I have 401k with my company, does it make sense to daytrade stocks on the side, or put it all in 401k?

Question

Thanks!

Answer 1

First make sure that you are at least putting as much into your 401(k) as the company matches. Even if you are a consistently excellent day-trader you will find it tough to beat the return you get from a company match.

Then also consider maxing your 401(k) to IRS limits before day-trading.

Finally, remember that when you are "day-trading on the side" you are probably competing (there is a buyer AND a seller for every stock) against people who are doing it full-time, not just on-the-side.

I don't like those odds.

Ask friends and family for a referral to trusted and local independent financial advisors. Then interview two or three of them. Go with the person you trust. They should be able to tell you how mcuh to put in your 401(k) and what other investment vehicles might be right for you and your family.

Answer 2

It NEVER makes sense to daytrade with your retirement money, never. Daytrading is something you do with your disposable money. Now if your question is if it makes sense to daytrade or buy lottery tickets or bet on ponies or pull one-arm bandits in Vegas or some Indian tribe casino--then ABSOLUTELY, day trading is the more sensible (less fun, but the better choice).

As for "put it all", most 401ks have participation limits, so you won't "put it all" in the fund anyway. The best, ahem, bet is to put the maximum into your 401k, especially if there are matching funds by your employer. Sure you can do your day trading as long as your little stock hobby is at best solvent. But if you start coming short on a regular basis, take up another hobby, okay? If you can't, then you might want to talk to a mental health professional and ask another question, "Could I have a gambling addiction?"

Answer 3

Put the maximum into your 401K first.

Put the maximum into a Roth IRA next, and invest that in the market for tax free gains.

After that is done, and you have enough in savings for an emergency and special purchase, THEN you can start another brokerage account.

80% of daytraders lose money.

Find good, solid investments and hold them at least 1 year. If you don't think they are a good enough investment to hold at least 1 year, don't buy them. Stocks held less than 1 year are subject to higher taxes.

Note that when you change companies, you can roll your 401K into a conduit IRA at a brokerage and invest it also.

Answer 4

Only put the money you want to keep and grow in the 401K. The rest you can use to day trade.