Money Forum World

Deirdre Glenn · Joined: 08 Nov 2007 Posts: 2096

I am thinking about using some of the money in my 401k to buy stocks, is that a good idea? And what are the Pros and Cons in doing this? will my 401k and donations be affected?

Importer · Joined: 08 Nov 2007 Posts: 2161

Your 401K will include stock alternatives, where is it invested? What market?

Adan Wiley · Joined: 08 Nov 2007 Posts: 2107

It depends on the structure of your 401 k plan. If it has a self directed brokerage account choice, you may be able to do it. Some plans dont offer that choice.

Alberta · Joined: 08 Nov 2007 Posts: 2109

Well the best way to answer this is YES it's a smart idea. BUT you have to now your personal risk tolerance. My out look on how you may want to invest your 401k / IRA is
By age
20 35 60% stock 40% Mutual money
35 45 50% stock 30% Mutual money 20% bonds
45 55 30% stock 40% Mutual money 30% bonds
55 65 20% stock 30% Mutual money 40% bonds

Carolyn Gallagher · Joined: 08 Nov 2007 Posts: 2163

few things about stocks in a 401k..

1 you just lose the dollar cost averaging approach to investing which tends to smooth out the gains/losses which is better way of looking at lasting investing.

2 You lose the capability to offshoot losses against your earning for the year inside the 401k.

3 Investing directly in a stock is pretty violent investing. be sure that you may handle the ups/downs nature of it. Youll have to over invest in bonds/money markets to smooth out your portfolio caused by the aggressiveness of your stock buying.

4 fees fees fees fees every buy requires a fee so youll need lots of money in your 401k to annoy with this or your gains are wiped out now. If you arent purchasing in a minimum of 10k increments then its pointless.