No. of Recommendations: 0
>> In the past I have always contributed to my 401(k) for the tax savings and for the "free" money when I had a plan that matched. Now that I'm learning the ways of the Fool I'm not sure if I should still contribute to a 401(k) or put the money into stocks.
------------------------------
In general, if you can get any significant amount of matching from your employer, you should contribute up to the amount that will be matched. Where else can you get the effect of an immediate 50 percent return?

But you should also consider what investment options are available in the 401(k), and how long you might stay with the company. It is more attractive to contribute the maximum that can be matched if there is an acceptable investment option (in the Foolish way of thinking, an index fund would qualify; most other mutual funds wouldn't).

How long you might stay matters because your money has to stay in the plan as long as you stay with the company. After that you can elect to roll it over into a self-directed IRA. If none of the investment choices is very attractive, you have to weigh the partial matching against the return you would hope to get with an investment outside the plan.

Keep in mind, in any case, that you can invest in a Dow Dividend portfolio somewhere else if you still have funds available.
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement