I am also not a big fan of 529 plans - I would rather invest the money elsewhere and keep the option open to deciding on any country/any college for my kids. Believe me, that is a big option you have. Regarding life insurance there are two major flavors - term life (which is pure life insurance - you use it or lose it) and whole life/variable life/ etc which are investment-linked. Term life is simple, classic life insurance - for a low premium you get coverage for a certain amount if you die before a certain age. If you outlive that age, no payout. However the good thing abouty this is that you can use the low premiums to ensure adequate coverage. In my opinion by adequate coverage what you need to ensure is that in the event of death of the insured, you can guarantee the same income stream so there is no financial impact. Whole life/variable life is a bit more complicate since they are investment linked. In my opinion you should separate insurance and investment.
Thanks Srividhya,Laks09 and Pavarun. Valuable inputs. I think I'll go with 401k fo this year. Thanks again ladies
401k Investment what are the pros and cons of investing in 401K? How do you all decide how much money to put in 401 k and where? Please suggest me how can we get optimum benefit out of it and what are the loopholes?
question about legal rights over real estate what are the pros and cons of investing in 401K? How do you all decide how much money to put in 401 k and where? Please suggest me how can we get optimum benefit out of it and what are the loopholes?
Re: question about legal rights over real estate NL If you contribute to the companys 401K , company would match up a certain % of what ever you are contributing.... Also you can save on taxes depending on how much you save in 401k (also depends on which tax bracket you fall into) In future, if you want to buy a home/ pay tuition fee for your kids college, you can take a loan against this 401k savings Just like PF in India, you can roll over this 401k to another companys 401k or into Roth IRA incase if you quit the company... You can track your investments online and also see how your money is invested by your company, if you want to manage your portfolio you can do it by yourselves also.. However if you happen to quit the company, if you want to cash out 401k there would be approximately around 35 to 40% of the amount would be gone in taxes..so you would get only 60 to 65% of the money that is balance in the account.
Re: question about legal rights over real estate Many employers provide some kind of 401k match - If possible you should try to max out the company match - this is free money that you will otherwise lose.
Hi Srividhya This topic is very informative Thanks to srividhya. Is 529 plan & 401k are they related to each other? Pls enlight me in this topic. Anyone here planning to start 529plan pls share your thoughts.
529 and 401k are not related to each other...both of them are saving plans...which help in reducing taxes... However if you save money in 529 plan (i.e for college tuition for kids) you have to use the money only for paying tuition fee, cant withdraw the money for other purposes or emergencies..so lately all financial planners are suggesting 529 as the last resort for savings... If you save more money in your 401K account, you can always take loan for the tuition or emergencies or first time home buying...you dont have this option with 529 plans.. So before starting for 529 plans...things to confirm Are you saving enough in your 401K? Do you have enough money in your emergency fund? Do you have any other savings/Investments like MFs etc Did you pay off your CC debt? My personal opinion is..I would start a savings account on kids name or invest in some MFs rather than put the money in 529 plans as the money would be tied down and cant use for any other necessities...
Need help on 401k Hi all, I'm new to USA and need some help about investment for my husband's 401k plan. He has witched to a new company where do not match the 401k anymore. So we have not opted for the 401k option here. However there are 401k funds above $5k from his previous employer which we now have to claim. Require your advise on the best investment option for these funds here. Should we transfer it to a ROth IRA? How does a ROTH IRA work, what are the other options available to us? (My husband is on H1)
Re: Need help on 401k If you withdraw the amount you would have to pay around 30 to 40% on taxes and fines on the amount in 401K account...thats a good option of choosing to roll over to IRA. Roth IRA should be good and also your husband can add to Roth IRA every year (Max that he can add is 5000$) which would help in tax benefits but you cannot with draw it before your husband is 65 and same taxes and fine apply for early withdrawal. Read the info on net to get more insight onto IRAs http://en.wikipedia.org/wiki/Roth_IRA
