Had a thought today....
I'm not a big fan of my 401k. The offerings are slim not to mention I prefer my Roth IRA.
So not to leave any money on the table, I do invest in my 401k so my company will match it 50% (up to my 4%) So, I invest the minimum 4% and they match 2%.
So, spit balling here:
I was thinking, "can I get it out and working better for me?"
I am able to take out 2 loans from my 401k and the rate is about 5% ish. So, if I do nothing else but borrow as much as I can from the 401k, I will end up putting in 9% and the company matches 2% for a total of 11%.
I mean I am feeding the 401k more money, but I wonder if the funds I would borrow would serve me better in my general investment account. The idea is that I just need to make more out of the 401k than in right?
The more funds I put in, the bigger the next loan can be once the first is paid off.
Or would I be better served putting an additional 5% (loan rate) of my post tax income into my investment account?
EDIT:
At some magic number this is worth while. Would 100% return be viable? of course. Would 50% rate of return work? sure would... would 15%? hmm.. now we're getting down to the real discussion.
Instead of this "OmG yoR GonNa LosE fIV PerCEnT iNTerEst tO thE MaN. THis SuX 4 ThAt REasON aLONe!"
With inflation being a real looming threat to investments, what number does returns have to be in order for this to be interesting?
I'm not a big fan of my 401k. The offerings are slim not to mention I prefer my Roth IRA.
So not to leave any money on the table, I do invest in my 401k so my company will match it 50% (up to my 4%) So, I invest the minimum 4% and they match 2%.
So, spit balling here:
I was thinking, "can I get it out and working better for me?"
I am able to take out 2 loans from my 401k and the rate is about 5% ish. So, if I do nothing else but borrow as much as I can from the 401k, I will end up putting in 9% and the company matches 2% for a total of 11%.
I mean I am feeding the 401k more money, but I wonder if the funds I would borrow would serve me better in my general investment account. The idea is that I just need to make more out of the 401k than in right?
The more funds I put in, the bigger the next loan can be once the first is paid off.
Or would I be better served putting an additional 5% (loan rate) of my post tax income into my investment account?
EDIT:
At some magic number this is worth while. Would 100% return be viable? of course. Would 50% rate of return work? sure would... would 15%? hmm.. now we're getting down to the real discussion.
Instead of this "OmG yoR GonNa LosE fIV PerCEnT iNTerEst tO thE MaN. THis SuX 4 ThAt REasON aLONe!"
With inflation being a real looming threat to investments, what number does returns have to be in order for this to be interesting?