(Updated)Is it just me or do 401ks seem more and more like failed idea.

[Jeff7]

But in reality, who knows until it hits and who knows when it will end?

And if they were good enough to be able to correctly anticipate market dropoffs and get through them with either minimal losses, or even short their holdings correctly in order to profit from the drop, they wouldn't be screwing around with something like Target Retirement funds. Being that good would push you into "owning your own island" territory.

That first "if" is always the problem though.

Hopefully this chart shows up correctly.
RGAGX is a managed large-cap stock market fund, the cheapest in that class (R6 level). It's actually pretty cheap for a managed fund. The other classes are more expensive. R3 is 0.98%.
FUSEX is an S&P 500 index fund. It just follows the market average.

The two graphs look pretty darn similar. Whatever those fund managers are doing, they certainly seem to do a good job of following the average, dips and all. I guess their expensive skill and experience did a whole lot of nothing.
"Our skilled fund managers will work to keep your money safe.
This is not guaranteed whatsoever, and there are no refunds in the event that performance doesn't even match the market average. Good luck!"

 

[OverVolt]

Anyone with two brains cells could have known that McDonalds was about to shit the bed. Put me in charge if I had enough funds to diversify them more or less like an index fund and selectively remove low performers.

 

[Tweak155]

High fees were one of the reasons my company dropped their 401k. Knowing them I doubt that they ever looked into other options though, who knows.






It depends on which kind of IRA you're putting it into. Traditional IRA you can deduct any contributions on your taxes. Roth IRA contributions are not deductable like you said.



That $5.5k limit is total contributions to all traditional & Roth IRAs. In my case i have each type so i put $3k in one & $2.5k in the other each year.



Yeah, you can invest after tax income, which i do. I just get a 1099-DIV at the end of the year & have to claim it on my taxes.

Ah, got it. I knew it worked out though that you couldn't put $5.5k into both traditional and roth IRA. Just had the rules wrong in my head.

 

[bbhaag]

A tax loophole that the government has tried unsuccessfully to do away with sounds like a failed idea? An unintentional tax code flaw allowing employers to to skimp on retirement benefits might be a bad idea? Nooooo.

You just aren't investing wisely my friend. You need to get your shit together.

 

[Exterous]

YMMV on the future but compared to low saving interest rates, there's not much better to put your money into for the long term. I wonder if it will hold up over the long term though....seems that everything else (from the past) is collapsing. I suppose that time will tell.

I'm willing to bet a lot of people are chasing yield by having riskier investments than they should

why not move it all out if they know a recession will hit?

Their crystal ball is only slightly less cloudy than yours. Also I believe most of the target date funds have some pretty stringent rules on category % changes as people want more predictability out of those funds. You don't want to check into a 'Set-and-Forget' fund in 20 years and find a manager lost 40% of your value on a sector gamble.

 

[Spungo]

In a 6 page thread on investing, I think I saw the word "dividend" appear 1 time, and the word "earnings" appeared 0 times.

People shouldn't invest a penny until they understand what they are buying. Buying stuff without a reason is how we get things like the etrade baby losing everything:
https://www.youtube.com/watch?v=4GX4W5PBESg

 

[brianmanahan]

In a 6 page thread on investing, I think I saw the word "dividend" appear 1 time, and the word "earnings" appeared 0 times.

People shouldn't invest a penny until they understand what they are buying. Buying stuff without a reason is how we get things like the etrade baby losing everything:
https://www.youtube.com/watch?v=4GX4W5PBESg

dividends don't matter as much as appreciation though

from a tax standpoint i'd rather gets returns via cap gains than dividends

 

[OverVolt]

dividends don't matter as much as appreciation though

from a tax standpoint i'd rather gets returns via cap gains than dividends

Yup x1000. Dat 20% capital gains tax.

Do you pay taxes on dividends if they are re-invested though? Something I've always wondered.

Hold your positions for more than 1 year. Day traders are dumb. Don't buy anything you aren't willing to hold for a year.

 

[brianmanahan]

Do you pay taxes on dividends if they are re-invested though? Something I've always wondered.

yes, what you do with the dividends doesn't matter - just that they got paid to you.

of course that's only in a taxable account. in 401k or traditional ira, both dividends and cap gains will get taxed as normal income when they are withdrawn.

 

[Spungo]

dividends don't matter as much as appreciation though

So you're saying you would like to buy companies that are priced below their true value. That's a good start. At least you know what you are looking for. The next question is how to identify whether or not a company or a sector is undervalued. Which metrics should we be looking at?

 

[brianmanahan]

So you're saying you would like to buy companies that are priced below their true value. That's a good start. At least you know what you are looking for. The next question is how to identify whether or not a company or a sector is undervalued. Which metrics should we be looking at?

i don't buy individual companies, just the indexes. some total market, some small/value tilt (small companies + lower PE). US and international.

%75 stocks, %25 bonds. i rebalance to that ratio every year or so.