|
|
2003 Financially
Another day, another no-prize to Pat, who brings us one money wonk's financial predictions for 2003.
Personally, I consider this an amazingly good time to buy. The stock market has basically been flopping around like a fish for more than a year now, and that makes for great bargains.
And all of you (well, maybe except for Neenah) should be saving something. If you aren't taking advantage of the retirement benefits your employer offers, take time out today to fill out the forms. Start it out at 2.5% of your current salary. If you make $30k per year, will only pull $28 out of your GROSS paycheck. Trust me, you'll never miss it.
If you already participate in your retirment funds, take time out today to bump your 401k contributions by 2.5%. Again, you'll never miss it, and over time it'll make a monstrous difference in your retirement benefits.
If you're already putting 10% or more of your salary into your 401k, or if your employer doesn't offer one, consider opening a Roth IRA (see this and this) and plunking $35 per month into it. C'mon, that's only $8.75 a week. I'll bet you drop more than that on pizza. Already have a Roth? Try bumping your monthly contribution up $35 per month.
Also think about opening up one or two regular mutual fund accounts. These can act like savings accounts, but give you far better interest rates. Well, ok, they used to. But they will again, and if you start now you'll be in a position to really profit when it all starts back up.
And don't think you can't do it because you don't think you need to, or don't make enough money, or are too confused, or just don't like dealing with it. It's easy to set these things up. If you do monthly contributions (highly recommended) you can usually start for as little as $25 per month. There are lots of places that'll let you do it all on-line (do searches for Schwab, T Rowe Price, Ameritrade, and E-trade just to start).
For anyone under 35, starting now, even if you start really small, makes huge differences in what you'll have when you want to retire. Compound interest is an amazing thing!
It's a new year folks. Start it out right by taking control of your own money!
Shane and I each put $50 a month away for retirement...our financial person said that by the time we retire (Shane is 23, I am 18), we should each have around $800,000 - $1,000,000. I like those numbers, and I'm glad I listened to my mom for once when she told me to start saving early.
Posted by: Pam on January 9, 2003 12:50 PMactually, I think that should be more - those numbers were calculated when we were still putting away $25 each a month. woohoo!
Posted by: Pam on January 9, 2003 12:51 PMI'm on to your evil plot. You're trying to get people to buy stock in order to pump up your own 401k!
Well, thanks for helping to boost up my 401k as well. :) I'm putting in 19%, and work is putting in 6%. Woohoo!
Posted by: Byna on January 9, 2003 01:28 PMI put 13% into my 401k (max allowed for my plan) - the employer puts in another 3%. My Wonderful Spouse puts in 15% and employer matches the first 5%. We need to look into those Roth IRA's though.
Posted by: Bogie on January 10, 2003 05:45 AMAnd don't forget folks, most contributions to 401k plans comes out BEFORE taxes - which means your total tax liability is lowered while you save for retirement.
Posted by: Bogie on January 10, 2003 05:47 AMwow.... financial advice from the blogosphere.
Please add some sort of disclaimer that they should contact their financial planner!
Seriously... with the IRA choices out there, it is ABSOLUTELY ESSENTIAL that people become aware of the choices before dumping money into one.
One particular little shred that you DIDN'T tell people is that Roth IRA's are NOT tax deductible, whereas a traditional IRA plan IS tax deductible up to a certain threshold (that's industry-speak!), depending on whether or not you are covered by a 401(K), etc.
Also, every mutual fund, brokerage house, bank, etc. offers IRA plans, only YOU and your financial advisor can decide which investment vehicle (more industry-speak!) is right for you.
I applaude your enthusiasm at encouraging people to save for their retirement and you have a valid point. People SHOULD save for their retirement, and save A LOT for it, but they need to save wisely in the right type of investment and the right type of retirement plan.
Scott, I highly advise that unless you're going to take your Series 6, 63, 7 and primary principal's license, you don't give financial advice.
Posted by: Jim S on January 10, 2003 01:35 PMRoth IRAs are not tax deductable, true, but there are no limitations on when you can withdraw the principal, and all interest/dividens are tax free on withdrawal at retirement, unlike 401ks.
If people had to be qualified to give opinions and/or advice, the entire blogosphere would suddenly get very, very quiet.
Posted by: scott on January 10, 2003 01:44 PM