Should I bother starting my 401K at this time?

[RandomEvent]

I work for Bank of America, and I'm wondering if I should bother to start up my 401K with everything that's going on in our economy. I'm pretty stupid about this stuff, but logic is telling me it might be a good idea to start my 401K since I have less to lose than those who are losing a lot in their 401K's right now.

Any advice is appreciated.

[Munjibunga]

Now is a good time. Things are down right now. Buy low, sell high. You're in a lot better shape than those of us who are on the ride down.

[Beta]

Yes. You should start it as soon as possible (assuming you can realistically afford to contribute part of your salary to one).

You will probably have several options on how you want to allocate your funds, and you can choose something less volatile than stocks.

I agree with Munji; your plan will have time to build. People who have had plans for years and are close to retirement age probably won't see their plans recover much.

I don't use or endorse any of Motley Fool's products or services, but this collection of articles has some basic information that is presented in a less than stodgy format.

Here's one tip: any plan where your employer's own stock is included as part of a company match or whatever probably sucks. I used to work for a Fortune 500 company that filed for bankruptcy (I got out just before they filed), and the company's match was entirely in company stock.

To make the story as short as possible, I found that during one week the value of the company stock had dropped by 50% or more. My former employer had bought up some other companies that were failing because they had too much debt, and the company I worked for was also in the middle of a lawsuit filed against them by Calvin Klein (there's a hint). I guess investors decided that was enough reason to move their money elsewhere.

Needless to say, I was done. The portion of my plan that wasn't in my employer's stock was doing well, but I still ended up losing close to half of the total amount before I quit.

[Largedon]

Buy now, things may never be cheaper. Now if you were retiring right now you would be screwed, but its the perfect time to buy in.

[HeavyDuty]

Better now than six months ago!

[Geddyfleaharris]

I have had a couple of phone calls from people that I deal with telling me it is a great time to buy. Personally I plan to stay away from stocks for awhile. I am not sure how things work in the States but in Canada I can buy a Canada Savings Bond or a GIC (Guaranteed Investment Certificate). They are both low interest but the principle is 100% secure. I think there is still more pain to come. IMO. But what do I know; I play bass

[Hoover]

How old are you?


Trick question: it's never too late to start contributing to your 401(k). Just do it asap and -- this is the important part, imho -- then forget about it. Don't follow its progress, don't read the earnings reports, don't re-allocate your distribution annually or quarterly or monthly, just leave it there and ignore it.

Until you're 59 years old at least.

[baba]

Yes, get in.

[RandomEvent]

Thanks, guys. I'm going to start mine up this weekend.

[BigKahuna13]

yes. absolutely. contributing to a 401K should be a no brainer decision. the money invested is tax deferred and companies often match part of it. don't think twice. i'd also put as much in stocks as possible. that money is isn't going to be needed for years so you can assume much greater risk than if you needed it next year. over time stocks outperform everything.

[Bayou_Brawler]

yes get in. 401Ks are all about time. the earlier you start the better...

[Phalex]

Originally Posted by Beta

Here's one tip: any plan where your employer's own stock is included as part of a company match or whatever probably sucks. I used to work for a Fortune 500 company that filed for bankruptcy (I got out just before they filed), and the company's match was entirely in company stock.

A friend of mine got stuck with this same scenario. Turns out the company couldn't find anybody to buy the company for what they wanted, so they effectively "sold" the company to the employees for more than anybody else was willing to pay. Then they folded.

[Philbiker]

If your company matches you need to invest at least enough to enable their maximum matching.

[RandomEvent]

Good grief, I'll need some help with this. I just looked at starting it up, and I have no clue what any of the terminology is, or what's going on at all. I'll ask my manager tomorrow for some help.

[richnota]

many 401 k offerings have a stable market fund and offer "age-based" selections that are good choices in a volatile market.

Get in now. Markets always come back (remember all the rich people and corporate executives are in the market and they never lose).

[wazzel]

Put in atleast what it take to get the maximum company match. Usually you part will be around 5%. Depending on the company they can match anywhere from 25-100%+ of what you put in. For example. The company I work for matches 50% up to 6% of my gross pay. I put in 6% of my gross pay and they put in an amout equal to 3% of my gross pay.

Now is not a bad time to get in if you are not near retirement age. If you are near retirement age shove you money in a matress. Things are going to be bumpy for a while.

[GregC]

You're 24? Absolutely, I wish I'd started that early. Put in at least enough to get the match, go pretty heavy in equities (IMO) and don't look at your balance but once a year.

[enyapj18]

Yes start a 401k and put in as you can. But what do I know I'm just an accountant.

John

[thumpbass1]

While my 401K has taken a hit like everyone elses, I advise any young person to get into a good investment plan as fast as they can, and a 401K is a great vehicle to make sure you can afford that six pack of Malox when you get to be old and grey.

[RandomEvent]

My girlfriend is pretty financial savvy, so we're going to discuss financial things this Sunday. We're also going to set up my 401K.

I'd like to thank everyone for their advice on this subject.