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michael
ParticipantYou can save cash in your 401k also, except at a much faster rate…
Lets see, you earn $1000. For simplicity, lets assume a 25% federal tax bracket. You are left with $750 to put in your cash savings account. The account earns, let’s say, 4% or $30 (annualized). Since it is not a tax deffered account you owe $7.50 in taxes, leaving you $22.50 in earned interest and a total of $772.50
If you would have left the money in the 401k you would have $1000 (pretax contribution). In this example the employer is contributing 25% or $250. You now have $1,250. This account also earns 4%. 4% x $1,250 = $50. The account is tax deffered so I don’t have to pay taxes and I can keep my $50 of interest for a total of $1,300.
401k plans do suck!
ParticipantYou can save cash in your 401k also, except at a much faster rate…
Lets see, you earn $1000. For simplicity, lets assume a 25% federal tax bracket. You are left with $750 to put in your cash savings account. The account earns, let’s say, 4% or $30 (annualized). Since it is not a tax deffered account you owe $7.50 in taxes, leaving you $22.50 in earned interest and a total of $772.50
If you would have left the money in the 401k you would have $1000 (pretax contribution). In this example the employer is contributing 25% or $250. You now have $1,250. This account also earns 4%. 4% x $1,250 = $50. The account is tax deffered so I don’t have to pay taxes and I can keep my $50 of interest for a total of $1,300.
401k plans do suck!
ParticipantYou can save cash in your 401k also, except at a much faster rate…
Lets see, you earn $1000. For simplicity, lets assume a 25% federal tax bracket. You are left with $750 to put in your cash savings account. The account earns, let’s say, 4% or $30 (annualized). Since it is not a tax deffered account you owe $7.50 in taxes, leaving you $22.50 in earned interest and a total of $772.50
If you would have left the money in the 401k you would have $1000 (pretax contribution). In this example the employer is contributing 25% or $250. You now have $1,250. This account also earns 4%. 4% x $1,250 = $50. The account is tax deffered so I don’t have to pay taxes and I can keep my $50 of interest for a total of $1,300.
401k plans do suck!
ParticipantYou can save cash in your 401k also, except at a much faster rate…
Lets see, you earn $1000. For simplicity, lets assume a 25% federal tax bracket. You are left with $750 to put in your cash savings account. The account earns, let’s say, 4% or $30 (annualized). Since it is not a tax deffered account you owe $7.50 in taxes, leaving you $22.50 in earned interest and a total of $772.50
If you would have left the money in the 401k you would have $1000 (pretax contribution). In this example the employer is contributing 25% or $250. You now have $1,250. This account also earns 4%. 4% x $1,250 = $50. The account is tax deffered so I don’t have to pay taxes and I can keep my $50 of interest for a total of $1,300.
401k plans do suck!
ParticipantRegarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.
Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.
To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.
I think, you ought to at least place 6% in the plan.
ParticipantRegarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.
Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.
To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.
I think, you ought to at least place 6% in the plan.
ParticipantRegarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.
Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.
To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.
I think, you ought to at least place 6% in the plan.
ParticipantRegarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.
Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.
To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.
I think, you ought to at least place 6% in the plan.
ParticipantRegarding vesting. Unless it is cliff vesting, a portion of the money will be vested each year. In the example of 5 year vesting, you vest at a rate of 20% each year. After 3 years, 60% of the employer match is yours. It’s still money you otherwise would not have.
Also most mutual funds will revert back towards their benchmark. Your mutual funds aren’t that bad. The type of mutual fund shares, and thus their expenses, will be based on the size of the total 401k plan.
To clarify, alpha is a measure of risk adjusted performance. It demonstrates the true value added by the portfolio manager. It takes beta into account in the formula (CAPM). Also, be sure to take notice of R2 (R squared) which is the correlation coefficient. If the R2 is too low, it invalidates alpha and the correct index is not being used.
I think, you ought to at least place 6% in the plan.
ParticipantDrunkle has a good point… there is some uncertainty with the future of tax rates. If you want to hedge against this risk some employers are now offering Roth 401k.
My wife and I earn over $200k per year. That places us in the 33% federal tax rate. By contributing to our 401k’s our AGI comes in at about $190k, dropping us into the 28% federal tax rate.
Simple example…If we were not contributing, $1,000 pretax would become $667 after tax. By leaving it in the 401k, I essentially just get a 50% return. Also, if I invest my $667 and get a 10% return, I make $66.70. The same investment in the 401k where i have $1,000 returns $100.
You’re not going to get rich with your 401k plan but it could prove to be a good back up plan. You can try to get rich doing something else, but just understand that there is a tight relationship between risk and reward. For every one story of success that you hear, there are ten failures.
Oh yeah, an ADR is an American Depository Receipt. It allows a foreign company to raise capital in the US. And in order to list on a US exchange, they adhere to our rules.
ParticipantDrunkle has a good point… there is some uncertainty with the future of tax rates. If you want to hedge against this risk some employers are now offering Roth 401k.
My wife and I earn over $200k per year. That places us in the 33% federal tax rate. By contributing to our 401k’s our AGI comes in at about $190k, dropping us into the 28% federal tax rate.
Simple example…If we were not contributing, $1,000 pretax would become $667 after tax. By leaving it in the 401k, I essentially just get a 50% return. Also, if I invest my $667 and get a 10% return, I make $66.70. The same investment in the 401k where i have $1,000 returns $100.
You’re not going to get rich with your 401k plan but it could prove to be a good back up plan. You can try to get rich doing something else, but just understand that there is a tight relationship between risk and reward. For every one story of success that you hear, there are ten failures.
Oh yeah, an ADR is an American Depository Receipt. It allows a foreign company to raise capital in the US. And in order to list on a US exchange, they adhere to our rules.
ParticipantDrunkle has a good point… there is some uncertainty with the future of tax rates. If you want to hedge against this risk some employers are now offering Roth 401k.
My wife and I earn over $200k per year. That places us in the 33% federal tax rate. By contributing to our 401k’s our AGI comes in at about $190k, dropping us into the 28% federal tax rate.
Simple example…If we were not contributing, $1,000 pretax would become $667 after tax. By leaving it in the 401k, I essentially just get a 50% return. Also, if I invest my $667 and get a 10% return, I make $66.70. The same investment in the 401k where i have $1,000 returns $100.
You’re not going to get rich with your 401k plan but it could prove to be a good back up plan. You can try to get rich doing something else, but just understand that there is a tight relationship between risk and reward. For every one story of success that you hear, there are ten failures.
Oh yeah, an ADR is an American Depository Receipt. It allows a foreign company to raise capital in the US. And in order to list on a US exchange, they adhere to our rules.
ParticipantDrunkle has a good point… there is some uncertainty with the future of tax rates. If you want to hedge against this risk some employers are now offering Roth 401k.
My wife and I earn over $200k per year. That places us in the 33% federal tax rate. By contributing to our 401k’s our AGI comes in at about $190k, dropping us into the 28% federal tax rate.
Simple example…If we were not contributing, $1,000 pretax would become $667 after tax. By leaving it in the 401k, I essentially just get a 50% return. Also, if I invest my $667 and get a 10% return, I make $66.70. The same investment in the 401k where i have $1,000 returns $100.
You’re not going to get rich with your 401k plan but it could prove to be a good back up plan. You can try to get rich doing something else, but just understand that there is a tight relationship between risk and reward. For every one story of success that you hear, there are ten failures.
Oh yeah, an ADR is an American Depository Receipt. It allows a foreign company to raise capital in the US. And in order to list on a US exchange, they adhere to our rules.
ParticipantDrunkle has a good point… there is some uncertainty with the future of tax rates. If you want to hedge against this risk some employers are now offering Roth 401k.
My wife and I earn over $200k per year. That places us in the 33% federal tax rate. By contributing to our 401k’s our AGI comes in at about $190k, dropping us into the 28% federal tax rate.
Simple example…If we were not contributing, $1,000 pretax would become $667 after tax. By leaving it in the 401k, I essentially just get a 50% return. Also, if I invest my $667 and get a 10% return, I make $66.70. The same investment in the 401k where i have $1,000 returns $100.
You’re not going to get rich with your 401k plan but it could prove to be a good back up plan. You can try to get rich doing something else, but just understand that there is a tight relationship between risk and reward. For every one story of success that you hear, there are ten failures.
Oh yeah, an ADR is an American Depository Receipt. It allows a foreign company to raise capital in the US. And in order to list on a US exchange, they adhere to our rules.
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