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Link Posted: 5/14/2022 1:00:47 AM EDT
[Last Edit: RacerX330] [#1]
It is really good that you're shoveling as much as you can afford to into your 401k, however, if you believe there could be a chance of unemployment in the next 6 months, then it would not be a bad idea to shovel into an emergency fund, so that you have 6 months of expenses in cash.

Keeping this cash in the 401k won't be helpful, as you'll pay a penalty on top of your marginal tax rate to get it out if you have to make an early distribution.  The market will do whatever it does, prices will rise and prices will fall, and none of that will matter unless you can survive a potential period of unemployment without significant tax penalty.  Taking a hardship distribution from 401ks and IRAs is a huge pain in the ass, 1 you have to pay it back, 2 you can only take out what would satisfy the immediate heavy financial need, etc...

Funding an emergency fund is always 1st priority, once that is sufficient, funding retirement accounts comes next.  

Whether the market is on sale or at par or at a premium is completely irrelevant.  Pausing to fund emergency fund is prudent, if you're young, you'll have plenty of time to make up the contributions later.

Link Posted: 5/14/2022 1:23:05 AM EDT
[#2]
Link Posted: 5/14/2022 1:24:25 AM EDT
[#3]
Link Posted: 5/14/2022 1:28:16 AM EDT
[#4]
Link Posted: 5/14/2022 2:04:47 AM EDT
[Last Edit: Keekleberrys] [#5]
Link Posted: 5/14/2022 2:32:12 AM EDT
[#6]
Keep going!

"The market is like a rollercoaster.  The only people who get hurt are those who jump off!"

Link Posted: 5/14/2022 2:35:40 AM EDT
[#7]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Keekleberrys:
if you have faith that the economy will recover, right now is the time period your money will effect you the most in the future.

opportunities like this dont come along very often.

boomers are institutionalized and think their "financial advisors" create money out of thin air. but really they just have a steadier hand than other emotional people.
View Quote


It would be pretty easy when its other people's money.
Link Posted: 5/14/2022 2:43:51 AM EDT
[#8]
I guess you would have to run the numbers but if you are putting 20% in and not hitting your 401k cap for the year it's possible you are in a good income bracket where it would make more sense to just contribute the bare minimum to the 401k for employer match, then max out a Roth IRA (and if you have an stay at home wife you can max hers out too),  then if there is any left go back to putting that in the 401k.

Roth's have a few advantages:
- You use post tax money from your paycheck, so you will owe no taxes on whatever you earn
- Principal put into Roth can be taken out at any time with no penalties
- There are a few useful scenarios, like paying for school (yours or a kids), where you can even withdraw earnings penalty and tax free
- Also you tend to have a lot more flexibility in investment options because you can use any investment firm like Fidelity and directly buy stocks and ETf's

Link Posted: 5/14/2022 2:53:25 AM EDT
[#9]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By FaygoJoe:
Keep going!

"The market is like a rollercoaster.  The only people who get hurt are those who jump off!"

https://www.youtube.com/watch?v=UlghMhGoKcQ
View Quote


This is 100% correct.....

Like my financial advisor told me 10 years ago....you are in this for the long haul....now, the long haul now vs what the truck looked like say 30-40 years ago is different....

I am 63 and retired from the largest oil company in the world....and what I can say is this....I do wish I would have sat down with a financial advisor when I was 30, I MAY have made some changes, but would it have made a difference from where my wife and I are sitting today?  Cant say, but remember:  The Long Haul is the plan

The objective is to get to a point where you have no bills and can pay cash....
Link Posted: 5/14/2022 2:59:46 AM EDT
[#10]
Buy cheap, stack deep. With stocks and mutual funds.
Link Posted: 5/14/2022 3:01:17 AM EDT
[#11]
Don't adjust 401k. Adjust lifestyle to save / afford necessities. Look back on this in 20-30 years and be happy you worked hard and saved.
Link Posted: 5/14/2022 3:55:10 AM EDT
[#12]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By RacerX330:
It is really good that you're shoveling as much as you can afford to into your 401k, however, if you believe there could be a chance of unemployment in the next 6 months, then it would not be a bad idea to shovel into an emergency fund, so that you have 6 months of expenses in cash.

Keeping this cash in the 401k won't be helpful, as you'll pay a penalty on top of your marginal tax rate to get it out if you have to make an early distribution.  The market will do whatever it does, prices will rise and prices will fall, and none of that will matter unless you can survive a potential period of unemployment without significant tax penalty.  Taking a hardship distribution from 401ks and IRAs is a huge pain in the ass, 1 you have to pay it back, 2 you can only take out what would satisfy the immediate heavy financial need, etc...

Funding an emergency fund is always 1st priority, once that is sufficient, funding retirement accounts comes next.  

Whether the market is on sale or at par or at a premium is completely irrelevant.  Pausing to fund emergency fund is prudent, if you're young, you'll have plenty of time to make up the contributions later.

View Quote

QFT
Link Posted: 5/14/2022 4:59:27 AM EDT
[#13]
Quit investing and just buy a $20 scratch off ticket every payday.
You're bound to hit it big.
Link Posted: 5/14/2022 5:18:12 AM EDT
[#14]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By SageEBR:
I guess you would have to run the numbers but if you are putting 20% in and not hitting your 401k cap for the year it's possible you are in a good income bracket where it would make more sense to just contribute the bare minimum to the 401k for employer match, then max out a Roth IRA (and if you have an stay at home wife you can max hers out too),  then if there is any left go back to putting that in the 401k.

Roth's have a few advantages:
- You use post tax money from your paycheck, so you will owe no taxes on whatever you earn
- Principal put into Roth can be taken out at any time with no penalties
- There are a few useful scenarios, like paying for school (yours or a kids), where you can even withdraw earnings penalty and tax free
- Also you tend to have a lot more flexibility in investment options because you can use any investment firm like Fidelity and directly buy stocks and ETf's

View Quote

Attachment Attached File
Link Posted: 5/14/2022 5:40:08 AM EDT
[Last Edit: SARS] [#15]
If anything times where prices are lower than they had been are the times to ramp up contributions, not lower them.

You could also consider reducing your 401k contributions and putting the amount of reduction into a Roth IRA. The contributions to the Roth IRA (but not the earnings) would be more accessible in the event of an emergency. Definitely never reduce your 401k contributions below the amount required to get the full max though.

I agree with the advice to start looking for a better job at a company that isn't floundering now.

ETA: oops, beat like a rented mule. Should've read all of the page 2 replies before posting.
Link Posted: 5/14/2022 5:40:23 AM EDT
[#16]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By JamiesGotAGun:
Don't make the mistake I did.  I stopped investing from 2008 to 2014.

There are ebbs and flows.  Just keep paying yourself and ignore it.  You'll end up rich.


View Quote

A bunch of people I worked with made the same mistake.
At the time I was investing in the 401k to the max.
Co-workers stopped or reduced their contributions because of fear.
I thought, the longer the market stays down the better I will be when it goes back up.
I feel I made out like a bandit at least until recently :-)
Retired so no more adding to investments.
Link Posted: 5/14/2022 5:42:47 AM EDT
[#17]
Originally Posted By nsl:
My company only gives a 4% match, but I'm putting in 20%.
Right now it is not hurting me, but we've just had a lay off, there are rummers of pay cuts, etc.
I don't make much as far as Arfcom standards (a little over $50K a year), but I am not starving.
Anyway, seeing as how I'm putting in about 2 car payments or 1 house payment a month, it gets frustrating seeing it going down.
View Quote


Now that things are down you are buying more, when things come back you will be better off.
This is not hard to understand, so many people just panic.
Link Posted: 5/14/2022 6:41:40 AM EDT
[#18]
You already did something smarter than 95% of Americans, saving 20% of your income.  Don't ruin it by thinking like a dumbass.

Stocks not being tangible does some wierd psychological voodoo to people's minds.  If you were committed to buying ammo every week for the rest of your carreer because you knew all you wanted to do was shoot guns in retirement and you knew ammo prices will always go up over time, why would you stop buying when the price is low and be excited when the price is high?
Link Posted: 5/14/2022 6:49:50 AM EDT
[#19]
My company matches at 6%, and my 401k goes up a percent every year when we get a raise…….. just gonna leave it alone
Link Posted: 5/14/2022 7:12:44 AM EDT
[#20]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Wolverine1776:
Rummers?

/media/mediaFiles/sharedAlbum/temp-95.gif
View Quote



Link Posted: 5/14/2022 7:22:44 AM EDT
[#21]
Now's when you want to increase them. But you should have an emergency fund that would get you through most troubles.
Link Posted: 5/14/2022 7:26:40 AM EDT
[#22]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By iwouldntknow:
Now's when you want to increase them. But you should have an emergency fund that would get you through most troubles.
View Quote

Got that covered too…….. one of the first things I did was open a checking and savings account and contribute to them……..
Link Posted: 5/14/2022 7:26:45 AM EDT
[#23]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By wyomingnick:


It would be pretty easy when its other people's money.
View Quote View All Quotes
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Discussion ForumsJump to Quoted PostQuote History
Originally Posted By wyomingnick:
Originally Posted By Keekleberrys:
if you have faith that the economy will recover, right now is the time period your money will effect you the most in the future.

opportunities like this dont come along very often.

boomers are institutionalized and think their "financial advisors" create money out of thin air. but really they just have a steadier hand than other emotional people.


It would be pretty easy when its other people's money.


@wyomingnick

I tried getting a financial advisor.  He left Smith-Barney for another private firm.  Then left them to go out on his own.  Then disappeared.  This all happened over a period of a year and I ended up not paying anything and still don’t use an advisor.

They take 1.5% of your total assets under management whether the stock market is up or is down.  It’s a can’t-lose situation for them.

I have no problem riding the market up or down on my own with very low cost funds.
Link Posted: 5/14/2022 1:09:15 PM EDT
[#24]
A good friend of mine is a financial advisor.

A significant portion of the value he provides is being an emotional support animal to keep people with lots of money from panicking during a dip.
Link Posted: 5/14/2022 1:16:21 PM EDT
[#25]
Time to dip out of stocks and try your hand at real estate soon,  prices are starting to fall,   Places like SEA and SFO area are about to cheap.
Link Posted: 5/14/2022 1:22:56 PM EDT
[#26]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By HDGator:
Now is when you're buying stocks that are on sale. If you can afford it, keep up the pace. You'll appreciate it in the future.
Look up dollar cost averaging. By regularly buying with a consistent amount you're automatically buying more stock at a cheaper price and less at an expensive price.
It will definitely help in the long run.

The advantage to putting as much into the 401k is that you'll accrue capital gains tax free on pre-tax money. It's a win-win for decades of saving.
View Quote


Stocks are not on sale.  Look at P/E
Link Posted: 5/14/2022 1:25:23 PM EDT
[#27]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By C-4:


@wyomingnick

I tried getting a financial advisor.  He left Smith-Barney for another private firm.  Then left them to go out on his own.  Then disappeared.  This all happened over a period of a year and I ended up not paying anything and still don't use an advisor.

They take 1.5% of your total assets under management whether the stock market is up or is down.  It's a can't-lose situation for them.

I have no problem riding the market up or down on my own with very low cost funds.
View Quote

This is the way.
Link Posted: 5/14/2022 1:34:10 PM EDT
[#28]
#1 - Reduces your tax liability
#2 - You can park the 401k into a money market account or no risk investment until you're ready to jump back in.
#3 - Max it out every year.....
Link Posted: 5/14/2022 1:40:25 PM EDT
[#29]
You’re buying it on sale. Now is the time to buy. Don’t be an idiot and listen to idiots.
Link Posted: 5/14/2022 1:40:44 PM EDT
[#30]
You know you can keep contributing and choose how those contribution are allocated if you want to make short/med term plays.

If you think the market is going down (I think it has another 5-10% to go down), then put your stuff in fixed income, then switch that over when the market is down.

If you think it is bargain time, then put it in growth funds.
Link Posted: 5/14/2022 1:53:47 PM EDT
[#31]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By psychotr:


Stocks are not on sale.  Look at P/E
View Quote View All Quotes
View All Quotes
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By psychotr:
Originally Posted By HDGator:
Now is when you're buying stocks that are on sale. If you can afford it, keep up the pace. You'll appreciate it in the future.
Look up dollar cost averaging. By regularly buying with a consistent amount you're automatically buying more stock at a cheaper price and less at an expensive price.
It will definitely help in the long run.

The advantage to putting as much into the 401k is that you'll accrue capital gains tax free on pre-tax money. It's a win-win for decades of saving.


Stocks are not on sale.  Look at P/E


P/E doesn't account for future growth.  I can buy any object that is overvalued today that I think it will be worth more in the future.  That's kind of how high P/E works.  You are correct that you're not technically getting a deal in today's stocks in this exact moment, but what will your overpayment be worth in 5 years?
Link Posted: 5/14/2022 2:02:10 PM EDT
[Last Edit: NoStockBikes] [#32]
I’d have to lose damn near 50% to hit a break even point with the tax savings (Fed + state + SS)
Your tax bracket may vary, but you’ve got a huge head start built in to offset any (unrealized until retirement cash out losses.
Link Posted: 5/14/2022 2:14:00 PM EDT
[#33]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Terrato:

QFT
View Quote View All Quotes
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Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Terrato:
Originally Posted By RacerX330:
It is really good that you're shoveling as much as you can afford to into your 401k, however, if you believe there could be a chance of unemployment in the next 6 months, then it would not be a bad idea to shovel into an emergency fund, so that you have 6 months of expenses in cash.

Keeping this cash in the 401k won't be helpful, as you'll pay a penalty on top of your marginal tax rate to get it out if you have to make an early distribution.  The market will do whatever it does, prices will rise and prices will fall, and none of that will matter unless you can survive a potential period of unemployment without significant tax penalty.  Taking a hardship distribution from 401ks and IRAs is a huge pain in the ass, 1 you have to pay it back, 2 you can only take out what would satisfy the immediate heavy financial need, etc...

Funding an emergency fund is always 1st priority, once that is sufficient, funding retirement accounts comes next.  

Whether the market is on sale or at par or at a premium is completely irrelevant.  Pausing to fund emergency fund is prudent, if you're young, you'll have plenty of time to make up the contributions later.


QFT


Not trolling.  Always have emergency funds available.  First principles.
Now, if there is reasonable confidence that one would not be facing potential unemployment, and emergency fund is well funded, then by all means continue DCA into the market at the aforementioned pace, or maybe a little more if it's feasible.
Link Posted: 5/14/2022 2:18:07 PM EDT
[#34]
If you had 10,000 rounds of ammunition that (cost averaged) you paid $0.25/round for, would you sell it all (with nothing left to shoot) if it reached $0.30/round for a  $500 profit? If the value dropped to $0.20/round, would you be pissed-off that your ammo-fort just “lost” $500 in value? OR would you buy more ammunition at the lower price?
Link Posted: 5/14/2022 2:25:15 PM EDT
[#35]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Caboose314:
Hindsight from being laid off in the past: The time to find a better job is before that ship sinks.  The guys that started looking at the first signs of smoke got the better available jobs before the rest of us were dumped on the market.

Leave the 401k alone.

View Quote


Probably not the worst advice on here...  In a world where nobody is getting applicants for good-paying jobs, why risk staying at a place that is laying off????  Stop being comfortable and find a new job.  My buddy owns a company and is hurting for help.  He is offering (last time I talked to him) $45K a year to start with ZERO experience.  I would have sucked a dick for a job like that years ago, and he isn't getting any response to his adds.


Another option, get a job with a pension.  So you don't have to rely so heavily on your 401.  It's like gravy on top, plus GD will hate you.  DOUBLE WIN!!!!!
Link Posted: 5/14/2022 2:39:34 PM EDT
[#36]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By motown_steve:
I upped my contributions.
View Quote

This. I doubled my contributions.
Link Posted: 5/14/2022 2:57:34 PM EDT
[#37]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By C-4:


@wyomingnick

I tried getting a financial advisor.  He left Smith-Barney for another private firm.  Then left them to go out on his own.  Then disappeared.  This all happened over a period of a year and I ended up not paying anything and still don’t use an advisor.

They take 1.5% of your total assets under management whether the stock market is up or is down.  It’s a can’t-lose situation for them.

I have no problem riding the market up or down on my own with very low cost funds.
View Quote View All Quotes
View All Quotes
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By C-4:
Originally Posted By wyomingnick:
Originally Posted By Keekleberrys:
if you have faith that the economy will recover, right now is the time period your money will effect you the most in the future.

opportunities like this dont come along very often.

boomers are institutionalized and think their "financial advisors" create money out of thin air. but really they just have a steadier hand than other emotional people.


It would be pretty easy when its other people's money.


@wyomingnick

I tried getting a financial advisor.  He left Smith-Barney for another private firm.  Then left them to go out on his own.  Then disappeared.  This all happened over a period of a year and I ended up not paying anything and still don’t use an advisor.

They take 1.5% of your total assets under management whether the stock market is up or is down.  It’s a can’t-lose situation for them.

I have no problem riding the market up or down on my own with very low cost funds.


Yup, I would never pay for an advisor. I don't see the point or need.
Link Posted: 5/14/2022 3:04:19 PM EDT
[#38]
You should be increasing your contribution, not decreasing it.

You should be bending over backwards in times like this to hit the statutory max of $20,500 even if means serious belt tightening.

Opportunities like this sometimes only come up once per decade.
Link Posted: 5/14/2022 3:05:42 PM EDT
[#39]
Buy high sell low?
Link Posted: 5/14/2022 3:07:03 PM EDT
[#40]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By _200mph:
No one knows, but my guess is we’ve bottomed. My hope rather.
I would ignore it at this point and check it again in 3 years.

View Quote


Whether we've bottomed or not OP is getting a good discount compared to the prices he was paying a few months ago.
Link Posted: 5/14/2022 3:15:43 PM EDT
[#41]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By FaygoJoe:
Keep going!

"The market is like a rollercoaster.  The only people who get hurt are those who jump off!"

https://www.youtube.com/watch?v=UlghMhGoKcQ
View Quote


Ramsey has some good insight but is an unlistenable pompous ass.


Link Posted: 5/14/2022 3:33:32 PM EDT
[#42]
Dollar Cost Averaging
Link Posted: 5/14/2022 3:48:41 PM EDT
[#43]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Keekleberrys:


10-4 dinosaur



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Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Keekleberrys:
Originally Posted By KILLERB6:


And yet, it’s the younger investors who are getting their heads handed to them a la Wall Street Bets, then complaining Wall Street is rigged and then complain more because the SEC is considering regulations to protect them from themselves…which they, of course, can’t understand.

Oh well, more “loss porn” to post on Reddit.


10-4 dinosaur





Fuzz-faced woker living in a cartoon world.
Link Posted: 5/14/2022 3:50:07 PM EDT
[#44]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By HDGator:
Now is when you're buying stocks that are on sale. If you can afford it, keep up the pace. You'll appreciate it in the future.
Look up dollar cost averaging. By regularly buying with a consistent amount you're automatically buying more stock at a cheaper price and less at an expensive price.
It will definitely help in the long run.

The advantage to putting as much into the 401k is that you'll accrue capital gains tax free on pre-tax money. It's a win-win for decades of saving.
View Quote


Unless a recovery never comes.
Link Posted: 5/14/2022 3:53:12 PM EDT
[#45]
The matching and the tax avoidance is worth it even if the market goes down further.

Trying to successfully time these things is for liars and fools
Link Posted: 5/14/2022 3:54:30 PM EDT
[#46]
Yeah, you should definitely only be buying stonks when they are expensive. Buying low and selling high is an awful idea.
Link Posted: 5/14/2022 3:55:18 PM EDT
[#47]
Now is not the time to be cutting it. You’re getting more shares per dollar.

As is the case most of the time with a tax advantaged account, put as much as you can in it until you’re nearing retirement. Don’t watch it and don’t get cute. Just contribute.

Stay your course. Your plan is sound
Link Posted: 5/14/2022 4:05:20 PM EDT
[#48]
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By PA-Minuteman:
Yup

I was at 16% and upped mine to 25% at the start of the year
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Discussion ForumsJump to Quoted PostQuote History
Originally Posted By PA-Minuteman:
Originally Posted By motown_steve:
I upped my contributions.
Yup

I was at 16% and upped mine to 25% at the start of the year



Yup I put in about 27% of my salary.
Link Posted: 5/14/2022 4:09:40 PM EDT
[#49]
Discussion ForumsJump to Quoted PostQuote History
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Discussion ForumsJump to Quoted PostQuote History
Originally Posted By terryj:
Originally Posted By SageEBR:
I guess you would have to run the numbers but if you are putting 20% in and not hitting your 401k cap for the year it's possible you are in a good income bracket where it would make more sense to just contribute the bare minimum to the 401k for employer match, then max out a Roth IRA (and if you have an stay at home wife you can max hers out too),  then if there is any left go back to putting that in the 401k.

Roth's have a few advantages:
- You use post tax money from your paycheck, so you will owe no taxes on whatever you earn
- Principal put into Roth can be taken out at any time with no penalties
- There are a few useful scenarios, like paying for school (yours or a kids), where you can even withdraw earnings penalty and tax free
- Also you tend to have a lot more flexibility in investment options because you can use any investment firm like Fidelity and directly buy stocks and ETf's


/media/mediaFiles/sharedAlbum/hes_right_you_know-328.jpg



There's Roth 401Ks now.
Link Posted: 5/14/2022 4:10:59 PM EDT
[Last Edit: Keekleberrys] [#50]
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