401(k) sucks, I hate stocks

[mizzou]

Just opted into my 401k program and am starting real small as I am young and I'm not sure how much of my paycheck I can stand to hold out (I don't really make much)

I'm putting in $xx each paycheck (paid every 14 days) and employer matches to maximum $xx (1/4 roughly). So about $xx each paycheck

I put EVERYTHING in high yield bonds (gov't backed bonds w/ around 5-6% yield)*EDIT

I know this is no way to build a portfolio, but I'm not putting my money in this crapshoot of a market until I know a thing or two about investing properly.

I looked at the performance of all of our investing companies funds (oneamerica is who we use )

So far year to date, everything except the obvious bond/cash market is in extreme negatives. Not one fund is performing in the positives, but a few aren't down too much.


How do I overcome my fear of the stock market? I'm one of those "stuff money under the bed" type people, but I do save alot of money.

 

[ViviTheMage]

look at it long term, not the past few months...

 

[JohnCU]

Originally posted by: ViviTheMage
look at it long term, not the past few months...

this

 

[Wheezer]

you are young enough to be around when the market bounces back, it always does......just be patient.

 

[HaiBiss]

Find a person or persons that you trust and ask what they are doing and their advice, just be warned there are always people that know enough to be dangerous. But you are young and have many years ahead of you to build and recoop losses if you have any.

By the way investing now is not a bad thing, remember stocks are down so you can get them cheaper then you could 2 years ago. It will go back up and then you can make more money for less.....

 

[mizzou]

yeah, I think when I see the market start to turn around I'll talk to an investment manager to see what's best for my situation.

Either way, I HATE the entire idea

 

[PowerEngineer]

Originally posted by: Wheezer
you are young enough to be around when the market bounces back, it always does......just be patient.

QFT The way the tax laws work, it's hard to find a better long-term investment than 401K (and IRA). You should promise yourself -- particlarly now when you are young -- to always max out your 401K contributions.

 

[HaiBiss]

Originally posted by: PowerEngineer

Originally posted by: Wheezer
you are young enough to be around when the market bounces back, it always does......just be patient.

QFT The way the tax laws work, it's hard to find a better long-term investment than 401K (and IRA). You should promise yourself -- particlarly now when you are young -- to always max out your 401K contributions.

It is too hard to max out your contibutions, when you have to pay rent, bills, student loans, car payment, and everything else that comes up. Do what you can but, don't make yourself so poor that you are putting things on a credit card instead of paying cash for them. You just lost money that way, 3-5% gain on 401k vs 22% on a cc.

I would recommend that you try to get as much as you can from the match, think of it as a raise it is free money.....

 

[kranky]

The way to overcome your fear is to learn more about the market. Specifically, the relationship between risk and reward, the benefit of starting young, and the characteristics of different types of mutual funds.

As you learn more about them, you will understand that investing with tax-free money which is matched by your employer, over the long term, is just about the best thing you can do - even when the market is down.

My favorite example: let's say you invest a fixed amount every month starting when you are 20, but at age 30 you stop contributing. Your co-worker doesn't start investing until he's 30, but he continues to invest the same amount as you did every month until he's 65. Both of you average the same rate of return over the long term.

You and your co-worker invested the same amount every month. You invested for 10 years, but your co-worker invested for 35 years. Do you realize YOU will have more money at age 65? It's because you started sooner, and that extra time made all the difference.

 

[mizzou]

Originally posted by: HaiBiss
It is too hard to max out your contibutions, when you have to pay rent, bills, student loans, car payment, and everything else that comes up. Do what you can but, don't make yourself so poor that you are putting things on a credit card instead of paying cash for them. You just lost money that way, 3-5% gain on 401k vs 22% on a cc.

I would recommend that you try to get as much as you can from the match, think of it as a raise it is free money.....

yep, I put in just enough to get max match. I'm a total idiot for not jumping on it sooner (I was eligible last year)

They match 2% max if you put in 5% of your wages

so essentially its just like a 2 % raise that you can't touch for 30 years =)

 

[PowerEngineer]

Originally posted by: HaiBiss

Originally posted by: PowerEngineer

Originally posted by: Wheezer
you are young enough to be around when the market bounces back, it always does......just be patient.

QFT The way the tax laws work, it's hard to find a better long-term investment than 401K (and IRA). You should promise yourself -- particlarly now when you are young -- to always max out your 401K contributions.

It is too hard to max out your contibutions, when you have to pay rent, bills, student loans, car payment, and everything else that comes up. Do what you can but, don't make yourself so poor that you are putting things on a credit card instead of paying cash for them. You just lost money that way, 3-5% gain on 401k vs 22% on a cc.

I would recommend that you try to get as much as you can from the match, think of it as a raise it is free money.....

I think I see the problem...

Never borrow money to buy something that goes down in value.

 

[EMPshockwave82]

Originally posted by: PowerEngineer

Originally posted by: HaiBiss

Originally posted by: PowerEngineer

Originally posted by: Wheezer
you are young enough to be around when the market bounces back, it always does......just be patient.

QFT The way the tax laws work, it's hard to find a better long-term investment than 401K (and IRA). You should promise yourself -- particlarly now when you are young -- to always max out your 401K contributions.

It is too hard to max out your contibutions, when you have to pay rent, bills, student loans, car payment, and everything else that comes up. Do what you can but, don't make yourself so poor that you are putting things on a credit card instead of paying cash for them. You just lost money that way, 3-5% gain on 401k vs 22% on a cc.

I would recommend that you try to get as much as you can from the match, think of it as a raise it is free money.....

I think I see the problem...

Never borrow money to buy something that goes down in value.

good luck with that. let me know how it turns out

 

[JohnCU]

Originally posted by: PowerEngineer

Originally posted by: HaiBiss

Originally posted by: PowerEngineer

Originally posted by: Wheezer
you are young enough to be around when the market bounces back, it always does......just be patient.

QFT The way the tax laws work, it's hard to find a better long-term investment than 401K (and IRA). You should promise yourself -- particlarly now when you are young -- to always max out your 401K contributions.

It is too hard to max out your contibutions, when you have to pay rent, bills, student loans, car payment, and everything else that comes up. Do what you can but, don't make yourself so poor that you are putting things on a credit card instead of paying cash for them. You just lost money that way, 3-5% gain on 401k vs 22% on a cc.

I would recommend that you try to get as much as you can from the match, think of it as a raise it is free money.....

I think I see the problem...

Never borrow money to buy something that goes down in value.

wow hey let me pull out that 10k out of my pocket straight out of college to pay for a reliable car. :disgust:

that's probably the stupidest statement made on ATOT in a while

 

[randomlinh]

you think that sucks? how about having to pay into a pension that I won't see if I don't stay here for a while...

 

[poopaskoopa]

Why do you hate stocks? You only have money in bonds

 

[BrunoPuntzJones]

Also remember that you are just barely beating inflation. With such holdings you'll just have the same amount of money you put into it.

 

[mizzou]

Originally posted by: BrunoPuntzJones
Also remember that you are just barely beating inflation. With such holdings you'll just have the same amount of money you put into it.

I think you mean I will have the same amount of buying power?

Either way, it sure as hell beats keeping it in my pocket. I'm obviously going to move into a well rounded fund soon eventually, but I opted out of it initialy because they made us choose our own funds/stock options on our own without any advice from an investment strategist.

 

[minendo]

Originally posted by: ViviTheMage
look at it long term, not the past few months...

Exactly. OP your 401k is for the long term and as you said, you are young.

 

[Engineer]

Originally posted by: PowerEngineer

Never borrow money to buy something that goes down in value.

Signed, millions of home owners in the US who bought in the last 5 years!

 

[DrPizza]

Originally posted by: mizzou

Originally posted by: BrunoPuntzJones
Also remember that you are just barely beating inflation. With such holdings you'll just have the same amount of money you put into it.

I think you mean I will have the same amount of buying power?

Either way, it sure as hell beats keeping it in my pocket. I'm obviously going to move into a well rounded fund soon eventually, but I opted out of it initialy because they made us choose our own funds/stock options on our own without any advice from an investment strategist.

I got really lucky; at some point during the last school year, the guy who helps manage my account came to my school and had meetings with a bunch of us. (403B rather than 401k, since schools are a non-profit institution). He recommended pulling just about everything out of stocks for a while & balance my portfolio differently because they expected the stock market to perform poorly. I'd much rather have a percent or two above inflation for a year, rather than lose money during that year. I'm sure that come September, we'll be talking about rebalancing the portfolio again. I almost changed my mind about the changes last year, thinking that maybe he was just doing this to increase his commission. I'm certainly glad I signed!

 

[Special K]

Originally posted by: mizzou
yeah, I think when I see the market start to turn around I'll talk to an investment manager to see what's best for my situation.

Either way, I HATE the entire idea

I would be extremely cautious about speaking to any sort of financial adviser. Many of them work on commission and do not have your best interests in mind. These "advisers" will try to sell you mutual funds with high expenses that do not benefit you, but earn them a fat commission.

Instead, I would recommend you start here:

Diehards Forum

In particular, start by reading this post:

link

It has a collection of books that will help get you started with investing. My personal favorite from that list is The Boglehead's Guide to Investing. It doesn't get too technical, and is a good book to start with. From there, you can research other books on that list, and/or ask specific questions on the forum. I have found the people on that board to be very helpful and knowledgeable.

 

[cubeless]

be glad u haven't been in one as long as i have... i've lost more on paper in this latest run down than u have made in your entire life... and i would like to retire in a few years...

try to look at it as a n% gain where the n is what your employer matches... it's the best deal u will get anymore... just keep hoping that u r buying when its down and u get more shares this way... if/when it goes up u get a nice ride...

 

[Engineer]

Originally posted by: cubeless
be glad u haven't been in one as long as i have... i've lost more on paper in this latest run down than u have made in your entire life... and i would like to retire in a few years...

try to look at it as a n% gain where the n is what your employer matches... it's the best deal u will get anymore... just keep hoping that u r buying when its down and u get more shares this way... if/when it goes up u get a nice ride...

Ain't that the truth. I've got two Roth IRA's (mine and my wife's) that have a broad range of funds in them and have been invested in for 5 years (dollar cost average). Both are negative now....talk about a kick in the gut!

I've held the course and refuse to touch them. Time will tell me if I've made a good decision or not.

I'm just no good at market timing (nobody really is) and am even worse at individual stocks...If I buy it, you should sell it and short some more...If I sell it, buy it...and if I think about it and don't buy it, that's a clue to buy some and maybe on margin too...

To the OP...your timeframe is long...dollar cost average and you "should" be OK in the longer run for things....

 

[Playmaker]

Originally posted by: JohnCU

Originally posted by: PowerEngineer

Originally posted by: HaiBiss

Originally posted by: PowerEngineer

Originally posted by: Wheezer
you are young enough to be around when the market bounces back, it always does......just be patient.

QFT The way the tax laws work, it's hard to find a better long-term investment than 401K (and IRA). You should promise yourself -- particlarly now when you are young -- to always max out your 401K contributions.

It is too hard to max out your contibutions, when you have to pay rent, bills, student loans, car payment, and everything else that comes up. Do what you can but, don't make yourself so poor that you are putting things on a credit card instead of paying cash for them. You just lost money that way, 3-5% gain on 401k vs 22% on a cc.

I would recommend that you try to get as much as you can from the match, think of it as a raise it is free money.....

I think I see the problem...

Never borrow money to buy something that goes down in value.

wow hey let me pull out that 10k out of my pocket straight out of college to pay for a reliable car. :disgust:

that's probably the stupidiest statement made on ATOT in a while

Who says you have to buy a car? If you're too poor to pay cash for a beater to get around until you can save for a decent car, then get a fuckin bus pass. His point is perfectly valid ... needing to take out 5-figure debt to buy a car when you're fresh out of college is the true "stupidiest" (sic) statement made on ATOT.

 

[JohnCU]

Originally posted by: Playmaker

Originally posted by: JohnCU

Originally posted by: PowerEngineer

Originally posted by: HaiBiss

Originally posted by: PowerEngineer

Originally posted by: Wheezer
you are young enough to be around when the market bounces back, it always does......just be patient.

QFT The way the tax laws work, it's hard to find a better long-term investment than 401K (and IRA). You should promise yourself -- particlarly now when you are young -- to always max out your 401K contributions.

It is too hard to max out your contibutions, when you have to pay rent, bills, student loans, car payment, and everything else that comes up. Do what you can but, don't make yourself so poor that you are putting things on a credit card instead of paying cash for them. You just lost money that way, 3-5% gain on 401k vs 22% on a cc.

I would recommend that you try to get as much as you can from the match, think of it as a raise it is free money.....

I think I see the problem...

Never borrow money to buy something that goes down in value.

wow hey let me pull out that 10k out of my pocket straight out of college to pay for a reliable car. :disgust:

that's probably the stupidiest statement made on ATOT in a while

Who says you have to buy a car? If you're too poor to pay cash for a beater to get around until you can save for a decent car, then get a fuckin bus pass. His point is perfectly valid ... needing to take out 5-figure debt to buy a car when you're fresh out of college is the true "stupidiest" (sic) statement made on ATOT.

ok considering my first job out of college was 60 miles away, and there is no public transportation system in place, means that i had no choice. everyone doesn't live in the fucking city.