Are you upset about your 401(k)? Have you lost 50%, 60%, even 70% of your money? Have you've lost money over the last 10 years? If your answer to any of these questions is yes, then it's time to learn about Bulletproofing. The guiding principles of investing for your retirement are very straight forward.
1. Don't lose the money
2. Make a buck
3. Make very sure you have great mutual funds, as well as a 401(k) or IRA.
If your employer does not match your 401(k) contributions then consider using a Roth IRA instead. If you make less than $150,000 a year as a combined household income, then you can each do a Roth IRA. With the rising tax environment brought to you by the democrats, and their free spending ways, you can count on having to pay higher taxes later. So it's a good idea to pay your taxes now.
Hidden Expenses
Remember that often-times a 401(k) has very high hidden expenses. Demand that your employer inform you of all the expenses that are built into your 401(k). If your 401(k) isn't performing well, and has bad mutual funds, then please review our mutual fund list at lefavi.com. And if you have good mutual funds but your performance is still pathetic then the problem may be the expenses of your 401(k).
Most people think that 401(k)'s are free and that there are no expenses associated with them. Not true! Very few employers pay any of the expense; in fact, most will pass the entire expense on to the employees.
Roth IRA a Good Option?
There are many good reasons to invest in a Roth IRA. When you contribute to a Roth IRA you do have to pay taxes, but you will pay on today's lower rates. Therefore, when you withdraw the entire thing comes out tax free, including all the gains. If you are making too much money to contribute to a Roth, wait until 2010. At that point in time it won't matter how much you make, you will be able to contribute to a Roth IRA. That may very well be one of the smartest moves you can make.
Always get out of your 401(k) immediately!
You should never keep your money in a 401(k) one minute longer than is necessary. There are an unlimited number of reasons why you should not leave it there. First, and most obvious, is that other retirement vehicles provide a better selection of investments to utilize.
Benefits of IRA
If you roll your money into an IRA account (you pay no taxes on moving to an IRA account) you can invest in virtually any security. In addition, there are many things you can do in an IRA account that you can't do in a 401(k). For example, if you want to take money out to help pay for a child's education, or pay for your own education, you can do so without a penalty. You can withdraw money to purchase a first home without incurring a penalty. None of which are allowed with a 401(k).
Remember, if a 401(k) is more restrictive than the regulations, the 401(k) document rules. And there is no reason why any employer wants you to stay in your 401(k) after you have left the company. At that point you are nothing more than an inconvenience to them. There are also a lot of not very helpful provisions in a 401(k), which is another reason to get out as soon as you can and move into an IRA account.
The reality is, 401(k)'s are sometimes a good thing, sometimes not. You have to be very careful to make sure that the one you have is worth keeping. If it hasn't made money over the last 10 years, you might want to consider changing to a Roth IRA or some other vehicle. And remember, most large employers allow their employees to take their money out of their 401(k) before you retire. Check to see if your employer allows that and my recommendation is if they allow that, simply do it. Get it into an IRA account and you will be much better served.
Bulletproof Retirement
Have you read the chapter on retirement in my new book? It will further explain why a 401(k) may be one of the worst choices you could make. I recommend that all of my clients read my book "Bulletproof Retirement" as it can answer a lot of your questions. Bulletproofing protects you against recession, depression and inflation. Basically, just about anything that can hurt you in the financial world. Never trust the people on Wall Street because they are only after your money.
These issues are vital to your financial survival and they are all found in my new book Bulletproof Retirement. Call (866) 702-7823 to purchase your copy.
We welcome you your questions and comments! We are anxious to hear from you and will answer as many questions as we can. Questions may be featured on TV, my radio show or on this blog. Your blog entry may also win you a free copy of my latest book Bulletproof Retirement.
