Investing 102

[GregWeld]

It ceases to amaze me how many people are willing to look past the old "too good to be true" statement and hand their hard earned money over to some charlatan they've never met... all based on their own personal greed. Too greedy to think correctly and say "nah -- this sounds like a scam".




http://www.forbes.com/sites/jordanma...te-securities/

[WSSix]

I think it stems partly from the belief by so many people that you have to be lucky or some how out smart the system to really make it in this world. Not only that but people's belief that having a lot of stuff means you're rich. Gone, for the most part, is the belief in hard work and saving.

[Vortech404]

I read most of these pages and come to the conclusion that the funds I have been contributing to for the last 8 years kind of suck.

Unfortunatly though my UPS/Teamster 401k plans all the plans are really safe. S&P 400, S&P 500, Russel 2000, etc. I contribute the FUND which has pre selected stocks/bonds in the fund. I'm not able to select one stock per say. I purchase UPS stock and a discount of 5% on the lowest quarter.I put 12% or 10k into the fund a year pre tax. I just started a Roth, not much in there. I'm thinking my 401k plan stinks with too many bonds.

Should I stop my current 401k plan with the teamsters and open another one that I can select better perfoming stocks"more control of where my money goes"? Could I still purchase these stocks pre tax to lower my income for tax purposes? Say I put $200/week into these stocks, say I pick 6 or 7 stocks I like. Are you guy's holding onto the for say 20 years or are you constantly buyiong selling. I don't know much about the market and wanted kind of set it and forget it approach or is that dumb.

Thanks guy's
John

[toy71camaro]

Originally Posted by Vortech404

I read most of these pages and come to the conclusion that the funds I have been contributing to for the last 8 years kind of suck.

Unfortunatly though my UPS/Teamster 401k plans all the plans are really safe. S&P 400, S&P 500, Russel 2000, etc. I contribute the FUND which has pre selected stocks/bonds in the fund. I'm not able to select one stock per say. I purchase UPS stock and a discount of 5% on the lowest quarter.I put 12% or 10k into the fund a year pre tax. I just started a Roth, not much in there. I'm thinking my 401k plan stinks with too many bonds.

Should I stop my current 401k plan with the teamsters and open another one that I can select better perfoming stocks"more control of where my money goes"? Could I still purchase these stocks pre tax to lower my income for tax purposes? Say I put $200/week into these stocks, say I pick 6 or 7 stocks I like. Are you guy's holding onto the for say 20 years or are you constantly buyiong selling. I don't know much about the market and wanted kind of set it and forget it approach or is that dumb.

Thanks guy's
John

A lot of that is going to rely on some "personal" data (income levels, tax levels, company match policy, etc etc). This is a question probably best left to an accountant/trusted financial adviser. Check into an "ELP" from Dave Ramsey. They're supposed to "teach" you the best path, not just sell you some other fund for their cut of the pie.

there are also financial advisers that work with you specifically to answer this sort of stuff rather than sell you retirement options. Check into a NAPFA or Garret Network fee only fiduciary. (i think i got that right. lol)

[bdahlg68]

Originally Posted by Vortech404

I read most of these pages and come to the conclusion that the funds I have been contributing to for the last 8 years kind of suck.

Unfortunatly though my UPS/Teamster 401k plans all the plans are really safe. S&P 400, S&P 500, Russel 2000, etc. I contribute the FUND which has pre selected stocks/bonds in the fund. I'm not able to select one stock per say. I purchase UPS stock and a discount of 5% on the lowest quarter.I put 12% or 10k into the fund a year pre tax. I just started a Roth, not much in there. I'm thinking my 401k plan stinks with too many bonds.

Should I stop my current 401k plan with the teamsters and open another one that I can select better perfoming stocks"more control of where my money goes"? Could I still purchase these stocks pre tax to lower my income for tax purposes? Say I put $200/week into these stocks, say I pick 6 or 7 stocks I like. Are you guy's holding onto the for say 20 years or are you constantly buyiong selling. I don't know much about the market and wanted kind of set it and forget it approach or is that dumb.

Thanks guy's
John

Don't stop the 401k. What brokerage is it thru? Fidelity has an option called Brokeragelink that will let you buy stocks. If. You are really limited than consider only enough to maximize the matching.

[Vortech404]

Thanks guys. My company doesn't match. My account
Is through Prudential

Thanks
John

[bdahlg68]

No match? I guess that is because of the discount on the UPS stock? Hmmm....

Anyway, what you may want to check into is called one of the following:

brokerage window
self-directed" 401(k)
self-directed brokerage account

Fidelity and Schwab have them but your employer (the plan "sponsor") decides whether your plan offers a brokerage window, and what proportion of your contributions you can invest through it. Your employer can also determine the range of investments permissible through a brokerage window. Some might restrict you to mutual funds, while others might permit a broader range of choices.

[Vortech404]

Thanks Brian I will look into that.
The reason UPS doesn't match is probably because of my
Pension.

[GregWeld]

I had asked Vortech to discuss these options with his Personnel office. They will have all manor of info for him as well as someone that he could speak with directly to answer questions of this nature.

Now ---- Here's a better/bigger question EVERYONE should be asking themselves.

What investments can I make -- and what style of investor am I -- and how much EFFORT am I willing to put in NOW -- in order to retire "decently" later.

That's a far more fundamental question!

Regardless of your available options ---- and the minuscule tax differences (before or after tax contributions).... what really counts is where you can put your money to work NOW... and have it double and triple or more over the years.


My personal belief #1 --- Mutual Fund "investing" (the forget it style of investing) will prove to be sadly disappointing in total return. This style of investing is fine --- until you get to where you have 50 or 100 grand..... and even then I wouldn't recommend it.... because you're just not taking responsibility for how you intend to live down the road.


My personal belief #2 --- BONDS are no place for ANYONE to be invested in for a retirement account unless you have a couple million bucks! Then MAYBE you could have half a million in super safe bonds. But ask yourself something.... are BONDS really more safe than say --- Exxon or Home Depot or Wal Mart or some other big cap company?

Now -- if BOND interest rates (we're talking Tax free munis here) get to be 10% ---- I'd be a buyer... BUT NOBODY SHOULD BE IN TAX FREE ANYTHING IN A RETIREMENT ACCOUNT that is already tax free (ROTH) or tax deferred (IRA/401). Why would you accept a FAR FAR lower rate of return -- to garner tax free status -- on something that is either tax free or tax deferred in the first place? And the difference in compounded growth over 20 or 30 years is just unbelievable!


Here's just one real quick google search I came up with!


Over the long term, stocks do better. Since 1926, large stocks have returned an average of 9.8% per year; long-term government bonds have returned between 5% and 6%, according to investment researcher Ibbotson Associates.


Do the math on 100K -- at 9.8% compounded over 20 years vs 6% (the higher number even!) and see what you have to retire on....


Note the difference between 5% and 8% is DOUBLE!! Multiply these numbers by ten to get the amount on 100k!!! and it's astounding!


Initial
Amount Years Compounding Return



$10,000 25 5% 3 $33,860
$10,000 25 8% 6.85 $68,500
$10,000 25 10% 10.8 $108,350
$10,000 25 12% 17.00 $170,000
$10,000 25 15% 32.92 $329,200
$10,000 25 18% 62.67 $626,700

[Vortech404]

Thanks Greg.
Looks like have work to do.

Those numbers get me really excited.
At least you know you have somebody else watching this
thread.

John