If in your 40's time will fly by. I would go with a Roth and be pretty aggressive. You can never put too much into your future. Calculate what you will need. If you are 40 and say you want to retire at 60. If you only put $5,000 a year in retirement that is only $300,000 (not counting investmetn gains). How long could you survive on that?

eb I would not worry about the no tax Roth rule changing for those that put money in with the rule in effect. It might change at some point in the future but that would only effect how investments made after that point are treated. I can see a day coming when SS is means tested and no matter that you put money in, if you have above a certain income from your retirement investments, you won't be getting any back.

My advise is play hard when you are young to set yourself up for retirement. Be aggressive. Remember you are in it for the long haul. When the market is down, invest more, maybe a few percent depending on what you can afford. It is not wise to invest more when the market is is going up because you are not buying shares on sale.
This is the way that I set myself up when I first started investing into a 401K. I started out investing 10% of my weekly salary on day # 1 when I hired in and increased it 1% per year every year (good or bad times).
Fast forward 34 years later. This is the way that I set myself up in the beginning. I now take home more money per week drawing 4% off my 401k than I did having to go to work every day.
The good thing is, I will never deplete my initial 10% investment, and my sons will have a boat load of money to spend when I tip over for the final time.

I am talking from a Canadian view point. I agree that you should start investing early. I'm 78. Got rid of all my mutual funds, and financial advisors at least 25 years ago. Do all my investing in self directed brokerage accounts. On line. Mostly in equities, about 15% cash. Banks, pipelines some oil and gas. I believe that no one can invest better than yourself, once you learn and understand finance. There is also no one to blame but yourself, if you make a mistake. Heck if I can do it, anyone can, get rid of the middle man. Good Luck old243

It is definitely a sound strategy to take investing advice from those on an internet trapping forum.

Here's some: don't try and play the market with a retirement account. Leave it alone.

I try to max my 401 investment each year, it’s tough some times I hit it some times not as I just work from May to November.... I think of it as a game.... but iv never had a truck payment, what pay 400 bucks a month in truck payment when I can stuff it in my 401....... my dad taught me that

Taking on risk when things are looking good isn't necessarily a great strategy. Lots of people lose money in the stock market because they buy when things are looking good (stocks are high) and panic sell when things are looking bad (stocks are low). You make money by doing the opposite. Buy low and sell high, not buy high and sell low. Remember that what goes up must come down. It might be next week, it might be 10 years from now but it is going to go down. But don't worry about that and don't try to figure out when it will happen. You'll never get the timing right anyway.

Even when it does go down, it will come back up again. The trick is to just stay in the market. In fact, if you pick any 20 year period from the last 100 years, you would have made money - even if that 20 year period included the great depression or the recent crash in 2008. The worst 20 year period of the last 100 years would have returned 6.5% per year. The best 20 year period - 18% per year.

If I was in my early 40's I would assume that I'd be working for at least another 25 years. That is plenty of time to recover from any bad years. That means you can invest with a little more risk. As you get closer to retirement, start shifting to things with less risk because sometimes you loose money and it's harder to recover if you only have a few years left before retirement.

I invest almost exclusively in index funds. I used to buy individual stocks and I did pretty well. But, I didn't have the time to spend doing a lot of research on stocks so I only owned 8, 10, or maybe a dozen stocks at a time. That's just too many eggs in one basket. One company declaring bankruptcy could have wiped out a big chunk of my money so now I buy mutual funds that include hundreds or thousands of stocks and let somebody who's smarter than me do the buying and selling. To diversify and not put all of my eggs in one basket, I own several different index funds including some that are overseas.

And, those who said "invest early are right". Let's assume a modest 8% return each year. By the way, The S&P 500, an index fund, has done closer to 12% over the past 100 years. But let's assume 8%. The "rule of 72" says that if you divide 72 by the rate of return (8%), you will get the number of years it takes to double your money. 72 divided by 8 equals 9 years. you double your money every 9 years. If you invest $1 when you are 18 years old, that $1 grows to: $2 at 27 years old, $4 at 36 years old, $8 at 45 years old, $16 at 54 years old, $32 at 63 years old, and $64 at 72 years old. One dollar invested becomes $64 if you start when you are 18. Wait until you're 40 and it only becomes $10.80 when you're 72. Huge difference. 1/6 as much money to retire on.

This huge growth is also why you NEVER take cash out of your investments. Financial advisors will tell you that you should leave your money in your investments to avoid tax penalties for early withdrawal. Those penalties are usually around 10%. No big deal. The real issue is that this money is growing and if you pull it out, it doesn't grow any more. If you pull out $1000 to pay an emergency car repair, you aren't puling out just $1,000. You are pulling out all future growth on that money. Remember, $1 can grow to $64. Would you spend $64,000 for a $1,000 repair? No way. Bu that's what you're doing if you use your retirement for anything except retirement.

Invest early (wish I had understood this when I was 18), absolutely stay in the market - even when things look bad - maybe, especially when things look bad, and never, never, never pull money out of your retirement investments.

Rant over. I'll get off my soapbox now.

I'm no expert but just wanted to add something about the Roth. There has been many study's done on which is better a 401K vs Roth. What they have learned is investing the same dollars in a 401K is going to make you more money then a Roth in a equal time period. The reason being is tax deferred till 71+ years of age. You also benefit paying lower taxes as you go. The power of more money NO taxes taken out each month grows more then paying those taxes up front in a Roth. You will have more money grow even at RMD time because then again it is only a portion that comes up that is taxed and the rest stays in and grows till you have to take the next portion out and so forth. Just a thought you need to do your own research on that topic. JAT for you.

I would say to invest in beans,,bullets and bandaids.Thats what we are all gonna be needing.

Always have a little in something And read this forum and another called "Scrap Metal Forum" .There are many guys on here and there that can make money from about anything. The elites under estimate the "common" man. The common man can be pretty dam smart, we just don't have as many golden parachutes as the a** kissers of the elites. Learn to make and sell about anything. A man can never have too many talents...

P.S. White 17 and others may roll their eyes at me, but if you haven't watched the movie The Big Short, you should. Of course its hollywood but there were a lot of really "smart" people who got burned because they believed their own bs. Never assume that any professional finance/investment guy has your best interest in mind (well, maybe bbwi- Bryce and some others on here are the exceptions). As I've told my mother-inl-law, her guys at Merrill Lynch aren't the shoulders she's going to be crying on if things fall apart. Good luck!!

No eye rolling here. I completely agree ! Manage your own finances. You can learn to do it. Some may choose not to because they find it boring or because they don't have time. That's great. But don't ever believe you can't do it.


If you liked the movie ( I haven't seen it ) read the book. By Michael Lewis: You would also enjoy Liars Poker , also by Lewis. And.............Predator's Ball by Connie Bruck

Snowy, a person can have both a Roth IRA and a regular employer sponsored 401K and contribute to each in the same tax year up to the plan maximums. Also, tax is not deferred in a 401K until age 71, it is deferred until the money is withdrawn. That can start as early as 55 1/2 without incurring a penalty, but a certain level of withdrawal is mandatory at 71 to ensure the gov't gets it's cut. I am not advocating a Roth IRA instead of a 401K but rather contribute the max to both, and do the more risky investments in the Roth.

Many folks don't understand that they can withdraw from their 401K at 55 1/2 if they retired from the company that sponsored their plan. IRAs are 59 1/2 but 401Ks are 55 1/2. The problem many find is that the 401K plans have primarily growth options and not the kind of principle protecting investment options favored in retirement. That drives folks to roll their 401K money over to an IRA at retirement and brings them back under the 59 1/2 limit.

excellent discussion, I think everyone , can take away something worth while.. I think starting to invest early. Put a portion of your earnings away. This is called , Pay Yourself. Take time to learn and understand finance.. You will make mistakes, along the way, just be smart enough to recognize them, and hopefully don't make them again. My Father , taught me to always save a little , we didn't have a lot, but he worked hard and we didn't want for necessities. Being Canadian, we have different retirement plans. Our relatively new, Tax free savings account, is an excellent way to shelter, some savings, hope any Canadians are taking full advantage of it. Good Luck old243

True >>> I'm talking long term on the 401K till RMD starts.

The simple way to look at ROTH versus deferred should be based on the individuals current tax bracket versus the bracket they anticipate to be in 20-30 or 40 years from now depending up on their age now and retirement age.
If you feel the brackets will be the same or lower deferred accounts look good. If you feel you will be in a higher bracket then ROTH makes more sense.
From personal experience as one ages and incomes rise and deductions go away one can be in a higher bracket more easily than one would think.

For many younger investors in lower income brackets Roths make sense early and as income rises and brackets change deferred may be a viable option.
Doing the math on growth and investment and with the large jump in bracket percentage, 12-22 or 15-25% ROTH investments come out ahead almost all the time. The real key to deferred investing is what does the tax payer do with the upfront tax savings? Invest it or spend it?

Bryce