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My employer does not offer an Index fund in my 401(k). This is the first time I will be able to take part in the plan. I am investing for the first time amd want to maxamize my investment, however my employer does not match.I am 39 and need some advice. Should I max out my contributions which equal 15%? If so kind of fund do I invest my money in?I am a late investor. I have payed down 90% of my short term debt and have only one credit card which I am now paying off.Please advise. Sincerely, A Fool In Need!!!!
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Congrats on paying off your bills and having money now available for retirement. The general consensus has been to put as much money as the employer matches in your 401(k), then put any additional money (up to $2k) in a Roth IRA and any additional money in the 401(k). Since your employer doesn't match and the choices are probably somewhat limited, put the money in the ROth first since the proceeds can grow tax-free. Then put as much money as you feel comfortable doing into the 401k. Of course any additional after-tax dollars can go into a savings/investment account.

GP
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AFIN,

Does your employer offer mid-to-large cap stock funds? Any type of equity-income funds? Perhaps you could get into some of these, instead. I hope you're not caught up in the word, "index," while my company offers stock funds whose benchmarks might be the S&P 500, the funds themselves are not listed as "index funds."

Beyond that, at your age, while still young, I would probably diversify my contributions across both equity and more conservative funds, perhaps bonds.

Regardless, of what funds you have available, as long as they're generating positive returns, the tax-defered advantages of a 401k are hard to beat.
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Regarding the index fund, explain the Foolish philosophy to your co-workers and get them to help you lobby your employer to include an index fund.

Even if your employer does not provide 401k matching funds, you should participate at a minimum level so that you can vest in any future matching funds.

One nice thing about a 401k is that the money is taken off the top of your pay and is reported to the IRS that way. If your income is low enough, contributing to a 401k can lower your pay enough to make a traditional IRA contribution tax-deferred. You would then get the same tax-deferral of a 401k, but you would have alot more investment options.

Zev
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Greetings, EMCSR, and welcome. You wrote:

<<My employer does not offer an Index fund in my 401(k). This is the first time I will be able to take part in the plan. I am investing for the first time amd want to maxamize my investment, however my employer does not match.I am 39 and need some advice. Should I max out my contributions which equal 15%? If so kind of fund do I invest my money in?I am a late investor. I have payed down 90% of my short term debt and have only one credit card which I am now paying off.>>

You received some great guidance from lm11 and Zev (aka Zgriner). In addition to their comments, I'll add that often you can do better outside a 401k rather than within it whenever there is no employer match. However, you must maintain the same discipline with your deposits (i.e., fixed contributions every time you get paid that increase as your pay does) to do so. To see if you can do so, you gotta run the numbers on a tax-equivalent basis for each alternative. I suggest one way to do that in Step 4 of my 13 Steps to Foolish Retirement Planning. You can read that missive at http://www.fool.com/Retirement/Retirement.htm .

Regards….Pixy
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