A company fund where they match your contribution sounds good. The problem is that if the company goes down so does your retirement.
Bill Gross -- The Good Times Are Over.
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Jerry Williams, a famous Boston talk show guy had investment "seers" on all the time, one day a caller asked HIM what he had learned from all the palaver, he said " Take it down to Alantic City and put it all on the red".
This is an interesting thread. I started participating in the market in my early 20's, opened an IRA, funded it with the max amount every year, then researched stocks. Mutual funds came a bit later. I usually bought on dips, downturns, bad news...but only if the bad news was temporary. I remember some companies getting slammed just because they missed some analysts prediction by one or two cents.
The oil crash is great for consumers, grocery prices, the airlines and shipping industries included. Gasoline here can now be found for $1.75/ga. That's like an instant salary raise with no tax consequences. The guys in construction driving their trucks are loving it too.
For me, I'll be searching for more gainful employment as the economy will be getting a needed shot from lower oil. I'd even consider moving as I have lots of equity in my house I'd like to extract. It by far has been my best investment the last 10 years overall.
As to the bank/real estate crash ~ 2008, I wonder why more "officers" weren't proscecuted? The DOJ really failed the American people. As such, many lost what faith they had left in this. The scammers made out like bandits...because they were.
The oil crash is great for consumers, grocery prices, the airlines and shipping industries included. Gasoline here can now be found for $1.75/ga. That's like an instant salary raise with no tax consequences. The guys in construction driving their trucks are loving it too.
For me, I'll be searching for more gainful employment as the economy will be getting a needed shot from lower oil. I'd even consider moving as I have lots of equity in my house I'd like to extract. It by far has been my best investment the last 10 years overall.
As to the bank/real estate crash ~ 2008, I wonder why more "officers" weren't proscecuted? The DOJ really failed the American people. As such, many lost what faith they had left in this. The scammers made out like bandits...because they were.
Ignore the current news, it is just noise in terms of long term investment strategy. Live below your means, stay away from consumer debt, and save/invest for your retirement by dollar cost averaging on a monthly basis 15% of your salary every month for 35 years into a couple of diversified low cost index funds. If you follow this extremely simple plan you will have a secure and pleasant retirement and likely can retire a few years early. Don't follow that plan and you will just as surely be screwed and have to work till you fall over. The choice is yours.
Originally Posted By: cashmoney
Ignore the current news, it is just noise in terms of long term investment strategy. Live below your means, stay away from consumer debt, and save/invest for your retirement by dollar cost averaging on a monthly basis 15% of your salary every month for 35 years into a couple of diversified low cost index funds. If you follow this extremely simple plan you will have a secure and pleasant retirement and likely can retire a few years early. Don't follow that plan and you will just as surely be screwed and have to work till you fall over. The choice is yours.
Well-stated! You've made it simple as one can and hit the nail right on the head!
Ignore the current news, it is just noise in terms of long term investment strategy. Live below your means, stay away from consumer debt, and save/invest for your retirement by dollar cost averaging on a monthly basis 15% of your salary every month for 35 years into a couple of diversified low cost index funds. If you follow this extremely simple plan you will have a secure and pleasant retirement and likely can retire a few years early. Don't follow that plan and you will just as surely be screwed and have to work till you fall over. The choice is yours.
Well-stated! You've made it simple as one can and hit the nail right on the head!
Originally Posted By: OneEyeJack
A company fund where they match your contribution sounds good. The problem is that if the company goes down so does your retirement.
This is generally the case with old school pension systems, but isn't the case at all, at least if I understand you correctly, with modern 401(k)s. (If you're talking about an employer match.) If your employer goes belly-up, you obviously may lose your job, but you won't lose your money*. A 401(k) is kept in your personal account with an investment house...such as Vanguard, Fidelity, etc...whomever your employer contracts with to manage the retirement accounts.
*The only money you would stand to lose is any unvested amount of the employer match. Some employers (not all, but some) have a vesting schedule that encourages longevity with the employer. Say that vesting schedule is four years. If you leave after two years, or if the employer goes bankrupt after two years, you still retain all of the money you contributed to the account, and you'll retain the unvested portion of the employer match, which would be 50% (half of the four year schedule).
A company fund where they match your contribution sounds good. The problem is that if the company goes down so does your retirement.
This is generally the case with old school pension systems, but isn't the case at all, at least if I understand you correctly, with modern 401(k)s. (If you're talking about an employer match.) If your employer goes belly-up, you obviously may lose your job, but you won't lose your money*. A 401(k) is kept in your personal account with an investment house...such as Vanguard, Fidelity, etc...whomever your employer contracts with to manage the retirement accounts.
*The only money you would stand to lose is any unvested amount of the employer match. Some employers (not all, but some) have a vesting schedule that encourages longevity with the employer. Say that vesting schedule is four years. If you leave after two years, or if the employer goes bankrupt after two years, you still retain all of the money you contributed to the account, and you'll retain the unvested portion of the employer match, which would be 50% (half of the four year schedule).
In a lot of cases, the company matches are in company stock.
In that case, OneEyeJack is correct.
In 1999, I had roughly 1100 shares of UAL stock - issued as part of an ESOP. When UAL was over $90/share, this seemed attractive, but I still disliked the risk of my paycheck and my investments being tied to one company's fortunes, as OneEyeJack has pointed out. However, I could not sell them until retirement, so I was stuck with the risk.
During the UAL bankruptcy, in addition to my 62% pay cut, and the liquidation of my pension, those shares were sold by the fiduciary, executing their "fiduciary responsibility" to prevent my investment from reaching zero value.
They sold at $ 0.72 each.
I tried not to spend the resulting $800 or so, but the kids needed to eat, whether my paycheck was less than half of the previous amount or not, so it went pretty quickly. And my previous concern about overexposure to risk from one company was completely validated.
In that case, OneEyeJack is correct.
In 1999, I had roughly 1100 shares of UAL stock - issued as part of an ESOP. When UAL was over $90/share, this seemed attractive, but I still disliked the risk of my paycheck and my investments being tied to one company's fortunes, as OneEyeJack has pointed out. However, I could not sell them until retirement, so I was stuck with the risk.
During the UAL bankruptcy, in addition to my 62% pay cut, and the liquidation of my pension, those shares were sold by the fiduciary, executing their "fiduciary responsibility" to prevent my investment from reaching zero value.
They sold at $ 0.72 each.
I tried not to spend the resulting $800 or so, but the kids needed to eat, whether my paycheck was less than half of the previous amount or not, so it went pretty quickly. And my previous concern about overexposure to risk from one company was completely validated.
Web link for Frontline PBS about corporate bankruptcy, excellent program on how they weaseled their way out of prior obligations to their employees. Bankruptcy law firm was paid $100 million for negotiating the restructure of the bankruptcy.
http://www.pbs.org/wgbh/pages/frontline/video/flv/generic.html?s=frol02s4baq79&continuous=1
http://www.pbs.org/wgbh/pages/frontline/video/flv/generic.html?s=frol02s4baq79&continuous=1
Originally Posted By: Astro14
In a lot of cases, the company matches are in company stock.
In that case, OneEyeJack is correct.
In 1999, I had roughly 1100 shares of UAL stock - issued as part of an ESOP. When UAL was over $90/share, this seemed attractive, but I still disliked the risk of my paycheck and my investments being tied to one company's fortunes, as OneEyeJack has pointed out. However, I could not sell them until retirement, so I was stuck with the risk.
During the UAL bankruptcy, in addition to my 62% pay cut, and the liquidation of my pension, those shares were sold by the fiduciary, executing their "fiduciary responsibility" to prevent my investment from reaching zero value.
They sold at $ 0.72 each.
I tried not to spend the resulting $800 or so, but the kids needed to eat, whether my paycheck was less than half of the previous amount or not, so it went pretty quickly. And my previous concern about overexposure to risk from one company was completely validated.
Which is precisely why a good, long term retirement investment strategy never puts all the eggs in a single basket.
In a lot of cases, the company matches are in company stock.
In that case, OneEyeJack is correct.
In 1999, I had roughly 1100 shares of UAL stock - issued as part of an ESOP. When UAL was over $90/share, this seemed attractive, but I still disliked the risk of my paycheck and my investments being tied to one company's fortunes, as OneEyeJack has pointed out. However, I could not sell them until retirement, so I was stuck with the risk.
During the UAL bankruptcy, in addition to my 62% pay cut, and the liquidation of my pension, those shares were sold by the fiduciary, executing their "fiduciary responsibility" to prevent my investment from reaching zero value.
They sold at $ 0.72 each.
I tried not to spend the resulting $800 or so, but the kids needed to eat, whether my paycheck was less than half of the previous amount or not, so it went pretty quickly. And my previous concern about overexposure to risk from one company was completely validated.
Which is precisely why a good, long term retirement investment strategy never puts all the eggs in a single basket.
Exactly Pop!
I was well aware of the risk, I wanted to sell the stock in 1999, to avoid that risk. But the ESOP structure prohibited the sale. I didn't like the situation, but I could do nothing about it except watch that asset evaporate.
Of course, the executives had no such prohibitions.
Now, during Delta's bankruptcy, the pilots had learned from the UAL experience. Delta pilots were prohibited from taking a lump sum from their pension until retirement. Knowing that the lump sum option would go away if the pension were turned over to the PBGC, many senior Delta pilots got divorced. Because a court can, through a QDRO, divide that asset, and the now ex-spouse can take the lump sum immediately- they wouldn't have to wait until the pilot retires....as you might expect, those couples are still living together....
I was well aware of the risk, I wanted to sell the stock in 1999, to avoid that risk. But the ESOP structure prohibited the sale. I didn't like the situation, but I could do nothing about it except watch that asset evaporate.
Of course, the executives had no such prohibitions.
Now, during Delta's bankruptcy, the pilots had learned from the UAL experience. Delta pilots were prohibited from taking a lump sum from their pension until retirement. Knowing that the lump sum option would go away if the pension were turned over to the PBGC, many senior Delta pilots got divorced. Because a court can, through a QDRO, divide that asset, and the now ex-spouse can take the lump sum immediately- they wouldn't have to wait until the pilot retires....as you might expect, those couples are still living together....
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Originally Posted By: Astro14
In a lot of cases, the company matches are in company stock.
In that case, OneEyeJack is correct.
In 1999, I had roughly 1100 shares of UAL stock - issued as part of an ESOP. When UAL was over $90/share, this seemed attractive, but I still disliked the risk of my paycheck and my investments being tied to one company's fortunes, as OneEyeJack has pointed out. However, I could not sell them until retirement, so I was stuck with the risk.
During the UAL bankruptcy, in addition to my 62% pay cut, and the liquidation of my pension, those shares were sold by the fiduciary, executing their "fiduciary responsibility" to prevent my investment from reaching zero value.
They sold at $ 0.72 each.
I tried not to spend the resulting $800 or so, but the kids needed to eat, whether my paycheck was less than half of the previous amount or not, so it went pretty quickly. And my previous concern about overexposure to risk from one company was completely validated.
In a lot of cases, the company matches are in company stock.
In that case, OneEyeJack is correct.
In 1999, I had roughly 1100 shares of UAL stock - issued as part of an ESOP. When UAL was over $90/share, this seemed attractive, but I still disliked the risk of my paycheck and my investments being tied to one company's fortunes, as OneEyeJack has pointed out. However, I could not sell them until retirement, so I was stuck with the risk.
During the UAL bankruptcy, in addition to my 62% pay cut, and the liquidation of my pension, those shares were sold by the fiduciary, executing their "fiduciary responsibility" to prevent my investment from reaching zero value.
They sold at $ 0.72 each.
I tried not to spend the resulting $800 or so, but the kids needed to eat, whether my paycheck was less than half of the previous amount or not, so it went pretty quickly. And my previous concern about overexposure to risk from one company was completely validated.
That was a pretty big hit.
But nowhere near as big as the liquidation of the pilot pension and its takeover by the PBGC.
A reasonable projection of my pension, pre bankruptcy, was $8,000/month. The PBGC will pay me $840/month. To compensate for that loss of roughly $80,000/year in retirement income requires an additional $2 million in my 401(k).
That was a big hit.
Before everyone jumps on and tells me how much pilots are paid, that same year (pension liquidated, stock sold at 0.72), the entire pilot pay scale was cut by 42%. And guys like me moved down the scale a couple of steps (different airplane) as well.
The total pay cut in my case was 62%. I lost two thirds of my pay in one year. I was making less than I had as a Lieutenant in the Navy six years earlier.
I was conservative with money before. That's the only reason I survived. But I am even more conservative with money now....
But nowhere near as big as the liquidation of the pilot pension and its takeover by the PBGC.
A reasonable projection of my pension, pre bankruptcy, was $8,000/month. The PBGC will pay me $840/month. To compensate for that loss of roughly $80,000/year in retirement income requires an additional $2 million in my 401(k).
That was a big hit.
Before everyone jumps on and tells me how much pilots are paid, that same year (pension liquidated, stock sold at 0.72), the entire pilot pay scale was cut by 42%. And guys like me moved down the scale a couple of steps (different airplane) as well.
The total pay cut in my case was 62%. I lost two thirds of my pay in one year. I was making less than I had as a Lieutenant in the Navy six years earlier.
I was conservative with money before. That's the only reason I survived. But I am even more conservative with money now....
Yep, people point to Enron, but the reality is those who had EVERYTHING in Enron stock were burnt the worst.
The only thing Enron employees had to take in Enron stock was the employer match. But some put everything in that instrument and were hurt badly.
No matter how good your employer claims the stock is, don't put everything in the company stock.
Originally Posted By: Pop_Rivit
Originally Posted By: Astro14
In a lot of cases, the company matches are in company stock.
In that case, OneEyeJack is correct.
In 1999, I had roughly 1100 shares of UAL stock - issued as part of an ESOP. When UAL was over $90/share, this seemed attractive, but I still disliked the risk of my paycheck and my investments being tied to one company's fortunes, as OneEyeJack has pointed out. However, I could not sell them until retirement, so I was stuck with the risk.
During the UAL bankruptcy, in addition to my 62% pay cut, and the liquidation of my pension, those shares were sold by the fiduciary, executing their "fiduciary responsibility" to prevent my investment from reaching zero value.
They sold at $ 0.72 each.
I tried not to spend the resulting $800 or so, but the kids needed to eat, whether my paycheck was less than half of the previous amount or not, so it went pretty quickly. And my previous concern about overexposure to risk from one company was completely validated.
Which is precisely why a good, long term retirement investment strategy never puts all the eggs in a single basket.
The only thing Enron employees had to take in Enron stock was the employer match. But some put everything in that instrument and were hurt badly.
No matter how good your employer claims the stock is, don't put everything in the company stock.
Originally Posted By: Pop_Rivit
Originally Posted By: Astro14
In a lot of cases, the company matches are in company stock.
In that case, OneEyeJack is correct.
In 1999, I had roughly 1100 shares of UAL stock - issued as part of an ESOP. When UAL was over $90/share, this seemed attractive, but I still disliked the risk of my paycheck and my investments being tied to one company's fortunes, as OneEyeJack has pointed out. However, I could not sell them until retirement, so I was stuck with the risk.
During the UAL bankruptcy, in addition to my 62% pay cut, and the liquidation of my pension, those shares were sold by the fiduciary, executing their "fiduciary responsibility" to prevent my investment from reaching zero value.
They sold at $ 0.72 each.
I tried not to spend the resulting $800 or so, but the kids needed to eat, whether my paycheck was less than half of the previous amount or not, so it went pretty quickly. And my previous concern about overexposure to risk from one company was completely validated.
Which is precisely why a good, long term retirement investment strategy never puts all the eggs in a single basket.
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