but after reading this thread i have decided to hold off on the ole' camaro for a year or two and use the money i was going to spend on that for investements. Dont hate me for doing so, but it just seems like the most financially responsible thing for me to do right now?
Thanks again for this great thread, i hope it keeps going for some time to come!
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FIRST! Kudos to you young man! You are so far ahead of the pack it's amazing!
SECOND = I wouldn't try to get "cute" with doing investing of any kind... keep it simple - just save money - salt it away in good stocks with dividends being re-invested and sleep well at night. The minute you try to get cute - the market will turn against you -- you'll worry -- and your best "plan" will go to hell in a hand basket. Don't do it. Just keep doing what you're doing.
THIRD -- Look into opening a ROTH account - and save the maximum you can using that funding mechanism. ALL of the growth and income etc comes out of a ROTH TAX FREE at retirement. Dude! You can't beat that! But there are qualifications etc. So check with Schwab on the rules.
FOURTH -- All of us have tried to steer clear of actual recommendations etc... So with regards to your BP question --- you need to go back and compare TOTAL RETURN over time - against other companies that you want to invest in -- spread some diversification in there with a little "risk"... You are YOUNG - you have time.... So if you think BP is the company you want to take on for a little "risk" -- then I say go for it. Just don't "GAMBLE" -- so just play with a small portion of your investable assets in something like that. BP certainly isn't going out of business.... and this is/could be a small blip that is a buying opportunity. Or not. We won't know that for maybe a couple years.
