Wednesday, November 14, 2007
No-Match 401K
(A no-match 401(k): Still worth it) This is a good question a person or two is probably wondering. This article gives the answer to one man's questions about where to invest when you company 401K plan does not provide a match. The answer is that it can still be worth it to invest in a 401K with no match as opposed to a taxable account. In this article the man is already maxing out a Roth IRA. I would be interested to confirm my guess that it would be advisable to put money in a Roth IRA before putting money in a 401K plan that had no match.
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Actually I completely disagree with this, unless of course your contributions knock you into a different tax bracket. 401k plans for most companies have few choices on how exactly you want to invest. They like to group your investments into Mutual Funds with generic titles like: Aggressive, Moderate, Conservative etc.. If someone is disciplined enough they can net far far more money in a traditional IRA, by merely following the simple rule: BUY LOW. If one were to keep x number of dollars in a money market and invest into ETF's (which are more specific to the market sectors and financially give less revenue to the companies who manage), you could net 15% a year. Save your $ and only invest at low points, this strategy would net you a little over 12% and you'd pick up extra 5% or so in money market monthly payouts.
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