Using 401k loan for another investment. (funds, pay, taxes, accounts)
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IMO, No. If you want to get the ball rolling, why don't you take the payments you would have been making to pay off the 401k loan ($150 - $200 per month) and start investing this. (401k loans are typically required to be paid off in 5 years unless for use of home purchase.)
why would this make sense? GCPA offers a good alternative. what is it you want to do with that $10,000? are you contributing to your 401k beyond the amount needed for company match? reduce your contribution to only get company match, take the rest, and start a brokerage account, if that's what you want.
do you have complaints about your investment options within your 401k account?
are you contributing to your 401k beyond the amount needed for company match? reduce your contribution to only get company match, take the rest, and start a brokerage account, if that's what you want.
second this. only put into a 401k what you need to get company matching money and no more.
second this. only put into a 401k what you need to get company matching money and no more.
well if you're happy with your investment choices, you can put more in. or if it's the only way you'll save for retirement, you can put more in. but there's no need to go beyond company match. you can get more choices in a ROTH IRA, IRA, or regular brokerage account...depending on your personal goals.
well if you're happy with your investment choices, you can put more in. or if it's the only way you'll save for retirement, you can put more in. but there's no need to go beyond company match. you can get more choices in a ROTH IRA, IRA, or regular brokerage account...depending on your personal goals.
well, i dont necessarily want to rehash this discussion here, but i think putting money into a tax deferred account is a very bad idea.
people seem to only be exposed to the theoretical positives of these accounts, not the negatives.
No, it's a TERRIBLE IDEA. First, there's a penalty for borrowing against your 401k of about 10% AND you may be subject to income taxes (for whatever bracked your total income would be....25%, 28%, etc). Are you going to get a 35%+ return on the money your borrow? Doubtful.
Seems like a better strategy would be to start SAVING $50 or $100 or whatever you can each month to start a brokerage account.
Don't rob Peter to pay Paul. Bad, bad strategy and if you get laid off, you would have to repay the ENTIRE amount due IN FULL.....which you may not have after paying taxes & penalty fees.
No, it's a TERRIBLE IDEA. First, there's a penalty for borrowing against your 401k of about 10% AND you may be subject to income taxes (for whatever bracked your total income would be....25%, 28%, etc). Are you going to get a 35%+ return on the money your borrow? Doubtful.
Seems like a better strategy would be to start SAVING $50 or $100 or whatever you can each month to start a brokerage account.
Don't rob Peter to pay Paul. Bad, bad strategy and if you get laid off, you would have to repay the ENTIRE amount due IN FULL.....which you may not have after paying taxes & penalty fees.
While it was a bad idea, I think you are confused. There is no 10% penalty or income tax for a 401k loan. In fact, the interest you pay on the loan you pay to yourself. You are thinking of withdrawing funds from a 401k. That is very different.
Additionally if the OPs employment situation changes, he will be obligated to pay off the loan in full or class it as a withdrawl which will be subject to taxes, plus the penalty.
Additionally brokerages charge fees often substantially more than any 401K administrative fees. The advice of our financial advisor at work is to max out, to the federal limit, the contribution you can make to your 401K (reduces your taxable income) THEN consider after tax options Roth 401K or possibly brokerage accounts.
well, i dont necessarily want to rehash this discussion here, but i think putting money into a tax deferred account is a very bad idea.
people seem to only be exposed to the theoretical positives of these accounts, not the negatives.
but that's a personal choice. like i said...it depends on the OP's goals.
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