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| *Ostroff, Fair and Company>>>Investing |
My dad wants to use his 401k savings to invest in the stockmarket is this a good idea? |
My dad wants to use his 401k savings to invest in the stockmarket is this a good idea? Age is a big factor in switching your 401k allotments. I'm hoping you mean that he's going to change the allotments within the 401k to mostly stocks. If he's over 50 and planning on retiring in 15 years or less, then he should keep his money in low to moderate risk areas. If what you're saying is he's wanting to take money OUT of his 401k and invest it in stocks, the answer, (unless he's of an age where he can withdraw from his 401k without penalties,) is NO WAY! There's penalties, and taxes, and penalties to deal with. Generally, it is a good idea to have PART of a 401k invested in the stock market. There are a number of good mutual funds that are good for this. Over long periods of time, stocks have appreciated in value. If he does not need the money in the next few years, he should consider putting up to about half of the funds in stock mutual funds. Not usually. If he removes the funds from his 401K then he will be subject to income taxes. If he is under 59 1/2 then he may also have to pay an additional 10% penalty. In most cases the loss on the 401K for the taxes would take too long to make up in the stock market. Also if he is counting on those funds for his retirement, then the chances of losing it are much higher in the stock market. He can also stay better diversified in a 401k with mutual funds. He may want to chat with a financial advisor. It is always a good idea to have investments in the stock market, as long as the purchases are researched and planned correctly alot of people come out on top.. Mutual funds are my favorite, other than their great yeild and performance on most funds there is something about them that I am attracted too. Here 3 very good funds that are ranked high and are low risk but also give an excellent return and good dividends. -PRWCX -PRFDX -FAIRX all three are low risk and have above average returns..PRWCX has only been down 1 year out of the 19 it has been open. If you mean he wants to take the money out, then that's always a sucker bet- you never want to pull money out of a 401K prior to retirement. If you mean should he have some of his holdings in stocks within the 401K, absolutely. Even if he's near retirement age, these days investors should be at least 70/30 in equities/bonds. However, individual stocks are risky; he'll be much better buying no-load index funds, if the 401K has those available. Hi, here is a collection of informative articles about investing. a free online investing tutorial for you. http://www.investingtutorial.info/... good luck ! wish you make fortune from investing ! |
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