401(k) Plans

I've been in and interested in the stock market so long (one year shy of forty years) I can remember when the mutual fund pages in my home town paper were just one page! Now it looks like there are more mutual funds then there are stocks listed on the New York stock exchange.

I wonder how many billions of investor dollars are supporting these funds. How many investor dollars are supporting all the brokerage firms? How many times has 401(k) monies been given to a 'financial expert' to manage after retirement, then three years later the $400,000 is down to $200.000 (Yet, the financial expert is still driving around in a new Lexus).

I could tell you stories from the people I know, who have retired and aren't so happy with these experts, but I bet you know some stories of your own.

Do you know what you're going to do with your 401(k) money when you retire? If you are going to hand it over to a financial expert to manage, see if you can get the names of some of his/her clients. See if you can call some of the expert's clients, tell them what you're planning to do and ask them if they're satisfied with the expert's performance. Or you could talk to those people you've once worked with, have retired, and went with a financial advisor or planner. Try to get some reference from a live body that has already been there, rather than just a bunch of statistics thrown at you by the expert.

Today's 401(k) plans are excellent vehicles for saving money and here's what I like about mine:

I like the 10 percent contribution being a tax write-off (some plans, sixteen percent). I can contribute up to 16 percent, but 6 percent would have to be after-taxed dollars.

I like that the monies made in a 401(k) are tax-deferred.

I like the company's 70 to 100 percent company match (it differs every year with my company) up to 6 percent of my contribution.

I like the option to move my money (every business day, if I wished) into my company's stock or an Interest Income fund, Bond fund, Mutual fund or Index fund, at no cost.

I like the option to roll-over into an individual IRA account, twice a year, any after-tax and company matched dollars put into my 401(k), with no penalties or fees, even while I am still employed with the company. This allows me to select individual stocks and allows the dividends from those stocks to be rolled-over automatically into more shares of each company, also at no cost. (However, there are commission fees for the purchases of the stock. Dividend purchases only are commission-free. In my book 'The Stockopoly Plan' I explain how to purchase stocks commission free.)

I like that the company's dividends in my IRA (set up by monies from my 401(k) plan) are also tax-deferred and are 85% tax free.

I like knowing that when my retirement day arrives, I'll already have an individual IRA set up to move the rest of the 401(k) monies into, with twelve stocks already chosen, owned and proven to provide reliable ever-increasing dividend income. (The companies owned all have a history of raising their dividends every year.) I like the free 1% the company gives me, just for being in the 401(k) plan.

I like the option to borrow money from my 401(k) plan, pay a low interest rate on the loan and know that the interest rate I'm paying on the loan goes to me (if I were paying a credit card bill of $3,000.00 at 18%, I know I have the option to pay off the high interest credit card loan and pay only 6% interest (to myself) on the $3000.00 loan from my 401(k).

I like knowing that when I move the rest of my 401(k) monies into my IRA when I retire, I'll know about how much income I can reasonably expect in dividend income four times a month, twelve months a year (all twelve stocks have staggered dividend pay-out dates, providing cash dividends every week of the year).

The companies chosen in my IRA, with their history of raising dividends every year, will provide the comfortable, worry-free income which I believe investing should be all about.

My advice on 401(k) plans is to talk to an expert from the firm your 401(k) monies are with and find out what options are available to you and/or what your company allows. My point was simply to inform you that you may not be restricted to just putting your money into a Mutual fund or your company's stock. You can transfer monies from your 401(k) to an individual IRA (Tradition, Roll-Over or Roth), at no fee and build your own Mutual fund. (I have been doing this in my 401(k) plan for years while still employed with my company.) If those companies you choose in your IRA have a dividend reinvestment plan you can request to have the dividends reinvested back into the stock each quarter. And this would be done for you, commission-free.

Charles M. O'Melia is an individual investor with almost 40 years of experience and passion for the stock market. Author of the book 'The Stockopoly Plan', published by American-Book Publishing. For more excerpts on 'The Stockopoly Plan' visit http://www.thestockopolyplan.com/

---

Why You Need To Buy and Sell Gold Coins (Part 6)

Pre-1933 Gold Outperforms Today's Gold Bullion...Since 1970, an investment strategy... Read More

Delist My Corporation Please

It use to be said that once a company was... Read More

My Way Or The Highway: Give Your Financial Professionals A Good Talking To!

All this talk about Investing is encouraging lately. Over the... Read More

How to Calculate the Value of Your U.S. Savings Bonds

If you're like many Americans over the age of 55,... Read More

Emotions: A Traders Worst Enemy; Get Rid of Fear and Greed - Youll be Glad You Did

You hear it over and over and over in books,... Read More

Value Investing

By definition, value investing is the process of selecting stocks... Read More

Trading Commodity Futures Using Support and Resistance - Paper Trading

Setting Up a Paper Trading AccountQuestion: I cannot trade with... Read More

Why the Rich Keep Getting Richer

Rich people: fortunate, lucky, selfish, and arrogant? Or highly educated,... Read More

Rules of Simple IRA Your Business Needs to Know

A Savings Incentive Match Plan for Employees plan, better known... Read More

Gold; What Type of Gold to Buy

JewelryThe advantages are:? Gold Jewelry is the easiest of the... Read More

How to Buy to Let

Find out everything you need to know about buy to... Read More

Introduction To FOREX

The Foreign Exchange Market, better known as FOREX, is a... Read More

What Age Should I Start Saving For Retirement?

Ask this question to 100 people and you will receive... Read More

Diversify!

The best way to avoid being hit hard by a... Read More

Franchise Investing, Franchise Opportunities and Franchising Renewals

Have you considered buying a franchise instead of trying to... Read More

An Economical Retirement Investment Plan

The practice of economy, directed toward a retirement investment plan... Read More

Playing With Money - And Making More

Ready to start playing with your money? Not interested in... Read More

Coca-Cola - A Value Stock?

There has been much talk lately about Coca-Cola and its... Read More

Well Managed Investing Risks Bring Rewards!

"Risk comes from not knowing what you're doing!" Warren Buffett... Read More

Getting Started Investing is Often the Hardest Part

There are several reasons people give for not investing their... Read More

The Dreaded Direct Question

(Please have a glass of water within reach before reading... Read More

Critical Investors Business Daily Responsibilities - If not Followed Could Cost You Millions!

When thinking about the investors business daily responsibilities in today’s... Read More

Pros & Cons of Investing in Bonds

What are Bonds?A bond is a debt security, by which... Read More

Success Trading: More Basic Terminology for New Traders

One important aspect of trading the markets is to understand... Read More

Using Divergences to Keep Out of Bad Trades

The American Football season just came to an end with... Read More

Fundamentals of Option Pricing

When one begins to consider an option, it is very... Read More

CYA

You all know what CYA stands for. Of course, Cover... Read More

5 Things To Know About The Stock Market

50% Of U.S. Households Invest In The Stock Market Individuals... Read More

The 8 Biggest Mistakes When Designing Portfolios - and How To Avoid Them

Are you as good an investor as you think? Do... Read More

Art Investing for a Financial Future

When we think of investing we probably conjure images in... Read More

The Difference Between Investing and Trading

Investing and Trading are not the same thing. The returns... Read More

How to Invest Overseas - Intelligently!

In recent months, many advisors have talked a lot about... Read More

Mutual Fund Returns May Not Be As They Seem!

Arthur Levitt, during his tenure at the SEC, experienced many... Read More