Is it better to buy individual stocks or invest in your company 401k?

[desjardins]

I view it as two different things really
401 is pre taxed and presumably will be used when you qualify for a lower tax rate. it's a limit and you usually get free money added from the employer. it's diversified too
individual stock is post tax and you either pay normal tax or 15% depending when you cash out. ain't no limit or free money added and it's not diversified

 

[Ezekiel 25:17]

I imagine you get bigger gains if you invest in a good start up that explodes. Think of Amazon. The hard part is finding that start up company.

 

[Macallik86]

This graphic helps you understand where your money should be going:

Spoiler

 

[Pimp]

This graphic helps you understand where your money should be going:

Spoiler

You don't need an emergency fund. Put that into investments and if you need it just withdraw the money. 401k ain't that important. Match whatever your company allows and not a dollar more or less. You'll invest better than the limited mutual funds your company offers.

 

[zerorequiem]

Better to buy index funds/ETFs than individual stocks starting out. Also contribute to your 401k though. At least the company match. Max out the Roth

 

[CrimsonTider]

You don't need an emergency fund. Put that into investments and if you need it just withdraw the money. 401k ain't that important. Match whatever your company allows and not a dollar more or less. You'll invest better than the limited mutual funds your company offers.

Yes you do need an emergency fund

 

[Jermaine Colington]

You don't need an emergency fund. Put that into investments and if you need it just withdraw the money. 401k ain't that important. Match whatever your company allows and not a dollar more or less. You'll invest better than the limited mutual funds your company offers.

I feel your enthusiasm, but you’re giving him really risky advice.

1. He should have an emergency fund because you don’t want to have to sell your positions to pay for a new alternator.

2. You can’t say definitively that anyone will perform better than their mutual funds/index funds/ CITs tied to a 401k. Everything seems easy in a bull market, but what about that downturn? It always happens. If you’re in it for the long haul your almost guaranteed to see a 10-15% return on mutual funds/indices

3. Investing in a 401k also reduces your taxable income. If you plan it right, you should be saving tens of thousands of dollars. It makes the most sense if you are currently a high earner and expect to be in a lower tax bracket in retirement. If you’re not making a lot right now, that tax benefit doesn’t mean that much.

The biggest question is whether he’s willing to put in the large amount of time and effort required to potentially see a marginal improvement on return. Hitting a big lick on investments is about as sure as going to a casino and putting a percentage of your paycheck on black at the roulette table. Not terrible odds... but not particularly great either.

 

[Sad Bunny]

401K easily lol

I get a 100% return on my investment via the company match.

 

[Pimp]

Yes you do need an emergency fund

No you don't. Maybe 20 years ago but today you can get your money in a day or 2. Emergency funds are for retards.

 

[Sad Bunny]

You don't need an emergency fund. Put that into investments and if you need it just withdraw the money. 401k ain't that important. Match whatever your company allows and not a dollar more or less. You'll invest better than the limited mutual funds your company offers.

The Coli.com.

1. Everyone should have an emergency fund for easy access to liquid cash. Look at the broke people during this pandemic who thought the same

Why withdraw from your investments and pay taxes

2......

Nevermind...so much wrong with this paragraph

 

[R.E.N. Spells Ren]

My job increases our 401k contributions each year automatically by 1%. I know I was looking at January check wondering if I took a pay cut. But nope , that was them increasing the contribution.

That should be illegal.

 

[Sad Bunny]

No you don't. Maybe 20 years ago but today you can get your money in a day or 2. Emergency funds are for retards.

And this is why 70% of Americans have zero cash to cover an emergency.

I could survive 12 months without touching my 401k, investments or severance due to my emergency that sits in a HYS account.

That peace of mind is priceless.

 

[CrimsonTider]

No you don't. Maybe 20 years ago but today you can get your money in a day or 2. Emergency funds are for retards.

You do

There’s no guarantee that any investment will appreciate in value. Also investments aren’t liquid.

 

[Sad Bunny]

That should be illegal.

No it shouldn't. I have that option too.

I opted out.

He can change it if he wants...most people are just dumb and don't read the fine print.

 

[Pimp]

I feel your enthusiasm, but you’re giving him really risky advice.

1. He should have an emergency fund because you don’t want to have to sell your positions to pay for a new alternator.

2. You can’t say definitively that anyone will perform better than their mutual funds/index funds/ CITs tied to a 401k. Everything seems easy in a bull market, but what about that downturn? It always happens. If you’re in it for the long haul your almost guaranteed to see a 10-15% return on mutual funds/indices

3. Investing in a 401k also reduces your taxable income. If you plan it right, you should be saving tens of thousands of dollars. It makes the most sense if you are currently a high earner and expect to be in a lower tax bracket in retirement. If you’re not making a lot right now, that tax benefit doesn’t mean that much.

The biggest question is whether he’s willing to put in the large amount of time and effort required to potentially see a marginal improvement on return. Hitting a big lick on investments is about as sure as going to a casino and putting a percentage of your paycheck on black at the roulette table. Not terrible odds... but not particularly great either.

I have hundreds of thousands in all my accounts. I learned that the lower tax bracket shyt is .. fukk a 401k... Put whatever the company matches and invest the rest on your own. If you can't pick your own stocks use Vanguard us growth or fidelity blue chip growth and watch your money pile up..

Emergency funds are for retards who listen to Dave Ramsey..If you put your money to work when a emergency comes it won't even feel like you're spending money because it came from growth..