I just starte this Jan 1. on a 401K with Principal.

Company does not match just so you know.

What is different between 401k and Roth IRA?

Also anyone know how Principal is compared to others companys my wife uses TIAA-CREF is that one any good?

I can use Schwab I have an Acct. with them too.

Thanks

 

401k is more like a traditional IRA. The money you put in is tax deductible in the year you put in funds. You pay tax on the money (whatever you put in plus gains) as you take it out of the account.

With a Roth IRA the contributions are not tax deductible. However there is no tax on anything when you withdrawal (assuming you don't take the money out early).

 

If your company does not match at all I would suggest going with the ROTH IRA until you hit the max amount allowed (4k in 2006). I am assuming you are younger.

YOu get more choices with the Roth IRA than with a 401k (in almost all cases) and since you are younger your principle will grow for a long time meaning you will not have to pay taxes on a hell of a lot of gains when you take it out in 30-40 years.

Either way start saving now

 

max 401(K), then ROTH if you qualify, then regular IRA.

 

I am 26 and have two kids on 6mths and 4yrs

 

no 401k for a hustla

 

What kind of different choices are there in a Roth compared to a 401K?

Thanks

 

if your company doesnt match i would invest in a roth ira.

 

TLNY, whatever 95gt said. Put it in a ROTH IRA and then if you have more than 4k to save, then go with the 401K. Don't listen to uu unless you have a great 401k or your company matches (which is not), because normally 401ks have no more than 15 funds to choose from.

 

401k is limited to what your company allows you to choose from. Can vary between 3 or 4 mutual funds or 10 -20.

A roth has no real limits on what you can choose from. You just deposit the money in an account with a broker and then pick what you want to buy, stocks, bonds, funds, etc.

 

so for someone younger like me, startin a roth IRA, investin in stocks would be better because i can take the risk now right?

 

yes, especially OTC BB ones

 

i gamble my money fosho

 

All depends on your investing style. Most would say a person your age should be heavy into stocks in their portfolio (90 or more %) because while stocks are more volital in the long run they have a higher return. But some people just don't have a high tolerance for risk so would rather have a little safer mix (50/50 stock/bonds)

Either way your smartest course is a ROTH IRA at this point (as long as you meet all the thresholds to be allowed to contribute to it) because you can expect a lot of gains over the next 35 to 40 years and you do not want to pay taxes on those gains.

 

also i forgot what they were specifically called, but dont financial institutions such as Vanguard offer low expense funds that mature in certain incriments of time, such as if u get a fund thats got a target year of 40 years, in the earlier years it invests primarily in stocks and automatically over the years the fund gradually makes the shift between more stocks and onto bonds....

anyone wanna shed some light on this?

 

If your company does not match then I'd max out a Roth before going into a 401(k). Do both if you can afford it. The Roth is generally considered more profitable at retirement. God knows what loony tax laws we'll have in 30 or 40 years.

 

Yes several companies offer this. Vanguard, Fidelity, and T. Rowe Price are the most notable. I am invested in all three but Kiplinger's analysts think the T. Rowe Price is the most properly invested percentage-wise.

 

Yea I've heard real good things about the T. Rowe Price ones too, heard they are a little more volatile therefore a higher return as well.

 

^^^ they are usually called life cycle funds. Good if you are the kind of person that would rather not be as involved in the investing part of it.

 

Or if you have little knowledge and experience when it comes to money and investing. I can't push this book too strongly for new investors:
The Only Investment Guide You'll Ever Need