401K's a sinking ship? Options Anyone?

[California]

I think you'd want a 529 plan for college savings.

Here's a gimmick I read recently. I don't know if its valid but it sounded convincing.

A young single woman, a professional investment advisor, said she started a 529 for a hypothetical future child. She said she didn't need to name a beneficiary upon opening it. In the future she can name any beneficiary (I think without limit, not necessarily family) and as I heard it she can cash it out herself someday if at the time there is no beneficiary. She said in effect its like a Roth IRA and allows additional personal tax-deferred savings in addition to the usual plans.

YMMV ! Free advice is worth only what it cost you.

 

[MossRoad]

I didn't think it could be cashed out without a penalty. It could only be used for educational expenses.

 

[California]

I think her reasoning was: she found a loophole that it reverts to the owner if unused. And even after penalties it was more tax-efficient to pay penalties on it once, after many years, compared to the taxes paid throughout the life of a non-tax-sheltered investment. I wish I had saved the article. I think she is a writer for Forbes.

 

[forgeblast]

The 403b lets us take $ out for education or retirement while the 529 says it must be used for education. I have her $ going into an S&P 500 fund now(just found the paper work), its good to know its in the right spot! I plan, when shes ready for college searching for every single scholarship available. We were told by a friend of ours that there are some groups that cant find people to give money too.
this is a bogleheads discussion on the same topic of 529 vs 403b Bogleheads

 

[California]

I have seen that DJIA chart many times over the years and I always shake my head because it always has been and always will be a shell game. There is only one stock that is part of the original "Dow 30" since it's inception and that is General Electric. The rest have either went backrupt or have been kicked out one by one as they go broke.

I too wish a more representative index were the most popular one.

But the DJIA and S&P500 indexes track pretty close; either is good enough to illustrate long term trends. Start with this Yahoo chart, hit Compare, check S&P, then Max time span (below chart). Then put the pointer on May 1998 to illustrate the point I was making in my post: following an unexpected increase in stock prices I decided I had already met my retirement savings goals. I retired age 54.

 

[California]

this is a bogleheads discussion on the same topic of 529 vs 403b Bogleheads

By following the discussions on that site you are getting better advice than anything you will see here!

Bogle (founder of Vanguard) is a genius.

 

[TheGoose]

I'm not sure if I'm following you or you're not following me. The companies that make up the DJIA do not stay consistent through time. As companies go broke they move out and as companies begin to flourish they move in. I don't see how you can compare a chart from 1998 with one from today when probably 20-30% of the companies on the "index" are no longer a part of it.

I understand that the index is simply relative. In fact, a quick look of almost any Fortune 500 company their stock would almost exactly mirror the DJIA.

In my view, if you wanted to compare the index of yesterday to today you need to keep the players the same. What would the DJIA look like if all the companies that made it up in 1998 were still in it?

I too wish a more representative index were the most popular one.

But the DJIA and S&P500 indexes track pretty close; either is good enough to illustrate long term trends. Start with this Yahoo chart, hit Compare, check S&P, then Max time span (below chart). Then put the pointer on May 1998 to illustrate the point I was making in my post: following an unexpected increase in stock prices I decided I had already met my retirement savings goals. I retired age 54.

 

[J F]

 

[RSKY]

Once again I will repeat what I've told my daughters, nephews, nieces, and assorted younger cousins. If your place of employment offers a 401K plan get in it. If they match anything at all put in the maximum amount that your employer will match. Invest in mutual funds and not single stocks. Invest in funds that cover a broad spectrum of the stock market. Keep an eye on it, making small changes to keep everything balanced. Don't try to make a killing in one year. Look for long term steady gain. Forget about taking anything out until you are ready to retire. Enjoy an early comfortable retirement.

RSKY

 

[MossRoad]

The 403b lets us take $ out for education or retirement while the 529 says it must be used for education. I have her $ going into an S&P 500 fund now(just found the paper work), its good to know its in the right spot! I plan, when shes ready for college searching for every single scholarship available. We were told by a friend of ours that there are some groups that cant find people to give money too.
this is a bogleheads discussion on the same topic of 529 vs 403b Bogleheads

You may want to consult an expert, but I'm pretty sure that's a hardship withdrawl from your 403b for education and there's a 10% penalty. An there are very specific coditions that you have to meet to prove you cannot get the education funds elsewher before you can pull from a 403b. Using a 403b or 401k for education expenses is a very poor choice compared to a 529.