I am planning to start investment in 401k as my company matches to 6% . What would be the ideal % figure to start with? Just wondering should I invest maximum amount which i guess 18k per year or not?
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Max it out if you can afford to do so. Compound interest works in your best interest when you’re still young.
Seriously, I would invest nothing if there is no company match. My 401k lost 3% since this year
I have always maxed mine out every year after my income hit about $80K many years ago. How can you not take a tax break when living in California! I also have to say between compound interest and the recent stock market gains, I can retire now and live a modest life (which I won’t do but nice to know I can, and I am under 40.)
+1 for Max. Nothing can beat 30 years of compounding interest.
Max it and forget it.
If my likelihood of retirement in the US is < 50%, would you still recommend to max it out? In other words, if I'd do an early withdrawal, does the punishment for that exceed company contributions, aka "free money"'
Pay off high interest debt (like credit cards etc.), stash 6 months of expenses for emergencies, put as much as you can into 401k up to max employer match, put as much as you can towards Roth IRA ($5500 per year limit), put as much as you can towards HSA (limit is ~$3.5k per year, if you have access to it via your employer), then max out your 401k as much as you can.
Why Roth IRA and HSA first before 401k? Would saving up to get a permanent home better than putting money into these accounts? I’m fresh grad 21y/o, will go back to school for about 5 years in my mid-late 20s.
IRA and HSA are both tax sheltered like 401k, but they also give you more flexibility of choosing your own investments (or you can mimic 401k using broad market mutual funds or ETFs). In fact, HSA is tax sheltered on both ends (contribution and withdrawal), but downside is it is tied to health care expenses. Although, I think doing 401k upto employer match before IRA/HSA makes sense. I will fix it.
You saving for a house? That’s one reason not to max out.
is saving for a house better than put for roth 401k etc?
No I am not. Just wondering what gonna happen if market crashes but seems like got the answer!
I'm doing 12% right now with a 6% employer match. The difference isn't too noticable.
Max it out. Thank me later.