FIN 101 Lecture 10: Invest In Your 401K

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periwinklemammoth360

13 Aug 2020

School

Ball State University

Department

Finance

Course

FIN 101

Professor

Olga S Mc Atee

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Document Summary

Invest in your 401k- at least to the company match. A lot of companies have a 401k investment plan you can invest in and is a pretty simple principle to understand. The 401k consists of different vehicles of investment where you can choose to invest. They are separate and distinct form the stock you have in that company. This 401k will probably give the option to invest in the company stock, though. A huge benefit of this is that you invest in them with dollars that are pre-tax. This means that you don"t have to pay taxes on the money that goes into them from your paycheck. However, you have to use the dollars that you won"t need until you retire because if you take the money out early there is a very high penalty for withdrawing before 65. This is another forced way to save that you should use.

Related Questions

Many employers provide 401K matching That is, once an employeehas been with the firm for a sufficient period (often one year),the firm will match the employeeâs contributions to the firmâsavailable 401K plan up to a certain percentage. Assume that anemployee has just become eligible for the firmâs matching plan. Inthis case, the firm will match the employeeâs investments up to 6%of the employeeâs salary. (If the employee contributes 1%, thecompany puts in 1%, likewise up through 6%. If the employee puts inmore than 6%, the companyâs contribution remains at 6% of thesalary.) If the 401K investment plan currently has earned anaverage of 5% per year for the past 5 years, consider thefollowing:

What percentage of their salary should this employee invest inthe 401K if they believe that they can earn 8% per year in an ETF(exchange-traded fund)? How does the current investment environmentaffect this employeeâs decision? What might be circumstances youcan envision that might change the employeeâs investment decisions?Use the time value of money concepts that you have learned in thisclass to help you consider this problem. Be sure to consider thebenefits and risks of investments in general and those for thisexample in particular. If you decide to use numeric examples, besure to state your assumptions.

Note: 401K and similar plans allow employees to invest pre-taxfunds as savings for their retirement. Taxes are paid when thefunds are withdrawn during retirement, with steep penalties forearly withdrawal of funds. âRegularâ investments are made withafter-tax funds.

skyelephant463

Subject: Management issues affected by the instability of Social Security

I read the question then I come up with my opinion please read my opinion them tell me what is your opinion, (what are you agree with or disagree with)

Here is the question:

As a benefits manager, how might the potential demise of Social Security affect the decisions you make regarding other benefits that you have the option of providing to your employees? How might it affect your company's human resource planning process?

Here is my opinion

As a benefits manager acknowledging that the demise of social security is pending, I would be tasked with finding more robust retirement planning options without significantly increasing the cost to the company. Increasing company 401k matching is a solution, but one that might not be necessarily a financial option. I think that mandatory employee training on the status of social security and the importance of retirement planning is crucial to addressing this problem. Most employees are not exposed or do not take this time to understand possibly confusing topics such as SS and retirement. People think that retirement planning is something they can put off for the future. I think that a financial advisor who specializes in retirement planning should be provided at the firmâs expense to employees. Also, possibly changing the bonus structure at the firm where part of an employeeâs bonus is deposited into an additional retirement investment vehicle separate from a 401K. This would promote retirement saving activities without additional costs to the firm.

Please leave me your comments what is your opinion (what are you agree with or disagree with my opinion)

â¦..

beigeeel743

Have you ever walked into a Wal-Mart or other big box store and been greeted by an older person who probably should have retired a decade ago? We all have at some time or another, and most of us think that when we're that age, we want to be taking vacations and spoiling our grand kids, not handing people shopping carts! Heck, none of us really -want to have to work during retirement. It's okay if you choose to work during retirement so that you have a reason to get up in the morning, but it should be your choice to do so.

Want to get rich? Use the power of compound interest working in your favor. A little bit of money invested well over a long period of time can equate to a lot of money! It's really a simple concept, but so many people fail to make use of the amazing power of compound interest. You can be very wealthy at retirement if you just put a relatively small amount of money away for retirement in a solid investment for a long period of time.

If you're under the age of 30, you can retire with a million dollars by age 65 by putting away a lot less money than you think! You'll need to put it in a solid investment account maybe a 401K- You just have to do the research and find a account at your work.. If you're really young, say age 20, you would only need to deposit very little into a good 401k to be a millionaire upon retirement.

You'll have to go find a savings calculator to figure out how much a month you need to put away to be a millionaire at retirement, but chances are it's a lot less money than you might think. Go to ANY OTHER FINANCIAL CALCULATOR. Please note two important things! 1) You must start as young as possible and 2) the return on your investment (percentage gain each year) makes an incredible difference in how you do. Someone who just puts money in CD's may average a 2% return and it would take much more money. If you get a professional broker or educate yourself, you should be able to get the traditional 7-8% return on your investments that someone using professional can usually get . This is why I always tell people to get the best advice they can through a professional broker as young as they can!

Your discussion is to tell me how much you should start investing now each month to have a cool million by retirement.

Make use of the power of compound interest in your financial life rather than letting the bank use compound interest against you through credit cards, mortgages and automobile loans. Compound interest is an amazing tool if you put away a percentage of your income away for retirement. When retirement occurs, you could do just about anything that you ever wanted--- just let it work for you and not somebody else.

rosejackal317

FIN 101 Lecture 10: Invest In Your 401K

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