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Wednesday, April 14, 1999

401(k) Thoughts

by Paul Corcoran

In the Fool's section on 401(k)s they recommend that those early in their career jump into this retirement vehicle. The reasons, in a nutshell, include:

1. You won't miss the money -- it just won't be in your wallet to waste!
2. The employer match -- you must take the free money!
3. It pays to start now, because time is on your side, youngster.

I thought I'd add some hard-earned wisdom to that already provided.

Ignore Safety: Get in that plan and ignore the safety of bonds, and money markets. As a young person, you have years to ride the ups and downs of the stock market -- but the trend in stocks is way up compared to the bonds and money markets.

Take it With You: You may think you've got a deal for life with your employer, but sooner or later you're going to go. And when you leave, take it all with you! It's a pain with the paperwork, notarization, and rules -- but it's the time to get out of the underperforming plan funds and put the money to work! You can take the 401(k) money and roll it directly into a self directed IRA with most any reasonable brokerage. Now you choose what to do with the money.

Invest Foolishly: Wow. Now you've got the money. Spend some time at The Motley Fool, buy a book or two by the Gardner guys (or check it out at the library), and get some solid portfolios of your choosing to work for you. You're here looking, so you already know that you can beat 90% of the funds out there without much effort. So get to work -- or at least get your money to work.

Retire Early: There's not much to say here. Fill in the blanks with your own dreams.


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