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Financial Planning / Foolish 401(k)s


Subject:  Re: Emergency Savings vs. Maximizing 401K Contri Date:  10/9/2002  9:43 AM
Author:  splotto Number:  15391 of 26254


I might be in the minority in here, but I think now is a great time to be buying. I think that all the purchases your 401k is making since July will payoff nicely 2 years from now. I have actually increased my contribution and I have been buying many of my DRiP stocks during this blue light special.

If you walked into your local store and discovered that a box of Band-Aid's were half price, would you not buy them? No. You would be happy they were on sale.

Clearly the analogy assumes that the Band-Aid's are the same product that they were when selling at full price. Some of the stocks out there are on sale because of real trouble. However, when we are talking about a total market index or an S&P 500 index (or quality stocks that are undervalued) you are still talking about generally the same companies.

You might consider not changing your contribution, but trying to lower your expenses elsewhere in your budget to add to your reserve. Don't forget, while it is not the best possible choice, your 401k funds are there if you have a REAL emergency (like being faced with losing your house or something).


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