Any financial geniuses in the house?

[TripleDigitRide]

I'm getting real tired of seeing my 401K on the decline. I need a better way to save for retirement.

Not only do I have a 401K, but I work for an employee owned company, and receive an unspecified number of shares each year though our ESOP program. Unfortunately, I'm not sure I can count on those shares any more than I can count on my 401K.

When we became an employee owned company, they decided to stop matching our 401K contributions, but I'm fairly certain the number of shares we receive is partially based on how much we contribute to our own 401K.

I'm almost positive I cannot withdraw or transfer the company stock unless I leave the company, but think I can possibly do something with the 401K.

Anyone with any real knowledge have any suggestions?

[Patrick Henry]

I use to work for a company with an ESOP. Be sure to read or ask the benefits dept in HR about the plan rules. The company's contribution to your ESOP may not be based on your 401K contributions; you need to ask. Also, the ESOP plan may very well allow you to diversify out of some of your ESOP shares into other investments. BUT...it all depends on how the plan is written.

Concerning your 401K.... I cannot advise you. It does not seem like there are any relatively safe investments today based on the state of the world and the debt levels and social welfare programs. But if you have many years until you retire it might be just as well to not make to many changes.

Your company may offer free investment and retirement planning through an outside 3rd party and the administrator of the 401K (the company who sends you your statements) probably does as well. Again, check with the benefits dept in HR they will know.

[Guest RemedyCNC]

You just have to ride it out. If you loose all your money in the stock market, you will have many, many friends. I have a bit more cash in my local bank in a money market account. The dividend amount is just barely over 1% but at least at the end of the day, I have made money. Hang in there. Things will certainly change, just maybe not tomorrow.

[I_Like_Pie]

Most 401k plans are administered by a 3rd party and there is often some leeway as to how that money of yours is invested. 401k is an investment classification that can actually be one of many types of investments....so long as it can be bound by your retirement.

If they stop contributing to it...there should be no reason that they should reject your desire to move it to another investment type...bond for example.

However - you are young and have a long horizon yet. If they are not matching anything from your dollar...it would probably be wise to stop putting the money there and put it into a roth IRA because obviously there are too many restrictions on your current set up. Talk to your HR person....there is somone there who has to know what is going on....that same person will be very saavy on the 401k agreement they made with their 3rd party.

[Guest Drewsett]

If there is no matching from your company any longer then I would advise you to stop contributing to your 401k immediately. You will be far better served contributing into a Roth IRA, VUL, or some other investment vehicle that you personally administer and don't have to pay tax on when you withdraw your funds.

A rollover into another retirement vehicle can typically be done without penalty...but if your balance is large enough then the conversion WILL cost you some taxes. If that's the case, then you should probably just roll your 401k into another one with an external company and no longer make contributions to it. You can then put all future contributions into your new IRA that YOU control.

Depending on what company you work for and how valuable that stock is they contribute to you in lieu of matching funds in your 401k might change my advice somewhat.

Oh, I'm a finance major at MTSU and I've been managing my own and my family members' investments for a number of years now. I have yet to lose money in the stock market (at least when you annualize my rate of return it's always been in the black).

[mousegunner]

Someone said a long time ago that "You make your money in business, and you PRESERVE your money in real estate." You should leave your 401K alone. Don't take money out. Just let it ride. You are only 34, and who knows if the stock market will be good to you in the next 30 years. It might. On the other hand, you could start putting your contributions into cds, and when you have enough money for a downpayment, buy a quadruplex. Let the rental income pay your mortgage for the next 20 or 30 years. Then you will have a source of income from rents that will last until you die, and you can leave the quad to your kids, or to a charity, or whatever you like. You can also preserve your money by buying a few silver or gold coins each month. In 30 years they will have increased in price, and preserved the value of your money. Just my two cents.

[Smith]

Just a thought. Be patient whatever you do. Move slow. After the Great Depression those who had left their stocks alone fully recovered after 3 years and made tremendous profits by 7 years. A lot of the so called "old money" was made in the GD stock market. I would try to get it in some kind of Roth or self directed IRA almost no matter if there is a penalty. Put it in funds that have no loads and long records, then leave it alone. Emotional and fear based decisions only make fund managers and brokers money.

[Bubba0031]

To get professional advice go to a professional. You go to a doctor for your medical needs and you use an attorney for legal services. Your future and planning for your retirement is no less important so use a professional money manager. They aren't that expensive and they pay for themselves. I'm not one but had one do all of my planning and it was well worth it.

A word of caution. When choosing one, if you decide to do so, you probably want an arrangement where you pay them for the planning as opposed to their compensation coming from the products they sell you.

Good Luck

[Guest GT_Rat]

Ever heard the expression "Buy low, sell high"? This is a great time to be investing in your 401k. I know it seems counter-intuitive to buy when the market is down or going down but remember, "Buy low, sell high." If you were retiring tomorrow or sometime in the next year or so then yeah, be worried, move your money to more stable investments. But you have more than 20 years before you retire so what the market does now in the short term isn't that important. Other than giving you the opportunity to buy low.

The ESOP is another story. How comfortable are you that your company is stable? How comfortable are you that their stock will rebound? If they are stable then we're back to "Buy low, sell high". If they aren't then get out of their stock.

[I_Like_Pie]

To get professional advice go to a professional. You go to a doctor for your medical needs and you use an attorney for legal services. Your future and planning for your retirement is no less important so use a professional money manager.

Don't go to the doctor for a headache.

I am a professional with decades of experience...the advice given so far has been good. Will be exactly the advice that one would pay for.