vania-janet/multiturn-rag-retrieval-data huggingface dataset:
"A trick that works for some folks: ""Pay yourself first."" Have part of your paycheck put directly into an account that you promise yourself you won't touch except for some specific purpose (eg retirement). If that money is gone before it gets to your pocket, it's much less likely to be spent. US-specific: Note that if your employer offers a 401k program with matching funds, and you aren't taking advantage of that, you are leaving free money on the table. That does put an additional barrier between you and the money until you retire, too. (In other countries, look for other possible matching fundsand/or tax-advantaged savings programs; for that matter there are some other possibilities in the US, from education savings plans to discounted stock purchase that you could sell immediately for a profit. I probably should be signed up for that last...)"
The simplest solution to fire-and-forget is to pick something like a Target Date mutual fund made up of low-overhead index funds (within your 401k or a Roth IRA, perhaps) and set up automatic purchase to that.  If you're talking about limit orders and so on, that ain't simple.
First thing's first: migrate your savings to an interest-bearing savings account (such as from Ally Bank). While it still lags behind inflation, 0.84% is still better than 0.00%. Short-term CDs are also an option. I've personally thought about experimenting with peer-to-peer lending, but a few thousand in savings isn't all that much in the grand scheme of things, and you don't want it tied up in a risky, speculative loan when you might need it the most. As the others have said, the general savings rules apply too: pay off high-interest debt, divert more money into your 401k (especially if you aren't hitting the match yet), then work on either whittling down other debts or saving more for a big purchase in the future.
Try the Envelope Budgeting System. It is a pretty good system for managing your discretionary outflows. Also, be sure to pay yourself first. That means treat savings like an expense (mortgage, utilities, etc.) not an account you put money in when you have some left over. The problem is you NEVER seem to have anything leftover because most people's lifestyle adjusts to fit their income. The best way to do this is have the money automatically drafted each month without any action required on your part. An employer sponsored 401K is a great way to do this.
You can only contribute up to 5% of your salary? Odd. Usually 401(k) contributions are limited to some dollar amount in the vicinity of $15,000 or so a year. Normal retirement guidelines suggest that putting away 10-15% of your salary is enough that you probably won't need to worry much when you retire. 5% isn't likely to be enough, employer match or no. I'd try to contribute 10-15% of my salary. I think you're reading the rules wrong. I'm almost certain. It's definitely worth checking. If you're not, you should seriously consider supplementing this saving with a Roth IRA or just an after-tax account.  So. If you're with Fidelity and don't know what to do, look for a target date fund with a date near your retirement (e.g. Target Retirement 2040) and put 100% in there until you have a better idea of what going on. All Fidelity funds have pretty miserable expense ratios, even their token S&P500 index fund from another provider, so you might as let them do some leg work and pick your asset allocation for you. Alternatively, look for the Fidelity retirement planner tools on their website to suggest an asset allocation. As a (very rough) rule of thumb, as you're saving for retirement you'll want to have N% of your portfolio in bonds and the rest in stocks, where N is your age in years. Your stocks should probably be split about 70% US and 30% rest-of-world, give or take, and your US stocks should be split about 64% large-cap, 28% mid-cap and 8% small-cap (that's basically how the US stock market is split).
Sure it is quite easy depending on income.  If one receives a bonus that is high in relationship to their income, it is very easy to max out a 401K prior to when one intended.  The later in the year such a bonus occurs the more likely that one will max out prematurely.   If one only has a single employer in the year, the custodial company will not accept amounts above the max, so one need not worry about that case.  If there is more than one employer, a refund is typically issued with the appropriate tax withheld.   Assume that a person makes about 60K per year.  They intend to put 12k into their 401K, thus have their contribution set to 20%.  By the beginning of September, they have 8K into their retirement, but they also receive a bonus of 50K.  Their 401K contribution for that bonus will be 10K, and thus they have maxed out their individual contribution for the year. So they will not be able to contribute for the rest of the year, including the first paycheck in September.  They will miss out on any match that the company may supply.  While that sucks, it should be relieved by the bless of receiving such a large bonus.
You are already doing everything you can. If your employer does not have a 401(k) you are limited to investing in a Roth or a traditional IRA (Roth is post tax money, traditional IRA gives you a deduction so it is essentially pre tax money).  The contribution limits are the same for both and contributing to either adds to the limit (so you can't duplicate). CNN wrote an article on some other ways to save: One thing you may want to bring up with your employer is that they could set up a SEP-IRA.  This allows them to set a % (up to 25%) that they contribute pre-tax to an IRA for everyone at the company that has worked there at least 3 years.  If you are at a small company, maybe everyone with that kind of seniority would take an equivalent pay cut to get the automatic retirement contribution?  (Note that a SEP-IRA has to apply to everyone equally percentage wise that has worked there for 3 years, and the employer makes the contribution, not you).
"The policy you quoted suggests you deposit 6% minimum. That $6,000 will cost you $4,500 due to the tax effect, yet after the match, you'll have $9,000 in the account. Taxable on withdrawal, but a great boost to the account. The question of where is less clear. There must be more than the 2 choices you mention. Most plans have 'too many' choices. This segues into my focus on expenses. A few years back, PBS Frontline aired a program titled The Retirement Gamble, in which fund expenses were discussed, with a focus on how an extra 1% in expenses will wipe out an extra 1/3 of your wealth in a 40 year period. Very simple to illustrate this - go to a calculator and enter .99 raised to the power of 40. .669 is the result. My 401(k) has an expense of .02% (that's 1/50 of 1%) .9998 raised to the same 40 gives .992, in other words, a cost of .8% over the full 40 years. My wife and I are just retired, and will have less in expenses for the rest of our lives than the average account cost for just 1 year. In your situation, the knee-jerk reaction is to tell you to maximize the 401(k) deposit at the current (2016) $18,000. That might be appropriate, but I'd suggest you look at the expense of the S&P index (sometime called Large Cap Fund, but see the prospectus) and if it's costing much more than .75%/yr, I'd go with an IRA (Roth, if you can't deduct the traditional IRA). Much of the value of the 401(k) beyond the match is the tax differential, i.e. depositing while in the 25% bracket, but withdrawing the funds at retirement, hopefully at 15%. It doesn't take long for the extra expense and the ""holy cow, my 401(k) just turned decades of dividends and long term cap gains into ordinary income"" effect to take over. Understand this now, not 30 years hence. Last - to answer your question, 'how much'?
Does the 401(k) get any match? Whatever you do, don't lose the match. Without more detail, it's tough. Will you lose more sleep for the debt rising, or for the retire account not?  It seems your debt is well managed, a year to zero? A student loan wouldn't scare me.
Deposit $3,500 each month in a brokerage account and invest that money across a handful of diversified index funds. Rebalance those investments every quarter. The hard part is coming up with $3,500 each month; this is where your budget comes in.
Ok, so if I have a 401k, when does it become mine? When I retire and start taking distributions from it? At that point, is the only thing I own what I actually take out or is the full balance mine? Who owns the 401k when I'm contributing? This is just raising more questions.
Most people carry a diversity of stock, bond, and commodities in their portfolio.  The ratio and types of these investments should be based on your goals and risk tolerance.  I personally choose to manage mine through mutual funds which combine the three, but ETFs are also becoming popular. As for where you keep your portfolio, it depends on what you're investing for.  If you're investing for retirement you are definitely best to keep as much of your investment as possible in 401k or IRAs (preferably Roth IRAs).  Many advisers suggest contributing as much to your 401k as your company matches, then the rest to IRA, and if you over contribute for the IRA back to the 401k.  You may choose to skip the 401k if you are not comfortable with the choices your company offers in it (such as only investing in company stock). If you are investing for a point closer than retirement and you still want the risk (and reward potential) of stock I would suggest investing in low tax mutual funds, or eating the tax and investing in regular mutual funds.  If you are going to take money out before retirement the penalties of a 401k or IRA make it not worth doing. Technically a savings account isn't investing, but rather a place to store money.
My advice would be to invest in the 401k with the same type of funds you'd purchase when you rollover to your IRA. They are both retirement accounts. If the stock market tanks, your 401k balance will be low but you'll also be purchasing stocks at a much cheaper price when you establish your roth. You should create an asset allocation based on your age, not on the type of retirement account you have. One question to consider: When you do become a student, you'll likely be a in lower tax bracket. Can you contribute pre-tax dollars and then rollover to a ROTH in the year that you're a student?
With a match, the 401(k) becomes the priority, up to that match, often ahead of other high interest debt.  Without the match, the analysis is more about the cost within the 401(k). The 401(k) is a tax deferred account (let's not go on a tangent to Roth 401(k)) so ideally, you'd be skimming off money at 25% and saving it till you retire, so some of it is taxed at 0, 10, 15%. If the fees in the 401(k) are say 1.5% between the underlying funds and management fee, it doesn't take long to wipe out the potential 10 or 15% you are trying to gain.  Yes, there's a risk that cap gain rates go away, but with today's tax law, the long term rate is 15%. So that money put into a long term low cost ETF will have reinvested dividends taxed at 15% and upon sale, a 15% rate on the gains. There are great index ETFs with sub - .1% annual cost.  My simple answer is - If the total cost in that 401(k) is .5% or higher, I'd pass. Save the money in an outside account, using IRAs as best you can.  (The exact situation needs to be looked at very carefully. In personal finance, there's a lot of 'grey'. For example, a frequent job changer can view the 401(k) as a way of saving pretax, knowing the fee will only last 2 years, and will end with a transfer to the IRA)
Over the years, the ""100"" number has varied. Some financial advisor types have suggested ""150"" or ""200"". Unfortunately, that's why a lot of baby boomers can't retire now. Above all, re-balance your portfolio regularly. At least once a year, perhaps quarterly if the market is going wild. Make sure you are still in-line with your desired asset allocation. If the stock market tanks and you are under-invested in stocks, buy more stock, selling off other funds if necessary. (I've read interviews with fund managers who say failure to rebalance in a down stock market is one of the big mistakes people make when managing a retirement portfolio.) As for specific mutual fund suggestions, I'm not going to do that, because it depends on what your 401k or IRA has available as investment options. I do suggest that your focus on selecting a ""passive"" index fund, not an actively managed fund with a high expense ratio. Personally, I like ""total market"" funds to give you the broadest allocation of small and big companies. (This makes your question about large/small cap stocks moot.) The next best choice would be an S&P 500 index fund. You should also be able to find a low-cost Bond Index Fund that will give you a healthy mix of different bond types. However, you need to look at expense ratios to make an informed decision. A better-performing fund is pointless if you lose it all to fees! Also, watch out for overlap between your fund choices. Investing in both a Total Market fund, and an S&P 500 fund undermines the idea of a diversified portfolio. An aggressive portfolio usually includes some Foreign/Developing Nation investments. There aren't many index fund options here, so you may have to go with an actively-managed fund (with a much higher expense ratio). However, this kind of investment can be worth it to take advantage of the economic growth in places like China. http://www.getrichslowly.org/blog/2009/04/27/how-to-create-your-own-target-date-mutual-fund/"
To answer your question: As far as what's available in addition to your 401(k) at work (most financial types will say to contribute up to the match first), you may qualify for a Roth IRA (qualification is based on income), if not, then you may have to go with a Traditional IRA.  You and your husband can each have one and contribute up to the limit each year.  After that, you could get just a straight up mutual fund, and/or contribute up to limit on your 401(k). My two cents: This may sound counter-intuitive (and I'm sure some folks will disagree), but instead of contributing to your 401(k) now, take whatever that amount is, and use it to pay extra on the car loan.  Also take the extra being paid on the mortgage and pay it on the car loan too.  Once the car loan is paid off, then set aside 15% of your gross income and use that amount to start your retirement investing.   Any additional money beyond this can then go into the mortgage.  Once it's paid off, then you can take the extra you were paying, plus the mortgage and invest that amount into mutual funds. You may want to check out Chris Hogan's Retire Inspired book or podcast as well.
If you do not need the money in the 401k right away and are interested in avoiding penalties on the amounts accumulated, roll over the 401k monies into a Roth IRA (your contributions and growth thereof) and a Traditional IRA (company match a d growth thereof). You can choose to take out money from the Traditional IRA not as a lump sum (penalties in addition to lots of income tax in the year of taking the distribution) but as series of equal payments over your life expectancy (no penalty but US income tax is still due each year). Be aware that he who rides a tiger cannot dismount: if you opt for this method, you must take a distribution every year whether you need the money or not, and the amount of the distribution must match what the IRS wants you to take exactly; excess withdrawals lead to penalties etc.  Publication 590 says Annuity. You can receive distributions from your traditional IRA that are part of a series of substantially equal payments over your life (or your life expectancy), or over the lives (or the joint life expectancies) of you and your beneficiary, without having to pay the 10% additional tax, even if you receive such distributions before you are age 59.5. You must use an IRS-approved distribution method and you must take at least one distribution annually for this exception to apply. The “required minimum distribution method,” when used for this purpose, results in the exact amount required to be distributed, not the minimum amount. Be aware that, depending on your country of residence/citizenship, you may be required to close all foreign accounts within x months of return, and if so, this stratagem will not work.
"All right, I will try to take this nice and slow. This is going to be a little long; try to bear with me. Suppose you contribute $100 to your newly opened 401(k). You now have $100 in cash and $0 in mutual funds in your 401(k) (and $100 less than you used to somewhere else). At some later date, you use that money within the 401(k) to buy a single share of the Acme World All-Market Index Fund which happens to trade at exactly $100 per share on the day your purchase goes through. As a result, you have $0 in cash and exactly one share of that fund (corresponding to $100) within your 401(k). Some time later, the price of the fund is up 10%, so your share is now worth $110. Since you haven't contributed anything more to your 401(k) for whatever reason, your cash holding is still $0. Because your holding is really denominated in shares of this mutual fund, of which you still have exactly one, the cash equivalent of your holding is now $110. Now, you can basically do one of two things: By selling the share, you protect against it falling in price, thus in a sense ""locking in"" your gain. But where do you put the money instead? You obviously can't put the money in anything else that might fall in price; doing so would mean that you could lose a portion of your gains. The only way to truly ""lock in"" a gain is to remove the money from your investment portfolio altogether. Roughly speaking, that means withdrawing the money and spending it. (And then you have to consider if the value of what you spent the money on can fluctuate, and as a consequence, fall. What's the value of that three weeks old jug of milk in the back of your refrigerator?) The beauty of compounding is that it doesn't care when you bought an investment. Let's say that you kept the original fund, which was at $110. Now, since that day, it is up another 5%.
If you withdraw the money, regardless of how small the balance is, the IRS will still insist you pay a 10% penalty when you file your taxes (assuming you're under 59 1/2). Your 401K plan provider might have a policy that allows you to avoid the usual automatic withholding. You should check with them. $600 in additional income isn't likely to move your tax bill much, unless you're really close to a boundary in the tax brackets. Rather than withdrawing the money, you can transfer the 401K to your next 401K, or roll it over to an IRA (plenty of no-fee options around). Once in a traditional IRA, you can convert the money to a Roth IRA. You pay the taxes on the amount, but no 10% penalty. Converting to a Roth has eligibility rules. You should double check with your financial institution before doing it. Edit: You can withdraw without the 10% penalty if you leave your job after age 55 (credit to @JoeTaxpayer for the correction). This IRS Page lists the conditions under which the penalty can be avoided. Edit: The original question has been edited to add more background details. Due to OP's investment preferences, I would also recommend that he simply withdraw the funds, pay the taxes and the $60 penalty and put the $500 or so dollars somewhere else.
You need to check with your employer. It is called an in-service rollover and it is up to your employer on whether or not it is allowed. There are a lot of articles on it but I would still talk to a professional before making the decision. And there are some new laws in place that put at least some responsibility on your employer to provide a 401k with reasonable options and fees. http://www.latimes.com/business/la-fi-court-edison-401k-fees-20150519-story.html We'll see if it has legs.
Unfortunately, nothing is ever that simple. Do you have any income in the country where you currently live? The US has tax treaties with many countries, and though you may not have tax on the income generated by 401(k) withdrawals in the US, that income may be taxable in your home country. Your best bet at this point is to hire an accountant that is familiar with US tax treaty issues and pay for some advice.
So now you own 110 shares at $10 NAV (no net change in price in two weeks) but your 401k balance is $1100, same as it was before the capital gains distribution and you are up 10%. Or, you could have chosen to invest the distributions into, say, a bond fund available in your 401k plan and still be up 10%, with no change in your stock fund holding, but a new investment of $100 in a bond fund. So, being up 10% can mean different things and does not necessarily mean that the ""return"" can be used to buy more shares."
I think better advice would be always max out your 401K at least to the level that the company provides a match. For example, my company will match 50% up to 10% of your salary. Good luck finding another investment with a guaranteed immediate 50% return. Beyond the company match, it is probably good advice to put as much in the 401K as you can afford if you aren't disciplined enough to invest that money on your own. Otherwise it depends on a number of factors as to whether it is better to invest on your own or in the company plan.
The managers of the 401(k) have to make their money somewhere.  Either they'll make it from the employer, or from the employees via the expense ratio.  If it's the employer setting up the plan, I can bet whose interest he'll be looking after. Regarding your last comment, I'd recommend looking outside your 401(k) for investing.  If you get free money from your employer for contributing to your 401(k), that's a plus, but I wouldn't -- actually, I don't -- contribute anything beyond the match.  I pay my taxes and I'm done with it.
"That's a lot of manual checking-in to see if everything is performing the way you ""want"". Not to insult your intelligence, but that is not your job, and doing that on a monthly basis is going to eat a lot of time. Plus, most 401(k) programs have lockout periods wherein changes can't be made without incurring additional fees (related to distributions, etc). And if you're checking that often, you are [likely] losing the benefits of investing in mutual funds to start with. If you have the stomach to handle the risk, go for the high-risk investment vehicles early in your career - you can afford a 30% drop this year if you then make 105%, 15%, or 50% back each of the next 5. If, on the other hand, you're in your mid-career, switch to more conservative management tactics."
That would be my suggestion (and what I've personally done), but I can't tell you what's right for you.   As an aside, you don't usually need to manually fund an IRA (traditional *or* Roth) to open it for a rollover - Just tell them you're doing a rollover, and they'll set you up and tell you where to have the 401k checks sent (and sometimes even arrange it all *for* you).