Motley Fool: Good Time To Start a 401(k)
Let's say you're a young employee just starting out in your first job or you're a mid-career employee who -- for some reason -- has never started a retirement savings plan.
We wondered: With the market so low, and with so many stocks so cheap, is now a good time to start a 401(k)? Or, is it better to get as much cash as possible from your paycheck and put it all in savings account?
So we asked the question of someone who should know: Tim Hanson, senior analyst at Alexandria's Motley Fool, which has been advising individual investors since 1993. Here's what he said:
"That depends on your individual situation. If you're very close to retirement and need the cash, I would not be contributing to stocks. This is a violently volatile market, and I have no idea what the next 12 months are going to look like -- and I read a lot on the topic.
If you're young, make it happen now. It's times like these when fortunes are made despite the fact that they may make you want to throw up along the way.
Either way, however, you should be contributing to your 401(k) to take advantage of the tax shelter and, most importantly, your company match. But if you're closer to retirement, you'll want to allocate those contributions into principal protecting vehicles, such as treasuries."
-- Frank Ahrens
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