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Message
How do I retire with money?
Posted on 4/26/10 at 11:44 am
Posted on 4/26/10 at 11:44 am
I work for the government( I know dont rag me). I am currently only in the 401K plan which I am currently giving 5% with 4% match. I know it depends on how much money I am making for the perecentage to count ( $50K). What are good retirement investments? I am 25 so I got some time to think about it.
5
Posted on 4/26/10 at 11:46 am to trident
attend this Financial Peace University I bet you can find a class in your area. I WISH I would have taken it when I was 25.
Posted on 4/26/10 at 11:48 am to trident
quote:If you work for a government agency, you are not in a 401(k) plan. Most likely a 457 plan.
I work for the government( I know dont rag me). I am currently only in the 401K plan
quote:A diversified portfolio of stocks.
What are good retirement investments?
Posted on 4/26/10 at 11:48 am to trident
You can contribute to a Roth in addition to your 401K.
Posted on 4/26/10 at 12:03 pm to trident
quote:
I work for the government(I know dont rag me).
Statistically, the best jobs to have. Government employees are consistently overcompensated for their work load and ability. (Not, knocking you, just saying)
quote:
I am currently only in the 401K plan which I am currently giving 5% with 4% match.
10% contribution is pretty good, but I would consider trying to throw some extra cash in a Roth IRA and invest it in growth index funds.
Also,
quote:
If you work for a government agency, you are not in a 401(k) plan. Most likely a 457 plan.
This is correct.
quote:
What are good retirement investments? I am 25 so I got some time to think about it.
For reference, if you continue investing the way you are right now and assume the following:
Retirement age - 65
Average ROI - 10%
Payments - 5,000/year
Then your retirement account value, at the time of your retirement will be about 2.2 million dollars (inflation unadjusted)
If inflation averages 5% a year, then the inflation adjustment factor will be about 7, so your inflation adjusted value will be about 315,000 dollars.
However, if you keep investing 10% of your income, your payments will adjust themselves to the inflation rate, helping to reduce this effect.
Posted on 4/26/10 at 12:38 pm to TheHiddenFlask
'However, if you keep investing 10% of your income, your payments will adjust themselves to the inflation rate, helping to reduce this effect.'
Why don't you explain to the young man what could happen if we have a hyperinflationary event?
Why don't you explain to the young man what could happen if we have a bout of deflation? Stagflation?
Why don't you explain to the young man what could happen if the stk mkts crash and remain at low levels for many years?
Why don't you explain the benefits of bonds vs stocks?
Are you guys all stk salesmen?
Why don't you explain to the young man what could happen if we have a hyperinflationary event?
Why don't you explain to the young man what could happen if we have a bout of deflation? Stagflation?
Why don't you explain to the young man what could happen if the stk mkts crash and remain at low levels for many years?
Why don't you explain the benefits of bonds vs stocks?
Are you guys all stk salesmen?
Posted on 4/26/10 at 12:55 pm to TheHiddenFlask
quote:
Government employees are consistently overcompensated for their work load and ability. (Not, knocking you, just saying)
Depends. I work for a consulting firm with federal agency clients, my experience is that there are some who are indeed very good and aren't paid nearly enough. And quite a few are as you say.
Posted on 4/26/10 at 1:09 pm to Rivers
quote:
Why don't you explain to the young man what could happen if we have a hyperinflationary event?
Then stocks should be an excellent way to preserve value. A good example would be the German hyperinflation of the early 20's, when German stocks did this about as well as anything available at the time.
quote:
Why don't you explain to the young man what could happen if we have a bout of deflation? Stagflation?
Here bonds are probably as good an investment as any, at least you get a return. Of course, this is the opposite scenario.
quote:
Why don't you explain to the young man what could happen if the stk mkts crash and remain at low levels for many years?
If he's 25 this is a *good* thing and he should load up on stocks while they are cheap. On the other hand, this sucks if you're 65.
quote:
Why don't you explain the benefits of bonds vs stocks?
Bonds help provide some diversification to one's portfolio. A lot of people don't understand what diversification is and how it helps.
Basically, if you hold a number of assets that tend to move up and down more or less randomly, that is diversified. A basket of assets that move in sync with each other is not diversified. Stocks and bonds (roughly speaking) tend not to move together all that much.
Diversification does not protect you from risk. What it does is lower the risk required to get a similar return.
quote:
Are you guys all stk salesmen?
Not me - I'm an index fund guy.
Posted on 4/26/10 at 1:32 pm to foshizzle
Rob a bank.
Posted on 4/26/10 at 1:36 pm to foshizzle
Quit being an azzhat and tell him what he really needs to hear: invest in gold.
Posted on 4/26/10 at 1:37 pm to LSURussian
i would like to get into stocks but dont have that much extra funds. What company offers the best type of Roth IRA?
Posted on 4/26/10 at 1:46 pm to trident
quote:
i would like to get into stocks but dont have that much extra funds. What company offers the best type of Roth IRA?
I'll let someone else tackle the majority of this question, but you should invest in index funds that reflect the market. You need to read up on the financial industry or hire a CFP to help you understand all the different mechanisms.
Posted on 4/26/10 at 1:47 pm to lynxcat
ok. What is a CFP and how much money does it take to start investing in these tyep of stocks?
Posted on 4/26/10 at 1:55 pm to trident
quote:Certified Financial Planner
What is a CFP
quote:If you're participating in your agencies' 457 plan, you can start with zero, assuming your retirement plan allows for such investment options. Your paycheck deductions go into the various investment options at your direction.
how much money does it take to start investing in these tyep of stocks?
Did you ask your human resources department for an explanation of your retirement plan's investment options?
Posted on 4/26/10 at 2:05 pm to trident
Do you get a pension?
Posted on 4/26/10 at 2:24 pm to LSURussian
well yea i am not just in the "G" fund that is guaranteed at an awful 3.5%. I am in the C fund which is the big US companies. I got in when the stock matket was at 9800 and am up 15% on my investments. 
Posted on 4/26/10 at 2:25 pm to AUFanInSoCal
yea. It is like 18% of my last three years working salary plus the 401K or 457 whatever on it is.
Posted on 4/26/10 at 2:59 pm to trident
A CFP is someone who will be able to help you make investment decisions so that you can retire (that is a pretty basic definition).
They will make you fill out a questionnaire to find out how you feel about risk and return and then will find out some other pertinent information that helps them figure out how to diversify your portfolio.
In general, they will put you in a riskier portfolio when you are younger and a safer portfolio later in your life. They adjust your portfolio as time goes by.
You do have to pay them a fee (around 2%), but if you are completely in the dark about how financials work, then you really do need to have a certified professional explain it to you.
Also, if the CFP can't explain different investment options to where you understand what he or she is talking about--go somewhere else. You shouldn't invest your money in something unless you have a grasp on what it is.
They will make you fill out a questionnaire to find out how you feel about risk and return and then will find out some other pertinent information that helps them figure out how to diversify your portfolio.
In general, they will put you in a riskier portfolio when you are younger and a safer portfolio later in your life. They adjust your portfolio as time goes by.
You do have to pay them a fee (around 2%), but if you are completely in the dark about how financials work, then you really do need to have a certified professional explain it to you.
Also, if the CFP can't explain different investment options to where you understand what he or she is talking about--go somewhere else. You shouldn't invest your money in something unless you have a grasp on what it is.
This post was edited on 4/26/10 at 3:01 pm
Posted on 4/26/10 at 3:06 pm to trident
quote:
well yea i am not just in the "G" fund that is guaranteed at an awful 3.5%. I am in the C fund which is the big US companies. I got in when the stock matket was at 9800 and am up 15% on my investments.
I'm guessing then that you're in the federal TSP. I don't remember if you have any choices other than the various federal letter funds.
Regarding a Roth, it doesn't matter much where you open it beyond things like customer service and fees. I have mine with Schwab and have been very happy there for several years, but it's pretty similar wherever you go. The Roth is simply a type of account and doesn't have much to do with what you invest in.
Posted on 4/26/10 at 3:07 pm to foshizzle
Nicely played. 
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