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Offline Peter

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Re: 401k plans
« Reply #30 on: January 06, 2009, 09:34:28 AM »
Get a safety deposit box in an out of the way town were nothing will ever happen but is close by.  I already own my own safe two actually a little gold some coins and about 10 pounds of silver and cash always have some cash that's not in the bank but that's me I'm paranoid
You have to be careful that you don't lose money by inflation - the safest place for your money these days is still more or less a bank.

Also, when you take physical possession of a bullion metal, it immediately loses about 10% of it's value, since it's no longer guaranteed to be free from loss of material or debasement, whether deliberate or accidental.  Financial institutions trade gold via the Good Delivery System, which is a tightly regulated system of storage and transport of Good Delivery bars; this means that the gold doesn't have to be reassayed every time it changed ownership, and often isn't even moved, which greatly reduces the cost of transactions.  There's at least one company that enables small private investors to buy Good Delivery gold, but it means that the gold stays in a vault somewhere, rather than being delivered to your door.
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14:10 - Moarskrillex42: She said something about knowing why I wanted to move to Glasgow when she came in. She plopped down on my bed and told me to go ahead and open it for her.

14:11 - Peter5930: So, she thought I was your lover and that I was sending you a box full of sex toys, and that you wanted to move to Glasgow to be with me?

Offline Trigger 11

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Re: 401k plans
« Reply #31 on: January 06, 2009, 09:41:21 AM »
My employer(s) have matched the first 5-6% I put in, so "my" investment is up, despite the current downturn. My private investments are down about 22% the past few months. However, I am buying these days because the prices are low. This way I cost average what I bought at the higher prices the past few years. When the markets go back up, I should be in good shape. I have 8-1/2 years before my first kid goes to college, so I have time. The employer match is free money, so long as you can do without what you invest until you're older you should be fine. In an emergency, you can always access the money for a heftier tax burden.

I also invest in Star Wars toys. If the economy completely collapses, I will likely be a world leader based on that little nest egg.
« Last Edit: January 06, 2009, 09:46:34 AM by Trigger11 »
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Offline Peter

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Re: 401k plans
« Reply #32 on: January 06, 2009, 09:56:26 AM »
(b) know the stock market is little more than gambling.

The stock market isn't gambling.  Certain high-risk investment strategies are similar to gambling, but medium-high risk strategies have a risk profile that's similar to investing in land or property, while medium risk strategies like using an index tracker (which I do) are very safe on a timescale of a decade or more, since your investment won't be wiped out by anything short of the apocalypse due to it's coverage of 100, 250 or 500+ companies and will rebound from crashes, recessions and bankruptcies given a little time and a hands-off approach.
Quote
14:10 - Moarskrillex42: She said something about knowing why I wanted to move to Glasgow when she came in. She plopped down on my bed and told me to go ahead and open it for her.

14:11 - Peter5930: So, she thought I was your lover and that I was sending you a box full of sex toys, and that you wanted to move to Glasgow to be with me?

Offline Christopher McCandless

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Re: 401k plans
« Reply #33 on: January 06, 2009, 10:02:07 AM »
(b) know the stock market is little more than gambling.

The stock market isn't gambling.  Certain high-risk investment strategies are similar to gambling, but medium-high risk strategies have a risk profile that's similar to investing in land or property, while medium risk strategies like using an index tracker (which I do) are very safe on a timescale of a decade or more, since your investment won't be wiped out by anything short of the apocalypse due to it's coverage of 100, 250 or 500+ companies and will rebound from crashes, recessions and bankruptcies given a little time and a hands-off approach.
The risk in investing in land or property is as much gambling as investing in the stocks, you should see what is happening to all those buy to let people who have bought those apartments which seem to be springing up left right and centre. Yes the stock market can be educated gambling, but you are still placing a bet. In the same way a good poker player can increase the chance that they will win, but they can't guarantee it.

Offline Peter

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Re: 401k plans
« Reply #34 on: January 06, 2009, 10:27:50 AM »
(b) know the stock market is little more than gambling.

The stock market isn't gambling.  Certain high-risk investment strategies are similar to gambling, but medium-high risk strategies have a risk profile that's similar to investing in land or property, while medium risk strategies like using an index tracker (which I do) are very safe on a timescale of a decade or more, since your investment won't be wiped out by anything short of the apocalypse due to it's coverage of 100, 250 or 500+ companies and will rebound from crashes, recessions and bankruptcies given a little time and a hands-off approach.
The risk in investing in land or property is as much gambling as investing in the stocks, you should see what is happening to all those buy to let people who have bought those apartments which seem to be springing up left right and centre. Yes the stock market can be educated gambling, but you are still placing a bet. In the same way a good poker player can increase the chance that they will win, but they can't guarantee it.

Gambling implies a net negative return when summed over a large number of attempts.  While investing in property or investing in stocks carries risk, the return on the average investment is positive, and the degree to which it is positive or negative and the probability of a single investment being positive varies depending on the investment strategy.  An investment in a single house or a single company can evaporate if that house or company falls foul of any of a range of catastrophes, but a diverse portfolio is resistant to single points of failure and as the diversification increases, the probability of it providing a positive return at the end of a given time period also increases, with a corresponding decrease in the probable magnitude of any positive or negative return.  With enough diversification, investments in the stock market match government bonds (vulnerable to government or currency collapse, Armageddon), bullion kept at home (theft, Armageddon), cash at home (theft, inflation, Armageddon) and cash in the bank (bank bankruptcy, Armageddon) for security while providing a much better average return.
Quote
14:10 - Moarskrillex42: She said something about knowing why I wanted to move to Glasgow when she came in. She plopped down on my bed and told me to go ahead and open it for her.

14:11 - Peter5930: So, she thought I was your lover and that I was sending you a box full of sex toys, and that you wanted to move to Glasgow to be with me?

Offline Christopher McCandless

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Re: 401k plans
« Reply #35 on: January 06, 2009, 11:19:08 AM »
(b) know the stock market is little more than gambling.

The stock market isn't gambling.  Certain high-risk investment strategies are similar to gambling, but medium-high risk strategies have a risk profile that's similar to investing in land or property, while medium risk strategies like using an index tracker (which I do) are very safe on a timescale of a decade or more, since your investment won't be wiped out by anything short of the apocalypse due to it's coverage of 100, 250 or 500+ companies and will rebound from crashes, recessions and bankruptcies given a little time and a hands-off approach.
The risk in investing in land or property is as much gambling as investing in the stocks, you should see what is happening to all those buy to let people who have bought those apartments which seem to be springing up left right and centre. Yes the stock market can be educated gambling, but you are still placing a bet. In the same way a good poker player can increase the chance that they will win, but they can't guarantee it.

Gambling implies a net negative return when summed over a large number of attempts.
If you are not an expert, or following very good advice then it fits the gambling definition you gave.
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While investing in property or investing in stocks carries risk, the return on the average investment is positive, and the degree to which it is positive or negative and the probability of a single investment being positive varies depending on the investment strategy.  An investment in a single house or a single company can evaporate if that house or company falls foul of any of a range of catastrophes, but a diverse portfolio is resistant to single points of failure and as the diversification increases, the probability of it providing a positive return at the end of a given time period also increases, with a corresponding decrease in the probable magnitude of any positive or negative return.  With enough diversification, investments in the stock market match government bonds (vulnerable to government or currency collapse, Armageddon), bullion kept at home (theft, Armageddon), cash at home (theft, inflation, Armageddon) and cash in the bank (bank bankruptcy, Armageddon) for security while providing a much better average return.
Except around say now, where you should take a look at how much most endowments have fallen by. Unless you know what you are doing (and factor in the time and resource involved in planning out a diverse array of investments) then you are gambling. More to the point, putting your money in a bank (backed by a government or several) is still the safest option.

Offline Peter

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Re: 401k plans
« Reply #36 on: January 06, 2009, 12:21:12 PM »
(b) know the stock market is little more than gambling.

The stock market isn't gambling.  Certain high-risk investment strategies are similar to gambling, but medium-high risk strategies have a risk profile that's similar to investing in land or property, while medium risk strategies like using an index tracker (which I do) are very safe on a timescale of a decade or more, since your investment won't be wiped out by anything short of the apocalypse due to it's coverage of 100, 250 or 500+ companies and will rebound from crashes, recessions and bankruptcies given a little time and a hands-off approach.
The risk in investing in land or property is as much gambling as investing in the stocks, you should see what is happening to all those buy to let people who have bought those apartments which seem to be springing up left right and centre. Yes the stock market can be educated gambling, but you are still placing a bet. In the same way a good poker player can increase the chance that they will win, but they can't guarantee it.

Gambling implies a net negative return when summed over a large number of attempts.
If you are not an expert, or following very good advice then it fits the gambling definition you gave.

Successfully investing in the stock market doesn't require a great deal of expertise.  Take a look at some historical charts for the various markets; they have a general upwards trend with fluctuations around that trend.  If you invest in a tracker for that market, your gains or losses will follow that trend; you don't need to do any 'expert' stuff, unless you consider buying a tracker as 'expert'.

Quote
Quote
While investing in property or investing in stocks carries risk, the return on the average investment is positive, and the degree to which it is positive or negative and the probability of a single investment being positive varies depending on the investment strategy.  An investment in a single house or a single company can evaporate if that house or company falls foul of any of a range of catastrophes, but a diverse portfolio is resistant to single points of failure and as the diversification increases, the probability of it providing a positive return at the end of a given time period also increases, with a corresponding decrease in the probable magnitude of any positive or negative return.  With enough diversification, investments in the stock market match government bonds (vulnerable to government or currency collapse, Armageddon), bullion kept at home (theft, Armageddon), cash at home (theft, inflation, Armageddon) and cash in the bank (bank bankruptcy, Armageddon) for security while providing a much better average return.
Except around say now, where you should take a look at how much most endowments have fallen by. Unless you know what you are doing (and factor in the time and resource involved in planning out a diverse array of investments) then you are gambling. More to the point, putting your money in a bank (backed by a government or several) is still the safest option.

Trackers are diverse-portfolios-in-a-package, and are the ideal instrument for someone who wants a low-risk, low-hassle, long-term investment vehicle that doesn't require much knowledge on their part.  They even outperform most other fund packages, since their fees tend to be very low, which gives them a significant head-start over managed funds; I use the Fidelity MoneyBuilder UK Index fund, which has a fee of 0.1%.  All you need to be successful with a tracker is a decade or two and the nerves to not panic and pull out your money when the market takes a dip.

The stock market is not a zero-sum game; the losers don't have to balance out the winners.  If you want a market that's akin to gambling, look at the currency exchange market.  In that market, every pound of profit is matched by a pound of loss for someone else, minus the spread (so it's really a negative sum game, just like gambling), but in the stock market, people buy a share of a company, which generates profit over time and pays this profit back to the shareholder as a dividend, in much the same way that a bank pays interest on deposits.  The situation is a little more complicated, since the ability of the company to pay dividends can vary over time and the value of a share in the company varies with the market's assessment of it's present and future ability to pay dividends, but if you're investing in a tracker that tracks an entire market, it's not necessary to deal with that level of complexity.
Quote
14:10 - Moarskrillex42: She said something about knowing why I wanted to move to Glasgow when she came in. She plopped down on my bed and told me to go ahead and open it for her.

14:11 - Peter5930: So, she thought I was your lover and that I was sending you a box full of sex toys, and that you wanted to move to Glasgow to be with me?

Offline Callaway

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Re: 401k plans
« Reply #37 on: January 07, 2009, 05:13:51 AM »
Anyone know anything about them? For the first time in my life I have the option of enrolling in one. I don't trust the government further than I can throw it when it comes to money; I plan to save enough privately to cover my own retirement.

But I know 401k plans are popular and standard, though I know very little about how they actually work or what benefits they'd give me. I may be being too paranoid and it would actually be a good investment.

I also don't know, if I did enroll, whether a regular plan or a Roth plan would be a better idea.

Can anyone from the USA give me advice?

Isn't your dad an economist?

If it were me, I would invest as much as the company will match in a 401k, because the match is a good return on your investment assuming that you will stay in the job long enough for their contributions to vest.  I don't know what your actual choices would be as far as what the 401K would be invested in, but there are usually more conservative choices as well as the somewhat riskier ones, depending on your acceptance of or aversion to risk.  However, unless the money is primarily invested in company stock, it should be safe from your company going bankrupt since it is invested through a brokerage house.  Beyond the amount that the company will match, I would invest in a Roth IRA up to the maximum allowed, which I think is $5000, assuming of course that you can afford to make that investment.  If you have a choice between a traditional 401k and a Roth 401k and you would still get matching funds from your employer for both, I would choose the Roth 401k.

Choosing between a regular IRA and a Roth IRA depends on whether you would rather have a tax break now or have both the earnings and principal tax free in the future, when the government's tax rates are likely to be higher than they are now even if your income in the future is lower, IMO.  A Roth IRA offers more freedom when it comes to taking out your initial investment (but not the earnings), so if you have an emergency that is not one of the few approved ones for penalty free withdrawals from a traditional IRA, you can still get the money without penalty.   If your company offers a 401k, then you can receive the tax deduction for a traditional IRA only if your income meets certain guidelines (around $50,000) anyway.  For that matter, the ability to contribute to a Roth IRA is also subject to income guidelines.  If you are earning over around $100,000 a year, you won't be able to get a Roth IRA for the full amount, although you could buy a traditional IRA with no tax deduction.

Offline Pyraxis

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Re: 401k plans
« Reply #38 on: January 07, 2009, 07:26:00 AM »
My dad's a computer scientist with a pure math background. He does know some things about finance but he's hard to approach because, well, he's my father, and because financial things have always been a close secret in my family.

I'm not sure if I get matching funds for both the Roth and the regular, but I will find out. I didn't realize a Roth was easier to take money out of in an emergency.

Thanks for the info :)
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Offline Pissgai

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Re: 401k plans
« Reply #39 on: January 08, 2009, 07:23:16 AM »
Interesting!
How many people do you know with investment plans who made LESS money towards the end of their careers than when they started out?

I don't know.  :-\  I'm paid fairly highly for my skills at the moment and I'm not sure that it would get much higher without me moving into a supervisor role, which I really don't want to do - I want to be hands-on. I also may drop this corporate thing and get back involved with startups when I've made enough to cover living expenses without an immediate income.

It makes me wonder if I should take the plan type that counts on now being as good as it gets.

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