DO NOT INVEST IN 401K

My 401k 1 year return is over 25%.

OP you are a retardz

Redpill me on 401K vs Roth IRA vs Regular IRA vs a regular investment account

I am almost done with my university degree and want to start investing early, which account type do you guys think is the best and why?

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lol my 401k is up over 10% this year. Reinvest your funds, retard

Whatever your company matches is the best account. Free money.

Who is it with user?

OP, Please understand finance.

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That makes sense. What if my employer can match different account types?

I guess my question is more about what circumstances would someone choose a 401k over an IRA or vice versa?

▶
I'm new to all this anons, what's the best way to invest? Or at least not get screwed like OP!

Does your employer match > If they do, only contribute to max the match.

Use Index Funds > This way you don't get screwed by Administrator Fee's which are horseshit.

Personally my shitty 401k doesn't allow me to have anything besides an S&P index fund so I put it all into that and then have a ROTH IRA which I use for an International index fund.

>allocate 401k into a money market
>complain about returns

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401k is a better long-term option. Money you invest is deposited from your paycheck without being taxed. You can't withdraw prior to the funds maturing without a steep penalty, however.

IRA's give you the ability to withdraw without a penalty after 5 years. If you want to save for a home downpayment, an IRA is a good bet.

Considering that we're overdue for another recession, would it make sense to hold off on putting money in index funds until the recession comes and passes?

How dumb are you?

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(((Roth))) ira

Nigger what? Like every single major investment company has 401k plans for any size of business and multiple investment options. Who the fuck is running your plan?

It really depends on your investment horizon. If you plan on retiring in less than five years then absolutely put it into something safe. But if you're not retiring for 30 years why the fuck you care about a recession?

No, invest now. The sooner you invest the better off you will be. It doesn't matter if the market crashes in a week. Are you retiring in a week? The next 3-5 years? Plan accordingly.

I think most conservative folks will eventually shift more and more of their savings from the market to something like US bonds and shit that are more stable. That way, if the market does go to shit right when you are about to retire, you can cash in your bonds first til the market recovers.

Or just buy a(1) bitcoin and be a multimillionaire in a decade.

Every user should invest there own money Use whatever legal means you can to avoid paying taxes.

>Trad/pretax vs Roth
Do you want to pay taxes on the money when it goes in the account (Roth), or when it comes out?

>401k vs IRA
401k is employer sponsored. Slightly better legal protections, but usually worse investment choices. Can't open one without employer offering. IRA is entirely self-sponsored and can be invested in whatever you want. 401k lets you put away $18500/yr, while IRAs are limited to $5500.

Both account types are merely containers. Cash goes in and sits as cash. You need to tell the investment company to buy stuff with the cash. S&P 500 is the usual choice, but target date funds are gaining in popularity.

Gains are always tax-free, so the dollar value gains faster than versus a regular investment account. No worries on keeping track of it for taxes either. Tradeoff is that you aren't allowed to take any of the money before retirement age.

I work in finance myself, so they like to have these shit plans that have administration fee's. A cool 5~8% off the top right away. A total fucking scam.

>this is a reminder to not invest in 401k. it is not keeping up with inflatio n and the economy will crash before you reach 70+
You're fucking retarded. You've had it for 2 years and it's exponential growth

Everyone look at OP, he's going to be poor forever

HOLY FUCK! YOUR 401K IS IN A MONEY MARKET!

YOU'RE A FUCKING RETARD, OP. YOU'VE MISSED OUT ON 40+% OF GROWTH

HAHAHAHAHHAHAHAHAHHAHAHAHAHHAHHAHA

You should probably kill yourself and let your beneficiaries have your money. They'll make better choices with it

I also work for one of those "finance" companies and it fucking baffles me how people don't shop around for plans. Especially if you're just investing in index funds. Why the shit should you pay hedge fund fees for a non-actively managed fund?

They're crooks that feed on ignorance.

>A cool 5~8% off the top right away. A total fucking scam

>Not doing your retirement directly through Vanguard

Welp, looks like we've got another genius here!

With such sentiment stock crush is inbound.

Because people are retarded. I have no idea why they don't just sign up for Vanguard themselves. It literally takes a 7th grade reading level and understanding of finance to set one up.

Why ignore the employer match? It's free money. Especially when the 401k offers an index fund with comparable fee's to Vanguard.

>putting your shekels into any type of "savings" account
aaaand it's gone

>Why ignore the employer match?
Well, for one, employer should have their plans administered through Vanguard as well imo. All you'd have to do as an employer is send Vanguard a check and the employees can monkey around picking the funds themselves. Hell, even as a plan administrator, they make it simple as fuck to run plans.

A 401k is simply a tax-deferred basket to invest in. It can hold any kind of investment. And there's no tax drag on compounding.
How old are you?

401ks are for long-term investments. I, for example, have my 401k (and other investments) in things that have been averaging a minimum of 10% for the past 30+ years. Even a year goes 0% or even negative, I'm going to make a shitload of money down the road. You just have to be patient.

>He ignores free money from his employer because muh vanguard.

Get the fuck out of here, Vanguard employee. Your service is good, but you are a total moron and idiot by advising others to reject their employer match.

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Of course it is, Ivan. Always worry when you have random guys with zero knowledge of the markets making boasts about how much money they're making. It's a potential indicator that things are going to go the other way.

>17k in savings account

mama mia Jow Forums really is a poorfag board

>after 5 years
Is that 5 years after depositing a certain amount of money, or could I withdraw however much I want after 5 years of the account being open?

I figured it would be best to catch the upswing when the recession dies down. Pic related, SPY lost half its value in the 2008 recession. Would it not be more prudent to buy in early 2009 than early 2008?

And regarding US bonds, can they even keep up with inflation? I thought US bonds hardly give you more than 2.5~3% per year

>Do you want to pay taxes on the money when it goes in the account (Roth), or when it comes out?
Both of these options seem equivalent to me, is there a catch?

Could I withdraw earlier from an IRA than a 401k? If not, the $5500 limit seems pretty damn low

Also, are Vanguard index funds worth buying over S&P?

That's what I'm doing right now, since I'm still in college and don't have a lot of money. Is there anything bad about it other than slowly losing value because of inflation?

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Do the Roth option for your 401K so your taxes come out up front as opposed to when you withdraw it after retiring. At minimum do what your company matches as it's free money - you can do up 19% and still get the tax advantage. I do 15%. Start it young - 401k is the ultimate compounding tool.

Most major companies will fire you for advertising them online without permission from your PR department.

Most likely he's not an employee of them and is a person that just uses them for their 401k.

youtu.be/N7YfhAqWu_0

A 50% loss on $100,000 is far better than blowing all of you extra cash on stupid shit...

My 401k averages 20% per year

Hit up Zacks.com
Its like Facebook (for jew stuff)

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so this is the power of the trump economy

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>What does the word Vested mean.

If you can predict the market then yes it makes sense to put your 401k into something "safe" and then buy in heavy when the crash occurs.

It's a viable strategy.

>mfw self employed kraut
>mfw my friends all work at companies
>mfw they ask me how i handle pension
>mfw i spend all the money i make and putting nothing aside
>mfw they buy houses at the peak of the real estate bubble
>mfw they put money into pension savings funds
>mfw they don't know about the economic collapse, civil war and global currency reset under global communist UN-despotism

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Invest now.

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>DO NOT INVEST IN 401K
OP is an inexperienced investor.. Read this book - It's the red pill for money.

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dave fucked up

Are you retarded? A 401K is an account linked to a set of assets you manage yourself. Stop picking shit assets. Protip, dump it all in an S&P500 index fund if you don't know what to buy.

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my 401k is up 11% yoy

lmfao all of that is worthless when the system crashes. should have invested in gold, retards

> cumulative since before trump was elected, then rode that stock market tidal wave afterward.

Yep. That happens non-stop.

>babbies first investment
At the very least always put in what your employer will match. Why turn down free money?

Fuck off Dave. Boomers aren't allowed here.

>Both of these options seem equivalent to me, is there a catch?
Quick answer is that Roth dollars are a better idea when you're in a low income bracket (ie, poor), and trad dollars are better when you're pulling mad dosh (ie, rich). When you retire, your income bracket presumably drops to zero (you're not working anymore), and any trad dollars will fill that spot.

>Could I withdraw earlier from an IRA than a 401k?
That's a function of Roth vs trad/pretax, not the account type. Roth lets you pull out principal but not gains. Trad doesn't allow any.

>If not, the $5500 limit seems pretty damn low
Yes.

>Also, are Vanguard index funds worth buying over S&P?
S&P500 is a product of a particular investment company. The Vanguard large cap index fund is a clone of that. They both do the same thing. Pick what ever is most convenient.

If you start a Roth in your 20s you are almost guaranteed to be a millionaire. Even if you are only investing 20 bucks a week, the compounding returns will do wonders for you. Seriously do it if you care about financial health and being ahead of your garden variety normie.

Jesus I get nearly $14 a month just off my bank savings interest with the same amount

You can invest in a traditional and a Roth at the same time and gradually roll funds from the traditional into the Roth. You take a tax hit, but it lets you get around the $5500/yr contribution cap.

>vested amount
>"da total savings!!!"
>(you)

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401k is through an employer. IRA is personal. Always choose Roth. Your gains are tax free with Roth. If your employer doesn't offer Roth. Take their match % and do an IRA with the rest of your $. $1800 a month compounded over 15 years at 12% average is over 5mil. If you can't beat em, join em.

Sure, but I'm writing this for someone just getting started. More advanced maneuvering is best saved for

What's the benefit of taking out taxes now rather than later? It seems to me that I'd get taxed the same amount either way

Save as in government bonds?

That's a pretty interesting graph. How much are they depositing each month and getting in interest in those calculations?

That makes sense, thanks for the explanation. So, for example, if I open a Roth 401k and take my employer's match, I could withdraw both my principal contributions and my employer's principal contributions without incurring any penalty?

I've heard that 12% figure from Dave Ramsey before, but is it reasonable to make 12% on average over a long period of time? I heard from other places that I'd be lucky to get 7% in the long run

My employer only matches our 401k in company stock, and the company stock is down the toilet.

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Do you get an employer match retard?

This.

Including the 3 years before Trump took over, cumulative returns are 9.9%

>So, for example, if I open a Roth 401k and take my employer's match, I could withdraw both my principal contributions and my employer's principal contributions without incurring any penalty?
Mostly correct. The one rule you don't know yet is that all employer matches must be made pretax.

Unfortunately this creates a giant mess when you take a distribution because all money in the account must be averaged together. Your distribution will take proportional pretax and Roth dollars. You'll be on the hook for taxes plus penalties for the pretax bit. (Yes, there are 401k features and options that can get around this, but it is up to the employer to write it into their contract. They usually don't.)

Better option is to wait until you leave service with the company. You can split your mixed 401k into separate Trad and Roth IRAs, then pull Roth principal.

>doesn't come close to keeping up with inflation, not sure what part you don't understand

What part of reducing your current tax by delaying income don't you understand?

Probably all of it.

Was a great read and lots of great advice. Anyone bashing this book a retard or has not read it.

index funds on vanguard.com... seriously do NOT get a financial advisor and do NOT invest in an actively traded account. you will get fees out the asshole.

lots of people think "a financial advisor only takes 1% a year"
yeah, but compound interest means that over 20 years that could be over $200k for him basically putting your funds in his own index fund

>tfw 32
>tfw lived with my grandma all my life
>tfw involved in cannabis biz since late teens and worked in IT since early twenties
>tfw my monthly cost of living has been $550
>tfw my annual income for more than a decade has not been lower than six figures
>tfw also living with my two sisters and cousin (who all have been ranking in serious cheddar too)
It pays to not leave the nest ;D

>Traditional 401k
>No employer matching
>Contributing >50% of my paycheck
>Contributions split between Vanguard S&P 500 Index Fund and ClearBridge Large Cap Growth Fund
>22yo
>6 figures salary
Can any kind anons rate my 401k setup? I chose trad over Roth because my understanding is pretax money is more money to invest over the long run than after-tax dollars.

> Ira tax free after 5 years

This is absolutely incorrect. IRA and 401k tax rules are for the most part the same.

The main difference between and IRA and a 401k is the 401k is provided by an employer, and usually the employer contributes to it. All these threads trying to decide which is better are hopelessly misinformed. In most cases the IRA is only worth considering if your employer either doesn't offer a 401, doesn't match, and/or is a small employer and gets a shitty deal on the 401k( high fees)

As for op. He is clearly a retard.

> After 5 years
He is completely wrong dont listen to him.

I think he is confused about Roth EARNINGS which are tax free after 59.5 years of age AND 5 years seasoned.

This is correct.

No match means you're free to front-load early in the year. Looks like you're doing that with >50% on a 6-figure salary. Nice job. Do you get a match after 1 year, or nah? If yeah, then watch yourself next year so you don't cheat yourself out of most of a year's matches.

S&P 500, with another large cap growth fund? Is the ClearBridge fund an international large cap? Seems like a lot of exposure to only large caps. What were your thoughts against adding bonds, small/mid caps, real estate, etc.?

Pretax is usually the right choice for 6-figure earners. Don't pick Roth at this point unless you're gambling on something outlandish like non-means-tested benefits for seniors in poverty tax brackets.

Unlike most in this thread this guy isn't talking out his ass

That sounds absolutely miserable unless you’re fucking both your sisters, and it’s still pretty depressing

You all need to take the biggest red-pill: Mr. Money Mustache

I don't know anything about finance. Where is a good place to learn about IRA's and 401k's and all the other stuff an user should know? Yeah I'm retarded, but appearently not as retarded as the OP from reading the replies.

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Waite till you pull it out and 60% gets flushed down the drain

I forget exactly how much, but my rate of return has been something ridiculous like 15-20% lately. IDK what you're invested in OP, but it surely isn't the US stock market.

Although I fully expect the market to correct in the next 2-3 years and a good chunk of that to evaporate. But I'm not anywhere close to retirement, so not like it matters. But sure makes it fun to look at statements currently.

Either Dave Ramsey if you are a complete dumbass. Or Mr. Money Mustache if you want to be rich.

FUCK NO

It is not free money. It's a scam to get control of your retirement.

Do not use a 401K or 403B. You will have no control over the your money and no ability to use it before you're 65. Inflation will destroy you your earnings.

Don't fall for the tax deferred meme either. ALWAYS PAY TAXES UP FRONT. Historically taxes always go up. Do not do tax deferred.

The United States might not event be a country in 40 years. Government backed retirement programs are only good for so long as the government exists.

>Do you get a match after 1 year, or nah?
No match at all with this company, unfortunately.
>Is the ClearBridge fund an international large cap?
It's domestic.
>What were your thoughts against adding bonds, small/mid caps, real estate, etc.?
I want mad gains by investing early, so I focused on more aggressive options. I'm not knowledgeable about bonds or real estate, so I imagine it would be counterproductive if I threw money at stuff I don't know anything about. I chose the S&P 500 for diversification reasons, and the growth fund to figuratively put most of my eggs in a few baskets.

Thank you user! I'm a wage cuck who is about to work for the post office.

You're going to lose all that money when the stock market bubble pops. Might want to head over to Jow Forums. It's not going to keep climbing vertically forever.

only newfags dont know this shit
we will never get to retire, we will never get pensions, we will never get 401k, they will take away social security and then they will increase your taxes so single mothers can live in McMansions

I visit Jow Forums every once in a while. Why the fuck is a Jow Forums thread giving better and more open, honest discussion on money than the board dedicated to it?
Also, who /contributes20%Of$78kSalary/ here?
Who /LivingBelowYourMeans/ here?

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Wow finally someone gets it

These idiots really think with all of this political instability and talk of communism that they are going to get to enjoy their 401k in 40-50 years. Retirement age isn't going to be 60 anyways, it's going to get pushed back.

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No kidding lol, I said as much.

Doesn't really matter, I'm only 30 and short of some serious SHTF stuff, I'm pretty sure the market will be a lot higher than it was when I started putting money in. And it's all in a target date fund so shouldn't have to worry about short term fluctuations in the market wiping it out right before I reach retirement age (assuming I even live that long), most should be out of the stock market and in lower risk investments by then.

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