Went over my first 401(k) statement

[BRPORSCHE]

Hopefully I can retire by 50!

I need to learn more though. I am not an an econ major and need to buy some books to help me. I made a 10.79% return last year using Merrill Lynch and hope to do better next year.

This is addicting.

Edit: I am 23 and hope to work just shy of 30 years. I put in 6% and my company matches up to 4%. So I assume if I add 10% every year and I am able to have a 10-15% return I shouldn't do that bad. It's shocking to realize how few people have even started a retirement fund.

[McLovin]

Originally Posted by BRPORSCHE

I am able to have a 10-15% return I shouldn't do that bad.

if your retirement objective requires that you average a 10-15% return over the next 30 years . . . good luck with that.

[BRPORSCHE]

Originally Posted by McLovin

if your retirement objective requires that you average a 10-15% return over the next 30 years . . . good luck with that.

I was being hopeful. As I said I am pretty new to this game. Only put into my account from oct. 1 to dec 31st so it was a small statement. What type of return percentage wise should I expect over 30 years?

[vash]

tom..well done!

you are young right? i am having a difficult time convincing two of my younger engineers to start. just start!..apparently them losing a weekend's beer money from the paycheck once a month is clearly not acceptable.

[KFC911]

Tom, from your other posts I perceive that you've got a HUGE jump on most regarding living within your means, debt management and investing, regardless of age. You already indicated your familiarity with compounding interest and "time is on your side", so congratulations!!! Now go enjoy the next 25 years living your life, and keep doing what you're doing...the rest will take care of itself with just one caveat....don't get DIVORCED ! There's a "rule of 72"....take any projected return, divide it into 72, and that's how many years it will take to double your investment. Let's take 8% for example (and a more realistic rate too), you'd double your investment every 9 years, and so on. I was having too much fun "way back when" to worry about money (still don't), but you're already on the right track.

ps: If you're happy w/ ML, might I suggest leaving your current 401K in place when you eventually change jobs. Some folks like to rollover/consolidate their 401K/IRAs, etc. but I like the flexibility (IRS rules) that comes with not doing so. (One can still have "everything" under the same borkerage house, etc. just keep the individual accounts "distinct".) In a nutshell, the x you contribute now (along with co matches) can easily be 10x in 25-30 years. Good luck...but you're not gonna need it

[David]

On my "when I get to retire" spreadsheet I use 7% a year for my 401K and I think that's actually a little below what the annual average is for the last 30 years.

Now bump the saving rate up to the max as soon as you can!

[BRPORSCHE]

Originally Posted by KC911

You already indicated your familiarity with compounding interest and "time is on your side", so congratulations

I may be familiar with it, but do not fully grasp it. Can anybody recommend some books?

[dmcummins]

Good for you to start at your age. I retired at 50 so it is doable. I can't tell you my rate of return over the past 30 years, but I was close to 15% last year in my 401k. One thing that I did that helped me was keeping track of my net worth and spending over the years. Also increasing my amount of savings every time I got a raise or a bonus.

[HardDrive]

Son, let me give the best piece of advice on investing I can give. Years ago, I looked at all my options, Stocks, Bonds, Real Estate, etc, and I made the wisest investment a man can make: I married an anesthesiologist.

[BRPORSCHE]

Originally Posted by HardDrive

Son, let me give the best piece of advice on investing I can give. Years ago, I looked at all my options, Stocks, Bonds, Real Estate, etc, and I made the wisest investment a man can make: I married an anesthesiologist.

Ya know how long I have been keeping that in for? I knew what she did and let me tell ya, SCORE! Pediatric anesthesiologist right? Man talk about serious money.

That was one hell of an investment.

[Steve Viegas]

Best investing advice for the layman "Richest Man in Babylon"

[KFC911]

HD's been a "kept man" for years ..."it's good work, if you can get it"! Bet even he must fear the big "D" though...I keed!

[MotoSook]

Good start, Tom! Ignorance and stupidity has some of the younger kids passing up the FREE MONEY of company match. Even some that are not so young think putting enough pre-tax money into a 401K to maximize the company match is too much to sacrifice. (shaking my head)


My current employer uses Mercer, which I don't like so much. I still have a Vanguard account which I'll keep active, because I like them. I had a JP Morgan account that I just rolled over into my Mercer account because there wasn't that much money in it anyhow and I got lazy and never tended to it. JP Morgan was good too, but I like the funds at Vanguard.

Good luck! Remember, as a single person making good money....you'll want to reduce your tax liability by putting it into the 401K....better to do that then spend it on booze...or at least not the excess boooze.

[MattKellett]

Tom - you're wise to put in as much as possible because your company is matching with that 4%. It pretty much means that for every $100 you put in you're making an instant $66 profit, so really your return is already +66%, not many can make those sort of returns.

[masraum]

If I could put 10, 12, 15%, or more into 401k, I would. As it is, I, at least, put enough to get my company's match. At my last co, they would match 100% up to 5%, and you were 100% vested immediately. I made something like 115% on my money last year if you lump the company matching in with the stock market gains. (the 15% is a fluke and a result of the wild recession ride). If you can get anywhere near 100% for no money and no risk....

When I was in my 20's, I put money in a 401k. When I left that job, I took the money. It wasn't much, a few grand, but I wish it was still in my portfolio. I paid out one other time, when I was laid off in 2001. I needed the money, but really regret that one too.

Keep putting money in, put in as much as you can manage, leaving some money for normal savings if you won't touch that for stupid stuff. Try to manage the two so you don't have much "extra" money. It may suck now, but it'll pay off later in spades.

[lowyder993s]

All sage advise here. It took a few years for my 401 to get to 100k...a few less to 200...18 mos to 300...and probably another 7-8 mos to 400. There were setbacks...and I've moved money from stock to bonds...and I've missed some appreciation, but all in all it's been generally trending upwards for 20 yrs. Couple that w/ investments, pension, inheritance and a business...I'm just happy I'll be there to support others.

Good luck young fellow

[bpu699]

Originally Posted by BRPORSCHE

Hopefully I can retire by 50!

I need to learn more though. I am not an an econ major and need to buy some books to help me. I made a 10.79% return last year using Merrill Lynch and hope to do better next year.

This is addicting.

Edit: I am 23 and hope to work just shy of 30 years. I put in 6% and my company matches up to 4%. So I assume if I add 10% every year and I am able to have a 10-15% return I shouldn't do that bad. It's shocking to realize how few people have even started a retirement fund.

I remember having that fun delusional dream about 12 years ago when I started regularly and heavily putting money in the S&P.... Gee, at a 15% return I was dreaming of having millions when I retired...

Lo and behold, the returns are closer to 1-2% or less. Is this a lousy time for the market historically? Yes. Just goes to show that "Prior returns are not a guarantee of future performance ."

[island911]

Originally Posted by Soukus

Good start, Tom! Ignorance and stupidity has some of the younger kids passing up the FREE MONEY of company match. ....

Matching certainly is good, but don't go linearly extrapolating your 401K funds. First, you don't know what the value of the dollar will be. Second, you don't know what the tax rate, on that deferred income, will be. Third, you don't know if those investments will have much future value.

fourth...

[MotoSook]

Originally Posted by island911

Matching certainly is good, but don't go linearly extrapolating your 401K funds. First, you don't know what the value of the dollar will be. Second, you don't know what the tax rate, on that deferred income, will be. Third, you don't know if those investments will have much future value.

fourth...

Man, Glenn, are you doom and gloom



...I agree. If the SHTF it all vaporizes...that's why I have land and lots of spoons. Come get it...

[Hugh R]

Put in $1,000 (600 you 400 boss). At 10% you $1,100 first year. 2nd year you have $1,000!put in plus $1,220.. 3rd year $2,220 x 10%= $2,440 plus $1,000, repeat each year . Also you didn't"t pay tax on it, until you retire.