Stocks/stocks/mutual Funds Homepage

Question: Can any stocks/mutual funds compare to this retirement plan?

(Posted by: Adam on 2009-10-19 13:10:16)

I am a college professor and my wife works for a large company. My employer matches my 5 % salary retirement 401K contributions with 7.5 % to a total of 12.5 % salary per year invested with TIAA- Cref. My wife's company matches her contributions 1:1 up to a maximum of 15 %(matched to 30 %) to a 401K of our choosing. Right now, our retirement plan is essentially to max out both contributions. The rest of our income goes to things that we need, including a house, cars, etc. Should we decrease our 401K contributions in favor of some other sorts of investments, or are the matched contributions a far better deal than anything 'unsubsidized' by our employers?

Posted by: bobby769 on 2009-10-19, 13:25:09

At my University the TIAA-Cref options are the same as what you have listed and it's one of the best ones I've seen. Right off the bat you get an over 100% return. Now here's the problem I see, TIAA-Creff options are very lousy. Take a look at charts for International Equity, Large Cap Value, mid cap value and small cap blend and their charts are almost identical. Now look at what they invest and in their also, the funds invest in almost the same companies. Where's the diversification in that? I also have the Fidelity option and will be moving out of TIAA-creff and into Fidelity and still get the same 7.5% from the employer. I would suggest maxing the investment and that should still leave room for you guys to open up your own pretax retirement accounts. If you have the funds that's what I'd suggest.

Posted by: Joe on 2009-10-19, 13:17:07

It is hard to beat a 401k with a full match. I would max out contributions that are matched.

Posted by: muncie birder on 2009-10-19, 13:30:55

So long as you get the match from your employer on all of your contributions, you are in the cat bird's seat. There are however problems with 401k, which you need to be aware of. First of course they are eventually taxed at the full tax rate, not a capital gains rate and who knows what the future tax rates might be? There is a pretty good chance they are going to be a lot higher than they currently are. Secondly, many 401k plans do not have an extremely good selection of investment options. Some in fact are down right poor. It is my opinion that one should not put all of ones investment moneys into a retirement account. There might come a time when it would be very handy to have some money within easy reach and it is certainly handy to take advantage of the current low tax rates to sock some money away after tax and also to take advantage of potential low capital gains tax rates. It might also be an advantage to be able to invest in certain options not provided by the 401k plans.

Posted by: Savetheworld on 2009-10-20, 00:36:43

I doubt that anybody could top this deal that you have. Even if that mutual fund was giving you almost as good returns I would still choose the plan you have. For, you might have more safety in choosing your 401K contributions and thereby would enjoy a terrific return and also enjoy some level of safety. I would definitely invest the maximum I could in this kind of a 401K plan.

Posted by: Invest Premium on 2009-10-21, 00:42:14

What if your money made you 1 - 10% or 10% to 200% per month with no risk at all,what if you dont need to work and just enjoy life what if you can watch your wealth growing while you are having fun visit myfxfunds dot com