I need some FINANCIAL direction...

[Lynn CC]

Since you don't have a lot of money to spare, if you can just find one thing to give up no matter how small and put that money into an account (faithfully)you'll be surprised how much you'll have saved over the years.
You can ask your children to do the same for something they want to save for too.
It's a great feeling to know your getting there slow and steadily!
Down the road things may change and you can add more to your nestegg.

 

[Christine]

Now that you know your company does a 401K, go for it. Mine has not performed well over the past few years and I'm TRYING to get over it, so I look at it as a tax shelter. It may not be making a lot of money (and often times I lose) but it makes my income appear lower to the IRS, so I pay less taxes. Plus, I'm getting free money from my company through their matching. At one point, I was putting the max into my account ($13,000) per year, but now that the kids are into their music lessons, school tuitions, etc., I have had to cut back just to make ends meet. But I make sure I do at least the 6% so I can get the full matching from my company.

The other things you need to try to do is read some of the "penny pinching" books or "thrifty" websites. Give up a lot of the convenience stuff--it is really costly. I know as a single parent it must be very hard because you are busy, but it will add up.

 

[gr8tpanther]

My company matches up to 3%, now, if I put in more, will they still put in 3%? I was thinking of putting 4% in and then they can match to 3%, then there is the INVESTMENT stuff that I am going over right now and OMG!!!! This is worse than a root canal!!!!

Anyone want to come help me?

 

[janette]

If they match 3% than no matter what you put in the match won't change. The benefit after that is in taxes, this is very worth it if you are in a 25% bracket. Not so much if you are in a 10% bracket. Still a good place to save and probably better than a Roth or other plans but not if you dont' have emergency funds etc if you are in the lower tax bracket.

Most plans I've had to chose the investments have lots of samples in how to do it. Look over the papers and find what they say to do for the risk you are willing to take.

The only type of investment I'd be careful of is company stock. Unless you are very confident in your company's future I'd only put a small percentage there. Very few times does a company stock perform better in the long run that a fund.

Some companies put their match in company stock, if your's does that distribute the rest of the money over the other type of funds.

There really isn't a wrong way, I had about 20 options and just put 10% to 5% in each without even reading much of the stuff. It's worked so far. Look at each funds performance over the last 5 years or so and that is a good indicator of what you might expect.

 

[Dan Murphy]

Review the booklet or material you have, Lynn. There is most likely a simple quiz to take to get a comfort level profile of your risk/reward attitude. Then there should be suggested funds for your profile. Go with the suggestion, and diversify into several funds.

When the market does poorly, don't worry, you have not lost, you are just temporarily down, likewise, when the market does well, don't get overly elated (you can smile though), as you have not made, you are only up in value. Big differences between being down and losing and being up and making. Let the time to your need of the money (retirement in this case), be the main driving factor in your risk choices. A down market does not hurt, but rather it benefits, long term, if you take advantage of it while it is down. A 401(k), by its nature of payroll deduction, does take advantage of market volatility, let is work for you, don't fight it.

Try the 3% to start, get comfortable, then increase one percent every 6 months, slow but sure. If you are in a 25% marginal federal tax bracket, and a 3% state tax, it costs you 78 cents to save a dollar, a 36% return on your deposit, hard to pass up. If you get a dollar for dollar match (is it?), to 3%, your return, on your deposit, is 164%, hard to top.


Not to be taken as investment advice

 

[Ted and Holly]

Dan, are you familiar with any of David Bach's books? You should check out 'The Automatic Millionaire". it is a good book.

And you really don't need to buy it. Spend a couple hours in the library or at the book store and you can blast through it.

It may not be news to you, but it is written in a very easy to understand way.

Ted