Is it worth it to invest in your company's 401K if there's no company match?

Question

In my previous company, they did match it and set a cap limit of 12%. But now, there is no match and employees are allowed to deduct between 1 to 75% of bi-weekly salary. Is it worth it in long run to invest, or is it possible you can lose all this money and better off just saving it yourself?

Answer 1

If you're not a disciplined saver, your might want to keep using the 401K even if there's not a match. (I'm assuming the 401K receives your contributions via payroll deduction.) If you're disciplined, max out a Roth IRA first. In either case, chose your asset allocation and redistribute to your percentages once a year. When choosing your asset allocation, consider assets outside as well as inside your retirement accounts. Use index funds. Or put your management on auto-pilot by choosing a life strategy fund if one's available. Remember, that, when withdrawing from such a fund, you'll have to sell a slice of all assets in the fund. (If bonds are doing well, and stocks are down, you'll still have to sell stocks according to their percentage of allocation in the fund.) This may be far in the future. A life strategy fund is usually only one option among many, so you can probably change things before you start to draw down the account. Never invest more than 5% of your assets in company stock, individual stocks, or sector bets. It is possible to loose all of your money whether you invest in a 401K or save yourself (although this would be highly unlikely in a properly diversified portfolio). The alternative - not saving or investing - is much more risky.

Answer 2

Invest in an Roth IRA first. Up to the limit anyway. Then start in on the 401k. Afterall, it's still tax deferred money. The Roth will probably beat the 401k over time but, the Roth IRA has a smaller limit you can contribute yearly.

Answer 3

Unless yoiu are already wealthy or are planning on inheriting wealth, you need to save for your retirement.

Your 401(k) plan offers these advantages:

You can contribute pre-tax money so your paycheck is not reduced by $100 when you contribute $100.

The money grows tax deferred.

If you use payroll deduction, you are more likely to stick with the plan than if you receive the money and have to take action to save something out of each paycheck.

Answer 4

Saving for your future/retirement is always a good thing!! Add in the tax benefits & the power of compounded interest and you have an even better thing.

The bottom line answer is can you do without a small portion of your income now to make sure you have cash available in the future.

Answer 5

A bird in hand is worth two in the bush. I would not give up the sure money for a speculation. Nobody can be sure about hyperinflation and currency market. Even the smartest guys have been wrong on currency. Economist and weatherman are mostly wrong. PIMCO guys have been wrong in the past about interest rates.