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Posted: 5/14/2022 1:00:47 AM EDT
[#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. |
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Posted: 5/14/2022 1:23:05 AM EDT
[#2]
Quote HistoryQuoted: I just increased my contribution. Buy low sell high. Pretty simple concept. Same here: my contribution limit just went to $61k. I’m holding what I have but new contributions are going mostly into cash for now. |
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Posted: 5/14/2022 1:24:25 AM EDT
[#3]
Quote HistoryQuoted: Technically you are doing the opposite of what you need but I’ve seen so many people do the same in your shoes. I say go for it, pull out at the bottom, wait for the market to get high to get back in. Just like the Wall Street Bets guys are (inadvertently) doing. |
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Posted: 5/14/2022 1:28:16 AM EDT
[#4]
Quote HistoryQuoted: so do most boomers. muh savings account  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. |
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Posted: 5/14/2022 2:04:47 AM EDT
[#5]
Quote HistoryQuoted: 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   edit: should have added a smiley to convey sarcasm  |
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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!"  Investing 101: Don''t Jump Off The Rollercoaster |
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Posted: 5/14/2022 2:35:40 AM EDT
[#7]
Quote HistoryQuoted: 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. |
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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 |
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Posted: 5/14/2022 2:53:25 AM EDT
[#9]
Quote HistoryQuoted: 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=UlghMhGoKcQThis 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.... |
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Posted: 5/14/2022 2:59:46 AM EDT
[#10]
Buy cheap, stack deep. With stocks and mutual funds.
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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.
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Posted: 5/14/2022 3:55:10 AM EDT
[#12]
Quote HistoryQuoted: 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 |
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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.
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Posted: 5/14/2022 5:18:12 AM EDT
[#14]
Quote HistoryQuoted: 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  Attached File |
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Posted: 5/14/2022 5:40:08 AM EDT
[#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. |
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Posted: 5/14/2022 5:40:23 AM EDT
[#16]
Quote HistoryQuoted: 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. 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. |
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Posted: 5/14/2022 5:42:47 AM EDT
[#17]
Quoted: 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. 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. |
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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? |
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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
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Posted: 5/14/2022 7:12:44 AM EDT
[#20]
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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.
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Posted: 5/14/2022 7:26:40 AM EDT
[#22]
Quote HistoryQuoted: Now's when you want to increase them. But you should have an emergency fund that would get you through most troubles. Got that covered too…….. one of the first things I did was open a checking and savings account and contribute to them…….. |
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Posted: 5/14/2022 7:26:45 AM EDT
[#23]
Quote HistoryQuoted: It would be pretty easy when its other people's money. Quote HistoryQuoted: Quoted: 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. |
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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. |
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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.
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Posted: 5/14/2022 1:22:56 PM EDT
[#26]
Quote HistoryQuoted: 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 |
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Posted: 5/14/2022 1:25:23 PM EDT
[#27]
Quote HistoryQuoted: @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. This is the way. |
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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..... |
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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.
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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. |
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Posted: 5/14/2022 1:53:47 PM EDT
[#31]
Quote HistoryQuoted: Stocks are not on sale. Look at P/E Quote HistoryQuoted: Quoted: 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? |
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Posted: 5/14/2022 2:02:10 PM EDT
[#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. |
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Posted: 5/14/2022 2:14:00 PM EDT
[#33]
Quote HistoryQuoted: QFT Quote HistoryQuoted: Quoted: 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. |
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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?
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Posted: 5/14/2022 2:25:15 PM EDT
[#35]
Quote HistoryQuoted: 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. 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!!!!! |
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Posted: 5/14/2022 2:39:34 PM EDT
[#36]
Quote HistoryQuoted: I upped my contributions. This. I doubled my contributions. |
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Posted: 5/14/2022 2:57:34 PM EDT
[#37]
Quote HistoryQuoted: @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. Quote HistoryQuoted: Quoted: Quoted: 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. |
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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. |
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Posted: 5/14/2022 3:05:42 PM EDT
[#39]
Buy high sell low?
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Posted: 5/14/2022 3:07:03 PM EDT
[#40]
Quote HistoryQuoted: 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. Whether we've bottomed or not OP is getting a good discount compared to the prices he was paying a few months ago. |
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Posted: 5/14/2022 3:15:43 PM EDT
[#41]
Quote HistoryQuoted: 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=UlghMhGoKcQRamsey has some good insight but is an unlistenable pompous ass. |
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Posted: 5/14/2022 3:33:32 PM EDT
[#42]
Dollar Cost Averaging
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Posted: 5/14/2022 3:48:41 PM EDT
[#43]
Quote HistoryQuoted: 10-4 dinosaur Quote HistoryQuoted: Quoted: 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. |
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Posted: 5/14/2022 3:50:07 PM EDT
[#44]
Quote HistoryQuoted: 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. Unless a recovery never comes. |
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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 |
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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.
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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 |
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Posted: 5/14/2022 4:05:20 PM EDT
[#48]
Quote HistoryQuoted: Yup I was at 16% and upped mine to 25% at the start of the year Quote HistoryQuoted: Quoted: I upped my contributions. I was at 16% and upped mine to 25% at the start of the year Yup I put in about 27% of my salary. |
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Posted: 5/14/2022 4:09:40 PM EDT
[#49]
Quote HistoryQuote HistoryQuoted: Quoted: 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. |
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Posted: 5/14/2022 4:10:59 PM EDT
[#50]
Quote HistoryQuoted: Fuzz-faced woker living in a cartoon world. lol ok. |
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