Yes. Fuck.Yes. Talk NPV to me. Mmmm. You want it Roth? Let's 401k like crazy.
Finance thread. Awesome. Even if it is personal finance. (I'm really more of a corporate finance guy but all finance is good finance.)
I'm not sure if anyone has mentioned it yet, but it isn't wise to dump all of your savings into tax-protected accounts (Roth) or non-tax protected accounts. A lot of people are attracted to Roth accounts (for good reason) but you ought to diversify yourself on your tax-front as well. Also every good retirement portfolio should have some real assets (land, house, whatever.) Real asset values are sticky (somewhat), and much less sensitive to currency devaluations and the like.
Close the Wells Fargo account and move the money into a savings account at Chase.
There. You still have two accounts, but they are consolidated in one bank so it's easier to manage them.
Thanks for the reply, if I combine both I'll have around 10k in my Chase savings account then. I talked to a banker today before I actually saw this thread and he mentioned something in passing about opening a CD account. I was running late so I couldn't stay and get all the information I wanted but wouldn't I have to leave my money untouched for a while in order to gain from it? Also, isn't it better to do those kind of things when your rich++?
Close the Wells Fargo account and move the money into a savings account at Chase.
There. You still have two accounts, but they are consolidated in one bank so it's easier to manage them.
Thanks for the reply, if I combine both I'll have around 10k in my Chase savings account then. I talked to a banker today before I actually saw this thread and he mentioned something in passing about opening a CD account. I was running late so I couldn't stay and get all the information I wanted but wouldn't I have to leave my money untouched for a while in order to gain from it? Also, isn't it better to do those kind of things when your rich++?
CDs basically lock your money in place until they mature, in exchange for a higher interest rate. The longer the time frame, typically the higher the interest rate. So if you put it in a 6 month CD you couldn't move it out without taking penalties until 6 months are up.
CDs are really low on the risk scale, but you are giving up liquidity for some more return. It really depends on your personal financial situation whether you can afford to have money locked up like that.
Close the Wells Fargo account and move the money into a savings account at Chase.
There. You still have two accounts, but they are consolidated in one bank so it's easier to manage them.
Thanks for the reply, if I combine both I'll have around 10k in my Chase savings account then. I talked to a banker today before I actually saw this thread and he mentioned something in passing about opening a CD account. I was running late so I couldn't stay and get all the information I wanted but wouldn't I have to leave my money untouched for a while in order to gain from it? Also, isn't it better to do those kind of things when your rich++?
Standard advice: figure out how much money you need to live for X (6 is conservative, I am not very risk averse so go with 4, some people in this thread have suggested 12) months, and keep that much liquid or close to it. This is so you don't need to starve to death, or worse, rack up a bunch of debt, if you lose your job/car/mind.
Everything else should be invested and earning you a return. So yeah, as a college student, you are probably better off socking the money away where it will earn a return for now.
Edit for personal happiness: My 401k went over 100k and my net worth above zero (oh my god I bought a house at exactly the wrong time, I hate my realtor) for the first time. I am pretty juiced.
My son was born when I was 21 and I'm a single parent. Nothing like not having a starting chance!
It could be worse, we're doing decent, but man... its going to be awhile before I can actually save money. I can't wait till he's in school.
Improvolone on
Voice actor for hire. My time is free if your project is!
I would like to put forth this idea: if you don't think you can afford to contribute to investing over a long time, you can instead try a short term of intense revenue generation. Maybe over a summer, move in with the folks or find a cheaper apartment way the hell away from California or New York, and work your ass off. Knowing that it is a temporary situation will help with the psychological tolls this arrangement usually inflicts. I got the benefit of a deployment overseas to do all the work for me, so I didn't have to bother finding housing or jobs, but that pretty well set me up. I've got a good investment fund started, paid cash for a decent car and can now finish college debt free next year.
The idea here is to get your investing started ASAP. Dropping $5000 this year will certainly be better than doing it 3 or 4 years from now, especially with the way the market is moving.
The main expense I have right now is an unemployed fiance, a mortgage (the mortgage came before the unemployment, we're not that stupid), and $60k in student loans racked up by a silly silly me who once thought I could force myself to like anything if it paid enough in the end (I can't).
We have no credit card debt, we eat out maybe once a month, by which I mean Denny's or a take-out pizza for <$25.00. I do, however, have a uterus nobody can figure out but which doctors keep sending me to have ultrasounds and various tests to check out, to the tune of a few hundred every few months (the emergencies to which I referred, because I don't want to fuck with my health, 'cause that uterine shit can kill you fast if you don't keep on top of it).
Basically I wish I could go back in time and tell my high-school self to ignore everyone saying that engineering was the future and just go into musical theater like I wanted, because I could not possibly be using my education any less than I am now. But barring that, I guess just wait until my fiance gets his JD?
Oh, and I make $40k.
Ok, so here's what I'd recommend:
1. How much do the medical tests cost each time you go? You mentioned a few hundred dollars, so I'll ballpark at $500 (ProTip: Always budget more than you need. Good ninja way to increase savings). You get the tests quarterly, and you're making somewhere around $3k/mo. So, in three months, you need to spend $500. Now, I fucking hate odd numbers, but you should probably be saving anywhere between $190 and $250/mo. for the medical tests.
2. Renegotaite your student loan payments. You can get payments deferred really easily now, and it's insanely easy to get to a lower monthly payment. So many people are defaulting on their loans, or are unable to pay, that banks will literally do whatever they can to keep a paying customer paying. You can renegotiate down to very little.
That leaves your mortgage and your fiance. Now, your fiance can be doing other things that will lead to employment. Depending on their career, they may want to check out what professional organizations for that career are in your town/city and start volunteering/doing time with that organization. For example, while unemployed, I learned how to drive a car and started helping out the local Independent Game Developers' Association chapter, and that led me to getting in contact with my current boss. Stuff like that helps a ton, especially if the job hunt isn't being fruitful. If there's nothing like that, volunteering time when you're unemployed looks insanely good on job applications. Non-profits always need helping hands.
The big question is your mortgage. Depending on that cost, things can get dicey. Still, it's a planned for expense (i.e. an expense you know is coming every month) so you can budget around it. I'd also encourage spending time with your fiance and creating a monthly budget; one that'll allow you to save the money you need for your frequent medical expenses while building up some savings.
My advice on that count is, after you've renegotiated your loan payment, take that plus mortgage plus utilities, work out a weekly grocery bill (mine's $35/wk., but I spend about $40/wk. on eating out due to work. Since you're more grocery dependant, a larger grocery bill is A-OK). These are, kind of, "must-pay" expenses, but you know (or can ballpark) how much they run. Once that's all taken care of, you need to assess leftover "fun money". This is basically what amount of your income is left after must-pay expenses are taken care of. From this, you first derive what amount you need to put into savings. Now, the medical expense is something you put into this pile, so I'd say saving roughly $500/mo. (or 1/6th of your monthly check) is optimal, but in times where you can't do that at least $300/mo. needs to go into savings. Then, when you need the test done, you simply withdraw the amount from savings to the tune of what you need.
and the compound interest idea is one that doesnt apply to stocks - it only applies to interest, like from a savings account.
This is from page one, which I just finished reading, but it is absolutely incorrect. It can apply just as well to stocks, if the stocks have dividends. Most brokerages will give you the option to automatically reinvest dividend and interest income back in the fund so that it compounds.
and the compound interest idea is one that doesnt apply to stocks - it only applies to interest, like from a savings account.
This is from page one, which I just finished reading, but it is absolutely incorrect. It can apply just as well to stocks, if the stocks have dividends. Most brokerages will give you the option to automatically reinvest dividend and interest income back in the fund so that it compounds.
Doesn't even matter if dividends are involved. Compounding applies to any asset whose return is proportional to its price. Which is like any investment.
enc0re on
0
Options
JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
The main expense I have right now is an unemployed fiance, a mortgage (the mortgage came before the unemployment, we're not that stupid), and $60k in student loans racked up by a silly silly me who once thought I could force myself to like anything if it paid enough in the end (I can't).
We have no credit card debt, we eat out maybe once a month, by which I mean Denny's or a take-out pizza for <$25.00. I do, however, have a uterus nobody can figure out but which doctors keep sending me to have ultrasounds and various tests to check out, to the tune of a few hundred every few months (the emergencies to which I referred, because I don't want to fuck with my health, 'cause that uterine shit can kill you fast if you don't keep on top of it).
Basically I wish I could go back in time and tell my high-school self to ignore everyone saying that engineering was the future and just go into musical theater like I wanted, because I could not possibly be using my education any less than I am now. But barring that, I guess just wait until my fiance gets his JD?
Oh, and I make $40k.
Ok, so here's what I'd recommend:
1. How much do the medical tests cost each time you go? You mentioned a few hundred dollars, so I'll ballpark at $500 (ProTip: Always budget more than you need. Good ninja way to increase savings). You get the tests quarterly, and you're making somewhere around $3k/mo. So, in three months, you need to spend $500. Now, I fucking hate odd numbers, but you should probably be saving anywhere between $190 and $250/mo. for the medical tests.
2. Renegotaite your student loan payments. You can get payments deferred really easily now, and it's insanely easy to get to a lower monthly payment. So many people are defaulting on their loans, or are unable to pay, that banks will literally do whatever they can to keep a paying customer paying. You can renegotiate down to very little.
That leaves your mortgage and your fiance. Now, your fiance can be doing other things that will lead to employment. Depending on their career, they may want to check out what professional organizations for that career are in your town/city and start volunteering/doing time with that organization. For example, while unemployed, I learned how to drive a car and started helping out the local Independent Game Developers' Association chapter, and that led me to getting in contact with my current boss. Stuff like that helps a ton, especially if the job hunt isn't being fruitful. If there's nothing like that, volunteering time when you're unemployed looks insanely good on job applications. Non-profits always need helping hands.
The big question is your mortgage. Depending on that cost, things can get dicey. Still, it's a planned for expense (i.e. an expense you know is coming every month) so you can budget around it. I'd also encourage spending time with your fiance and creating a monthly budget; one that'll allow you to save the money you need for your frequent medical expenses while building up some savings.
My advice on that count is, after you've renegotiated your loan payment, take that plus mortgage plus utilities, work out a weekly grocery bill (mine's $35/wk., but I spend about $40/wk. on eating out due to work. Since you're more grocery dependant, a larger grocery bill is A-OK). These are, kind of, "must-pay" expenses, but you know (or can ballpark) how much they run. Once that's all taken care of, you need to assess leftover "fun money". This is basically what amount of your income is left after must-pay expenses are taken care of. From this, you first derive what amount you need to put into savings. Now, the medical expense is something you put into this pile, so I'd say saving roughly $500/mo. (or 1/6th of your monthly check) is optimal, but in times where you can't do that at least $300/mo. needs to go into savings. Then, when you need the test done, you simply withdraw the amount from savings to the tune of what you need.
I am a huge "silly goose" if I say she should use her degree for a few years? I
1. How much do the medical tests cost each time you go? You mentioned a few hundred dollars, so I'll ballpark at $500 (ProTip: Always budget more than you need. Good ninja way to increase savings). You get the tests quarterly, and you're making somewhere around $3k/mo. So, in three months, you need to spend $500. Now, I fucking hate odd numbers, but you should probably be saving anywhere between $190 and $250/mo. for the medical tests.
Yeah, that's about how much money I get to carry over per month, total.
2. Renegotaite your student loan payments. You can get payments deferred really easily now, and it's insanely easy to get to a lower monthly payment. So many people are defaulting on their loans, or are unable to pay, that banks will literally do whatever they can to keep a paying customer paying. You can renegotiate down to very little.
This I admit I am dubious on. I have already consolidated my loans like three times just to get them down to $500 (I have both fed and private loans, that come to approx. that total). I mean, I can always try as this is I feel the big issue, but I don't think my odds are good going in. Also, I was told point-blank that I can't defer my loans unless I lose my job or go back to school at least part-time.
That leaves your mortgage and your fiance. Now, your fiance can be doing other things that will lead to employment. Depending on their career, they may want to check out what professional organizations for that career are in your town/city and start volunteering/doing time with that organization. For example, while unemployed, I learned how to drive a car and started helping out the local Independent Game Developers' Association chapter, and that led me to getting in contact with my current boss. Stuff like that helps a ton, especially if the job hunt isn't being fruitful. If there's nothing like that, volunteering time when you're unemployed looks insanely good on job applications. Non-profits always need helping hands.
Well, my fiance is going to be working with the census for the next little while, so there will be more money than just unemployment coming in - we are basically counting on this and hoping to squirrel as much of it away as possible. He's not really comfortable with working much out of the home at the moment because he is basically cramming to finish his Masters. It's very much a "this too shall pass" situation that seems to have dragged on forever.
The big question is your mortgage.
Oh, I forgot to mention I also commute to work on toll roads each day and that costs about $140/mo (I could not use the toll roads, but my commute would go from 40 minutes to 2 hours and therapy costs more than the toll[/i]), and while our gas/electricity bills come to a respectable $100, our water bill equals that. But moving on:
Depending on that cost, things can get dicey. Still, it's a planned for expense (i.e. an expense you know is coming every month) so you can budget around it. I'd also encourage spending time with your fiance and creating a monthly budget; one that'll allow you to save the money you need for your frequent medical expenses while building up some savings.
We're on this one.
My advice on that count is, after you've renegotiated your loan payment, take that plus mortgage plus utilities, work out a weekly grocery bill (mine's $35/wk., but I spend about $40/wk. on eating out due to work. Since you're more grocery dependant, a larger grocery bill is A-OK). These are, kind of, "must-pay" expenses, but you know (or can ballpark) how much they run. Once that's all taken care of, you need to assess leftover "fun money". This is basically what amount of your income is left after must-pay expenses are taken care of. From this, you first derive what amount you need to put into savings. Now, the medical expense is something you put into this pile, so I'd say saving roughly $500/mo. (or 1/6th of your monthly check) is optimal, but in times where you can't do that at least $300/mo. needs to go into savings. Then, when you need the test done, you simply withdraw the amount from savings to the tune of what you need.
I think this is all very reasonable, and more or less what we're doing, with the exception of the reduced student loan payments - which, if I could get that, would pretty much get us out of the paycheck-to-paycheck (we're not at that point, after all, I do get to spend savings on medical payments, we just can't accumulate it much yet). Thanks for taking the time to break it down for me.
I am a huge "silly goose" if I say she should use her degree for a few years? I
Not sure if you were going to say something else here (I'll edit if you come back and edit your post ), but the "unfortunate" thing is that my degree is 5 years old and my Associate's equivalent is 8, and I never got any work experience in either, and just barely passed my classes in both.
Long story: The only job I had that I pretty much liked, didn't require a degree for, and had good chances for advancement with a few certs was technical support. Problem is, I came to California unemployed, took the first job offer I got, which got me into the industry I'm in now. It pays a mint for lackey work, which is great, but I'm burned out on it and I'm not interested in what the higher tiers have to offer. But now all that tech support experience is rotting with going on 8 years inactivity on my resume.
I'm making the effort now to go get a few of those certs to bring my resume up to speed and "start over" working my way up, but in the meantime, .
Oh, I forgot to mention I also commute to work on toll roads each day and that costs about $140/mo (I could not use the toll roads, but my commute would go from 40 minutes to 2 hours and therapy costs more than the toll[/i]), and while our gas/electricity bills come to a respectable $100, our water bill equals that.
Can you carpool with coworkers in your area to split the toll road cost?
And I'm not even gonna ask why your water bill alone is 100 bucks a month.
Oh, I forgot to mention I also commute to work on toll roads each day and that costs about $140/mo (I could not use the toll roads, but my commute would go from 40 minutes to 2 hours and therapy costs more than the toll[/i]), and while our gas/electricity bills come to a respectable $100, our water bill equals that.
Can you carpool with coworkers in your area to split the toll road cost?
And I'm not even gonna ask why your water bill alone is 100 bucks a month.
How big is your pool?
No, our water bill is $100 a month because of where we live - $90 is the base rate alone. We have asked the Water Dept. about this and it has to do with how far they have to send the water to be refined and how much they have to process it due to being next to a body of water, and blah blah, we're aware we're being raped by the water Dept but we live here, so we live with it.
Nobody I know at work lives in my city save one person, who works erratic hours because he's a manager and he can. Right now we're looking into my taking the metro, and it might be a good option, we're working on the details.
At my workplace we have a workplace-wide mailing list that people use for stuff like this. "Anyone living in the X and Y area looking to carpool?" or "I need a roommate for the summer, contact me if interested" etc. and it all goes to a separate mailbox so people don't get spammed. That might be worth a try. Or you can post flyers on billboards around the office.
That being said, metro is probably a better idea in general since you'd also save on fuel.
I'm 33 and have no money and no assets. Am I doomed?
Same drill as everyone else here - are you working, where are you living (home/roommates/life partner/on your own), how much money do you make, what are your expenses, etc.?
Yeah, IIRC the water needs extra super-duper expensive processing because it's going right back into the river. :rotate:
The amount you pay doesn't seem right. I live in Riverside as well and part of my living arrangements, aside from rent, include paying all the utilities of the 4-bdrm house which are: Water, Electricity, City Services, Cable and Internet. I just paid them and the water bill was a whopping $20.
If anything the Cable + Internet bill was $90 which I should look into trying to lower and the next highest was the Electricity bill which came out to $70.
I should note everyone in the household as taken a very pro-active stance towards water conservation though.
Yeah, IIRC the water needs extra super-duper expensive processing because it's going right back into the river. :rotate:
The amount you pay doesn't seem right. I live in Riverside as well and part of my living arrangements, aside from rent, include paying all the utilities of the 4-bdrm house which are: Water, Electricity, City Services, Cable and Internet. I just paid them and the water bill was a whopping $20.
If anything the Cable + Internet bill was $90 which I should look into trying to lower and the next highest was the Electricity bill which came out to $70.
I should note everyone in the household as taken a very pro-active stance towards water conservation though.
Our DSL+cable bill comes to ~$60 (of which I pay half and my fiance pays half out of his unemployment), and our electricity is always $50 or under. Our gas bill got a bit hefty this winter but it was our first winter living out in the desert so we went a bit crazy with the heat; we have that under control now and it's back down from $100 or so to $50ish.
I'm 33 and have no money and no assets. Am I doomed?
Same drill as everyone else here - are you working, where are you living (home/roommates/life partner/on your own), how much money do you make, what are your expenses, etc.?
My expenses are around $500 per month, not including housing or student loan payments (which are deferred).
However, I don't pay any of that, because I'm not working - hence, no money - and am currently living in my grandparents house (they're in Arizona).
But, I think if I can join the military and go to work in the public school system, I might be able to accumulate a decent retirement.
Slider on
0
Options
JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
I am a huge "silly goose" if I say she should use her degree for a few years? I
Not sure if you were going to say something else here (I'll edit if you come back and edit your post ), but the "unfortunate" thing is that my degree is 5 years old and my Associate's equivalent is 8, and I never got any work experience in either, and just barely passed my classes in both.
Long story: The only job I had that I pretty much liked, didn't require a degree for, and had good chances for advancement with a few certs was technical support. Problem is, I came to California unemployed, took the first job offer I got, which got me into the industry I'm in now. It pays a mint for lackey work, which is great, but I'm burned out on it and I'm not interested in what the higher tiers have to offer. But now all that tech support experience is rotting with going on 8 years inactivity on my resume.
I'm making the effort now to go get a few of those certs to bring my resume up to speed and "start over" working my way up, but in the meantime, .
if you have an engineering degree and you can't find a job that pays more than 36 a year, you're doing something wrong. If nothing else, you ought to be able to re-task into teaching high school science pretty fast. I really don't mean to be a jerk but for real. maybe gtfo of california?
In the words of Dave Ramsey, you're problem isn't that you aren't trying to dig out, your problem is you don't have a big enough shovel.
Also your fiancee is bringing in nothing? Is he home watching kids, what? If not, I suggest he look from 8-12, eat lunch, and volunteer or do his coursework, or maybe tutor, from 1-? I mean, I dig the temp census thing, that's the kind of thing I'm talking about, and I dig working on the masters, I do, but dang man, you guys are two unencumbered american adults with college degrees, living on basically a 16-17 dollar an hour job, in what sounds like a high COLA area, commuting and stressing to do it.
I am 100% sure you guys can increase your income another 6-8k a year in the next 6 months if you put your mind to it. Then you can pay off any unsecured debt, build a rolling emergency fund, and start kicking the piss out of your student loans.
I am a huge "silly goose" if I say she should use her degree for a few years? I
Not sure if you were going to say something else here (I'll edit if you come back and edit your post ), but the "unfortunate" thing is that my degree is 5 years old and my Associate's equivalent is 8, and I never got any work experience in either, and just barely passed my classes in both.
Long story: The only job I had that I pretty much liked, didn't require a degree for, and had good chances for advancement with a few certs was technical support. Problem is, I came to California unemployed, took the first job offer I got, which got me into the industry I'm in now. It pays a mint for lackey work, which is great, but I'm burned out on it and I'm not interested in what the higher tiers have to offer. But now all that tech support experience is rotting with going on 8 years inactivity on my resume.
I'm making the effort now to go get a few of those certs to bring my resume up to speed and "start over" working my way up, but in the meantime, .
if you have an engineering degree and you can't find a job that pays more than 36 a year, you're doing something wrong. If nothing else, you ought to be able to re-task into teaching high school science pretty fast. I really don't mean to be a jerk but for real. maybe gtfo of california?
In the words of Dave Ramsey, you're problem isn't that you aren't trying to dig out, your problem is you don't have a big enough shovel.
Also your fiancee is bringing in nothing? Is he home watching kids, what? If not, I suggest he look from 8-12, eat lunch, and volunteer or do his coursework, or maybe tutor, from 1-? I mean, I dig the temp census thing, that's the kind of thing I'm talking about, and I dig working on the masters, I do, but dang man, you guys are two unencumbered american adults with college degrees, living on basically a 16-17 dollar an hour job, in what sounds like a high COLA area, commuting and stressing to do it.
I am 100% sure you guys can increase your income another 6-8k a year in the next 6 months if you put your mind to it. Then you can pay off any unsecured debt, build a rolling emergency fund, and start kicking the piss out of your student loans.
COLA? :?:
We are increasing our income 8k in the next 6 months - homeowner tax credit :rimshot:. Well, it's the best we could do on short notice .
Mmmm not sure where the engineering degree thing came from, though I did major in it before switching over to comp sci and getting an AA in that for time served, and finally got my degree in Visual Communications. Also, I make 40k (not 36) a year. I used to make more in my industry, but blah blah, economy, layoffs, blah blah. I hate kids, so I wouldn't seriously pursue teaching, but even if I wanted to, things are really, really shitty out here for teachers. And as my fiance knows, forget about subbing (which is the hell all the laid off teachers are living in right now).
We bought our house before the fiance lost his job, so we're in it until at least our three years are up in order to keep our tax credit, and after that we are most likely either a) moving to Austin, TX for the crazy low cost of living, or b) moving to Canada (back, for me) for the free healthcare, since my fiance can't afford any now. Well, this is the plan unless life changes dictate otherwise, which, hell, I've been trying to move back to Canada for 7 years now and something always seems to come up (including falling in love and moving in with one of the natives, dammit!), so.
Do you think that I should not try to get any technical certs (like CCNA, MSCE etc. which would currently be paid for by my contracting firm, so no expense to me) and try to get in as an entry-level network admin (a job that pays $60k at 2 years' experience) over something else? I thought it was a decent goal, if not having an immediate payoff.
Edit: Seriously, I am not trying to be difficult, here. But engineering and comp sci made me miserable.
sidhaethe on
0
Options
JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
edited April 2010
No, I think you didn't make it clear you were getting both an education and had advancement chances in your current job. You said you no longer worked in tech support and now did "lackey work"
Someone said you made about 3k a month (x12 is 36) is where I got that number, it wasn't a straight asspull.
Have you explored your loan terms to see about maybe renting a room? Or, more palatably, do you maybe have a relative turning 18 or something that might want to stay with you while going to college and could contribute... It sounds like your house is pinning you down, you might as well get all the value from it you can.
firewaterwordSatchitanandaPais Vasco to San FranciscoRegistered Userregular
edited April 2010
Hey! So, current finance thread, what's up with buying bonds? You've got these dollars, right, and you want to turn a portion of them into bonds. So you what? Like buy individual bonds? Bond funds?
Say you don't give two shits about risk and you're all bonds for life for a quarter of your monies? Long term bond fund? Short term? What's up smarties?
No, I think you didn't make it clear you were getting both an education and had advancement chances in your current job. You said you no longer worked in tech support and now did "lackey work"
Well, I work for a [strike]placement[/strike] consultant firm, as a contractor, for a telecom company. My job is data entry and I have no chance of advancement or raise since I am on a 3-year fixed contract. BUT, my contracting firm, being the ones who found me this job, are looking for other positions I could take, with other companies, which might be an advancement, and are also providing me the opportunity to take certifications that will increase my possibilities in leaving my current industry and getting into network administration.
So, both yes and not exactly, to what you said. I hope that clears that up!
you signed a contract to work for three years without a raise? Dang. I'm giving out one of those low whistles right now.
No, I did not know that the job was salary-locked when I signed on, however I did know that there was no chance of employment afterward. BTW, feel free to let me know if I have some kind of legal recourse or something, because it's not in my contract that I cannot get a raise, it's the contracting liaison at the company I'm working for that has the policy. My own contracting firm was unable to negotiate a raise on my behalf, which is why they are looking for something else for me now.
Also, I had been unemployed for 2 months and my previous job paid $31k... after I was laid off from a job paying $42k. Don't judge me!
sidhaethe on
0
Options
JohnnyCacheStarting DefensePlace at the tableRegistered Userregular
edited April 2010
I bang my gavel! I bang it! GAR!
seriously shit is tight, I know, but you can do it!
I don't quite understand - you work for a contractor that has placed you? Like a long term temp thing? This is becoming a thing for the jobs thread. . .
seriously shit is tight, I know, but you can do it!
I don't quite understand - you work for a contractor that has placed you? Like a long term temp thing? This is becoming a thing for the jobs thread. . .
There's a jobs thread? :shock:I don't get out of D&D/Multiplayer... much, but maybe I ought to.
But yeah, basically - the company I do the data entry for (not the consultant firm that placed and pays me) doesn't do direct hires anymore - I also handle payroll data entry, and all we've been getting is a steady stream of contractors over the past year, and I mean everything from engineers to project managers. I don't know if it's a sign of the times or just this location, but it seems you can't get in direct with a company at all these days, everyone's a contractor.
Anyway, yes, I started posting here because we are genuinely struggling with maintaining the kinds of savings I know we should be putting away, and wanted help trying to see where we could trim any fat. I've gotten some very good advice and suggestions here, and we are working on it, so hopefully we can get that on track soon!
sidhaethe on
0
Options
YamiNoSenshiA point called ZIn the complex planeRegistered Userregular
edited April 2010
We've got a 30 year mortgage on our condo. We don't plan on staying here for the full term. We'll probably move to a house in 5~7 years or so, depending on the market and how much we save. Is it worth putting any extra money towards the principle? I know it can seriously cut down on the length of the mortgage and interest, but if we'll be getting a new mortgage in 5 years, am I just giving them an interest free loan in a way?
We've got a 30 year mortgage on our condo. We don't plan on staying here for the full term. We'll probably move to a house in 5~7 years or so, depending on the market and how much we save. Is it worth putting any extra money towards the principle? I know it can seriously cut down on the length of the mortgage and interest, but if we'll be getting a new mortgage in 5 years, am I just giving them an interest free loan in a way?
No, you are paying down a loan at your mortgages interest rate. It's the same as any other debt reduction.
Here is what you need to compare:
1. Your opportunity cost of capital (i.e. how many %, after tax!, could my money be earning elsewhere).
2. Your mortgage's interest rate, net of how much of it you can deduct off your taxes.
If 1 > 2, don't prepay. Put the money into your next bet investment choice instead.
If 2 > 1, prepay as much as you can.
like i said, if your 401k matures (i.e. you turn 65) on a really bad down year, you get totally fucked. and who the hell knows if it will be a good year or a really bad down year 35 years from now.
You change your stock profile as you get older.
If the year you turn 65 is the worst year the stock market has ever seen and it loses 95% of its value, you shouldn't care, because at that point you should be almost entirely invested in T-bills and government-backed bonds.
is that how a 401k works?
for some reason, i was under the impression that i cannot change my past investments. so if ive already invested $100,000 into some high risk fund, i can't withdraw that amount and then later place it into t-bills. i can of course invest in different funds with my new monthly contributions, but those old investments are set.
that's how i thought it was, but i have to admit, i dont know that much about it.
and the compound interest idea is one that doesnt apply to stocks - it only applies to interest, like from a savings account.
This is from page one, which I just finished reading, but it is absolutely incorrect. It can apply just as well to stocks, if the stocks have dividends. Most brokerages will give you the option to automatically reinvest dividend and interest income back in the fund so that it compounds.
Doesn't even matter if dividends are involved. Compounding applies to any asset whose return is proportional to its price. Which is like any investment.
compounding as a concept applies to all investments, but the way it is written in the op is misleading.
for example, a $100 investment with an annual 6% return compounds as follows:
anyway, all im trying to say is compounding works both ways - if your investment loses value, your return is also negatively compounded.
that's why the compounding as espoused in the op is misleading. it seems to suggest that investment compounding is identical to savings account compounding, which it certainly is not.
finally, as far as i know, most companies do not pay dividends.
Ketherial on
0
Options
YamiNoSenshiA point called ZIn the complex planeRegistered Userregular
We've got a 30 year mortgage on our condo. We don't plan on staying here for the full term. We'll probably move to a house in 5~7 years or so, depending on the market and how much we save. Is it worth putting any extra money towards the principle? I know it can seriously cut down on the length of the mortgage and interest, but if we'll be getting a new mortgage in 5 years, am I just giving them an interest free loan in a way?
No, you are paying down a loan at your mortgages interest rate. It's the same as any other debt reduction.
Here is what you need to compare:
1. Your opportunity cost of capital (i.e. how many %, after tax!, could my money be earning elsewhere).
2. Your mortgage's interest rate, net of how much of it you can deduct off your taxes.
If 1 > 2, don't prepay. Put the money into your next bet investment choice instead.
If 2 > 1, prepay as much as you can.
I think I see where my thinking went wrong. They redo the amount of interest I owe every month, so paying extra principal does start paying off immediately in a way. I need to sit down with pen and paper (and possibly one of those little accountant visors) and figure it all out.
like i said, if your 401k matures (i.e. you turn 65) on a really bad down year, you get totally fucked. and who the hell knows if it will be a good year or a really bad down year 35 years from now.
You change your stock profile as you get older.
If the year you turn 65 is the worst year the stock market has ever seen and it loses 95% of its value, you shouldn't care, because at that point you should be almost entirely invested in T-bills and government-backed bonds.
is that how a 401k works?
for some reason, i was under the impression that i cannot change my past investments. so if ive already invested $100,000 into some high risk fund, i can't withdraw that amount and then later place it into t-bills. i can of course invest in different funds with my new monthly contributions, but those old investments are set.
that's how i thought it was, but i have to admit, i dont know that much about it.
You can always change your investments around.
If you invest 10k in high risk stocks today, tomorrow you can change your mind and sell those and buy low-risk bonds. Sometimes there are transaction fees associated with that, but if you're smart and do your research then you can avoid them when trading most investor-grade stocks and bonds.
There are also other options - that I personally don't recommend for individual investors. You can buy mutual funds that have set retirement dates. For example, the Fidelity Freedom 2050 fund has a target retirement date of 2050. This means that, today it is relatively high risk, but as time goes on the fund manager slowly gets rid of the high risk assets and buys lower risk ones. So by the time you're close to retirement it is a very low risk portfolio.
The reason I don't recommend mutual funds (i.e. actively managed funds) is because they tend to have high expense ratios. You might see expenses up to 2.5% with mutual funds, whereas with index funds they tend to be less than 0.5%.
anyway, all im trying to say is compounding works both ways - if your investment loses value, your return is also negatively compounded.
that's why the compounding as espoused in the op is misleading. it seems to suggest that investment compounding is identical to savings account compounding, which it certainly is not.
finally, as far as i know, most companies do not pay dividends.
Except in your second example who on Earth would ever list that as a 6% growth rate. Anyone in finance would list it as a 5% growth rate.
Does anyone know a good book about mortgages? Wife and I are looking at buying a house later this year and I want to make sure I don't get ripped off. I should add that I'm very comfortable with math and basic financial stuff, so I don't need something that's like "This is what interest is" or whatever. Something that tells me some things to look for in houses and how to deal with real estate agents would be nice as well.
Also, while we're talking about 401(k)s, I'll brag on my retirement for a second - I put in 5%, and they match with 9.24%. Yes, that's what I meant to type in. Right now I put it in a Fidelity 2050 target retirement fund because I'm lazy and the expense ratio isn't terrible (0.82%) :P
anyway, all im trying to say is compounding works both ways - if your investment loses value, your return is also negatively compounded.
that's why the compounding as espoused in the op is misleading. it seems to suggest that investment compounding is identical to savings account compounding, which it certainly is not.
finally, as far as i know, most companies do not pay dividends.
Except in your second example who on Earth would ever list that as a 6% growth rate. Anyone in finance would list it as a 5% growth rate.
But, you can't know that in advance. I suppose it's more a cautionary lesson in the risks of investments - you end up compounding both the ups and the downs.
A better illustration though is still 10-year returns of the like though - my superannuation fund for example has a "High Yield" investment option. Even before the chaos of the GFC, when I paid attention to their statements I realized that the 10-year return on the "Term Deposit" option was higher then any of the other packages.
Of course, now I'm trying to game it since the recovery is yielding 14% returns in the High Yield option and of course my money was still in that when it crashed.
Posts
Finance thread. Awesome. Even if it is personal finance. (I'm really more of a corporate finance guy but all finance is good finance.)
I'm not sure if anyone has mentioned it yet, but it isn't wise to dump all of your savings into tax-protected accounts (Roth) or non-tax protected accounts. A lot of people are attracted to Roth accounts (for good reason) but you ought to diversify yourself on your tax-front as well. Also every good retirement portfolio should have some real assets (land, house, whatever.) Real asset values are sticky (somewhat), and much less sensitive to currency devaluations and the like.
Thanks for the reply, if I combine both I'll have around 10k in my Chase savings account then. I talked to a banker today before I actually saw this thread and he mentioned something in passing about opening a CD account. I was running late so I couldn't stay and get all the information I wanted but wouldn't I have to leave my money untouched for a while in order to gain from it? Also, isn't it better to do those kind of things when your rich++?
CDs basically lock your money in place until they mature, in exchange for a higher interest rate. The longer the time frame, typically the higher the interest rate. So if you put it in a 6 month CD you couldn't move it out without taking penalties until 6 months are up.
CDs are really low on the risk scale, but you are giving up liquidity for some more return. It really depends on your personal financial situation whether you can afford to have money locked up like that.
Standard advice: figure out how much money you need to live for X (6 is conservative, I am not very risk averse so go with 4, some people in this thread have suggested 12) months, and keep that much liquid or close to it. This is so you don't need to starve to death, or worse, rack up a bunch of debt, if you lose your job/car/mind.
Everything else should be invested and earning you a return. So yeah, as a college student, you are probably better off socking the money away where it will earn a return for now.
Edit for personal happiness: My 401k went over 100k and my net worth above zero (oh my god I bought a house at exactly the wrong time, I hate my realtor) for the first time. I am pretty juiced.
It could be worse, we're doing decent, but man... its going to be awhile before I can actually save money. I can't wait till he's in school.
The idea here is to get your investing started ASAP. Dropping $5000 this year will certainly be better than doing it 3 or 4 years from now, especially with the way the market is moving.
Ok, so here's what I'd recommend:
1. How much do the medical tests cost each time you go? You mentioned a few hundred dollars, so I'll ballpark at $500 (ProTip: Always budget more than you need. Good ninja way to increase savings). You get the tests quarterly, and you're making somewhere around $3k/mo. So, in three months, you need to spend $500. Now, I fucking hate odd numbers, but you should probably be saving anywhere between $190 and $250/mo. for the medical tests.
2. Renegotaite your student loan payments. You can get payments deferred really easily now, and it's insanely easy to get to a lower monthly payment. So many people are defaulting on their loans, or are unable to pay, that banks will literally do whatever they can to keep a paying customer paying. You can renegotiate down to very little.
That leaves your mortgage and your fiance. Now, your fiance can be doing other things that will lead to employment. Depending on their career, they may want to check out what professional organizations for that career are in your town/city and start volunteering/doing time with that organization. For example, while unemployed, I learned how to drive a car and started helping out the local Independent Game Developers' Association chapter, and that led me to getting in contact with my current boss. Stuff like that helps a ton, especially if the job hunt isn't being fruitful. If there's nothing like that, volunteering time when you're unemployed looks insanely good on job applications. Non-profits always need helping hands.
The big question is your mortgage. Depending on that cost, things can get dicey. Still, it's a planned for expense (i.e. an expense you know is coming every month) so you can budget around it. I'd also encourage spending time with your fiance and creating a monthly budget; one that'll allow you to save the money you need for your frequent medical expenses while building up some savings.
My advice on that count is, after you've renegotiated your loan payment, take that plus mortgage plus utilities, work out a weekly grocery bill (mine's $35/wk., but I spend about $40/wk. on eating out due to work. Since you're more grocery dependant, a larger grocery bill is A-OK). These are, kind of, "must-pay" expenses, but you know (or can ballpark) how much they run. Once that's all taken care of, you need to assess leftover "fun money". This is basically what amount of your income is left after must-pay expenses are taken care of. From this, you first derive what amount you need to put into savings. Now, the medical expense is something you put into this pile, so I'd say saving roughly $500/mo. (or 1/6th of your monthly check) is optimal, but in times where you can't do that at least $300/mo. needs to go into savings. Then, when you need the test done, you simply withdraw the amount from savings to the tune of what you need.
This is from page one, which I just finished reading, but it is absolutely incorrect. It can apply just as well to stocks, if the stocks have dividends. Most brokerages will give you the option to automatically reinvest dividend and interest income back in the fund so that it compounds.
Doesn't even matter if dividends are involved. Compounding applies to any asset whose return is proportional to its price. Which is like any investment.
I am a huge "silly goose" if I say she should use her degree for a few years? I
I host a podcast about movies.
Yeah, that's about how much money I get to carry over per month, total.
This I admit I am dubious on. I have already consolidated my loans like three times just to get them down to $500 (I have both fed and private loans, that come to approx. that total). I mean, I can always try as this is I feel the big issue, but I don't think my odds are good going in. Also, I was told point-blank that I can't defer my loans unless I lose my job or go back to school at least part-time.
Well, my fiance is going to be working with the census for the next little while, so there will be more money than just unemployment coming in - we are basically counting on this and hoping to squirrel as much of it away as possible. He's not really comfortable with working much out of the home at the moment because he is basically cramming to finish his Masters. It's very much a "this too shall pass" situation that seems to have dragged on forever.
Oh, I forgot to mention I also commute to work on toll roads each day and that costs about $140/mo (I could not use the toll roads, but my commute would go from 40 minutes to 2 hours and therapy costs more than the toll[/i]), and while our gas/electricity bills come to a respectable $100, our water bill equals that. But moving on:
We're on this one.
I think this is all very reasonable, and more or less what we're doing, with the exception of the reduced student loan payments - which, if I could get that, would pretty much get us out of the paycheck-to-paycheck (we're not at that point, after all, I do get to spend savings on medical payments, we just can't accumulate it much yet). Thanks for taking the time to break it down for me.
Not sure if you were going to say something else here (I'll edit if you come back and edit your post
Long story: The only job I had that I pretty much liked, didn't require a degree for, and had good chances for advancement with a few certs was technical support. Problem is, I came to California unemployed, took the first job offer I got, which got me into the industry I'm in now. It pays a mint for lackey work, which is great, but I'm burned out on it and I'm not interested in what the higher tiers have to offer. But now all that tech support experience is rotting with going on 8 years inactivity on my resume.
I'm making the effort now to go get a few of those certs to bring my resume up to speed and "start over" working my way up, but in the meantime,
Can you carpool with coworkers in your area to split the toll road cost?
And I'm not even gonna ask why your water bill alone is 100 bucks a month.
No, our water bill is $100 a month because of where we live - $90 is the base rate alone. We have asked the Water Dept. about this and it has to do with how far they have to send the water to be refined and how much they have to process it due to being next to a body of water, and blah blah, we're aware we're being raped by the water Dept but we live here, so we live with it.
Nobody I know at work lives in my city save one person, who works erratic hours because he's a manager and he can. Right now we're looking into my taking the metro, and it might be a good option, we're working on the details.
:P
At my workplace we have a workplace-wide mailing list that people use for stuff like this. "Anyone living in the X and Y area looking to carpool?" or "I need a roommate for the summer, contact me if interested" etc. and it all goes to a separate mailbox so people don't get spammed. That might be worth a try. Or you can post flyers on billboards around the office.
That being said, metro is probably a better idea in general since you'd also save on fuel.
Yeah, IIRC the water needs extra super-duper expensive processing because it's going right back into the river. :rotate:
Same drill as everyone else here - are you working, where are you living (home/roommates/life partner/on your own), how much money do you make, what are your expenses, etc.?
The amount you pay doesn't seem right. I live in Riverside as well and part of my living arrangements, aside from rent, include paying all the utilities of the 4-bdrm house which are: Water, Electricity, City Services, Cable and Internet. I just paid them and the water bill was a whopping $20.
If anything the Cable + Internet bill was $90 which I should look into trying to lower and the next highest was the Electricity bill which came out to $70.
I should note everyone in the household as taken a very pro-active stance towards water conservation though.
We live in Corona. Wastewater processing alone is $41.
Our DSL+cable bill comes to ~$60 (of which I pay half and my fiance pays half out of his unemployment), and our electricity is always $50 or under. Our gas bill got a bit hefty this winter but it was our first winter living out in the desert so we went a bit crazy with the heat; we have that under control now and it's back down from $100 or so to $50ish.
My expenses are around $500 per month, not including housing or student loan payments (which are deferred).
However, I don't pay any of that, because I'm not working - hence, no money - and am currently living in my grandparents house (they're in Arizona).
But, I think if I can join the military and go to work in the public school system, I might be able to accumulate a decent retirement.
if you have an engineering degree and you can't find a job that pays more than 36 a year, you're doing something wrong. If nothing else, you ought to be able to re-task into teaching high school science pretty fast. I really don't mean to be a jerk but for real. maybe gtfo of california?
In the words of Dave Ramsey, you're problem isn't that you aren't trying to dig out, your problem is you don't have a big enough shovel.
Also your fiancee is bringing in nothing? Is he home watching kids, what? If not, I suggest he look from 8-12, eat lunch, and volunteer or do his coursework, or maybe tutor, from 1-? I mean, I dig the temp census thing, that's the kind of thing I'm talking about, and I dig working on the masters, I do, but dang man, you guys are two unencumbered american adults with college degrees, living on basically a 16-17 dollar an hour job, in what sounds like a high COLA area, commuting and stressing to do it.
I am 100% sure you guys can increase your income another 6-8k a year in the next 6 months if you put your mind to it. Then you can pay off any unsecured debt, build a rolling emergency fund, and start kicking the piss out of your student loans.
I host a podcast about movies.
COLA? :?:
We are increasing our income 8k in the next 6 months - homeowner tax credit :rimshot:. Well, it's the best we could do on short notice
Mmmm not sure where the engineering degree thing came from, though I did major in it before switching over to comp sci and getting an AA in that for time served, and finally got my degree in Visual Communications. Also, I make 40k (not 36) a year. I used to make more in my industry, but blah blah, economy, layoffs, blah blah. I hate kids, so I wouldn't seriously pursue teaching, but even if I wanted to, things are really, really shitty out here for teachers. And as my fiance knows, forget about subbing (which is the hell all the laid off teachers are living in right now).
We bought our house before the fiance lost his job, so we're in it until at least our three years are up in order to keep our tax credit, and after that we are most likely either a) moving to Austin, TX for the crazy low cost of living, or b) moving to Canada (back, for me) for the free healthcare, since my fiance can't afford any now. Well, this is the plan unless life changes dictate otherwise, which, hell, I've been trying to move back to Canada for 7 years now and something always seems to come up (including falling in love and moving in with one of the natives, dammit!), so.
Do you think that I should not try to get any technical certs (like CCNA, MSCE etc. which would currently be paid for by my contracting firm, so no expense to me) and try to get in as an entry-level network admin (a job that pays $60k at 2 years' experience) over something else? I thought it was a decent goal, if not having an immediate payoff.
Edit: Seriously, I am not trying to be difficult, here. But engineering and comp sci made me miserable.
Someone said you made about 3k a month (x12 is 36) is where I got that number, it wasn't a straight asspull.
Have you explored your loan terms to see about maybe renting a room? Or, more palatably, do you maybe have a relative turning 18 or something that might want to stay with you while going to college and could contribute... It sounds like your house is pinning you down, you might as well get all the value from it you can.
I host a podcast about movies.
Say you don't give two shits about risk and you're all bonds for life for a quarter of your monies? Long term bond fund? Short term? What's up smarties?
Well, I work for a [strike]placement[/strike] consultant firm, as a contractor, for a telecom company. My job is data entry and I have no chance of advancement or raise since I am on a 3-year fixed contract. BUT, my contracting firm, being the ones who found me this job, are looking for other positions I could take, with other companies, which might be an advancement, and are also providing me the opportunity to take certifications that will increase my possibilities in leaving my current industry and getting into network administration.
So, both yes and not exactly, to what you said. I hope that clears that up!
Thank you!
I host a podcast about movies.
No, I did not know that the job was salary-locked when I signed on, however I did know that there was no chance of employment afterward. BTW, feel free to let me know if I have some kind of legal recourse or something, because it's not in my contract that I cannot get a raise, it's the contracting liaison at the company I'm working for that has the policy. My own contracting firm was unable to negotiate a raise on my behalf, which is why they are looking for something else for me now.
Also, I had been unemployed for 2 months and my previous job paid $31k... after I was laid off from a job paying $42k. Don't judge me!
seriously shit is tight, I know, but you can do it!
I don't quite understand - you work for a contractor that has placed you? Like a long term temp thing? This is becoming a thing for the jobs thread. . .
I host a podcast about movies.
There's a jobs thread? :shock:I don't get out of D&D/Multiplayer... much, but maybe I ought to.
But yeah, basically - the company I do the data entry for (not the consultant firm that placed and pays me) doesn't do direct hires anymore - I also handle payroll data entry, and all we've been getting is a steady stream of contractors over the past year, and I mean everything from engineers to project managers. I don't know if it's a sign of the times or just this location, but it seems you can't get in direct with a company at all these days, everyone's a contractor.
Anyway, yes, I started posting here because we are genuinely struggling with maintaining the kinds of savings I know we should be putting away, and wanted help trying to see where we could trim any fat. I've gotten some very good advice and suggestions here, and we are working on it, so hopefully we can get that on track soon!
No, you are paying down a loan at your mortgages interest rate. It's the same as any other debt reduction.
Here is what you need to compare:
1. Your opportunity cost of capital (i.e. how many %, after tax!, could my money be earning elsewhere).
2. Your mortgage's interest rate, net of how much of it you can deduct off your taxes.
If 1 > 2, don't prepay. Put the money into your next bet investment choice instead.
If 2 > 1, prepay as much as you can.
is that how a 401k works?
for some reason, i was under the impression that i cannot change my past investments. so if ive already invested $100,000 into some high risk fund, i can't withdraw that amount and then later place it into t-bills. i can of course invest in different funds with my new monthly contributions, but those old investments are set.
that's how i thought it was, but i have to admit, i dont know that much about it.
compounding as a concept applies to all investments, but the way it is written in the op is misleading.
for example, a $100 investment with an annual 6% return compounds as follows:
100
106 (+6%)
112.36 (+6%)
119.10 (+6%)
126.25 (+6%)
133.82 (+6%)
however a $100 investment that moves up and down but averages an annual 6% return does not "compound" in the same way.
100
90 (-10%)
99 (+10%)
89.1 (-10%)
98.01 (+10%)
127.41 (+30%)
(i think i did the math right...)
anyway, all im trying to say is compounding works both ways - if your investment loses value, your return is also negatively compounded.
that's why the compounding as espoused in the op is misleading. it seems to suggest that investment compounding is identical to savings account compounding, which it certainly is not.
finally, as far as i know, most companies do not pay dividends.
I think I see where my thinking went wrong. They redo the amount of interest I owe every month, so paying extra principal does start paying off immediately in a way. I need to sit down with pen and paper (and possibly one of those little accountant visors) and figure it all out.
You can always change your investments around.
If you invest 10k in high risk stocks today, tomorrow you can change your mind and sell those and buy low-risk bonds. Sometimes there are transaction fees associated with that, but if you're smart and do your research then you can avoid them when trading most investor-grade stocks and bonds.
There are also other options - that I personally don't recommend for individual investors. You can buy mutual funds that have set retirement dates. For example, the Fidelity Freedom 2050 fund has a target retirement date of 2050. This means that, today it is relatively high risk, but as time goes on the fund manager slowly gets rid of the high risk assets and buys lower risk ones. So by the time you're close to retirement it is a very low risk portfolio.
The reason I don't recommend mutual funds (i.e. actively managed funds) is because they tend to have high expense ratios. You might see expenses up to 2.5% with mutual funds, whereas with index funds they tend to be less than 0.5%.
Except in your second example who on Earth would ever list that as a 6% growth rate. Anyone in finance would list it as a 5% growth rate.
Also, while we're talking about 401(k)s, I'll brag on my retirement for a second - I put in 5%, and they match with 9.24%. Yes, that's what I meant to type in. Right now I put it in a Fidelity 2050 target retirement fund because I'm lazy and the expense ratio isn't terrible (0.82%) :P
But, you can't know that in advance. I suppose it's more a cautionary lesson in the risks of investments - you end up compounding both the ups and the downs.
A better illustration though is still 10-year returns of the like though - my superannuation fund for example has a "High Yield" investment option. Even before the chaos of the GFC, when I paid attention to their statements I realized that the 10-year return on the "Term Deposit" option was higher then any of the other packages.
Of course, now I'm trying to game it since the recovery is yielding 14% returns in the High Yield option and of course my money was still in that when it crashed.