401k Q's - Brown Cafe

XpostalWorker · 11-27-2007, 02:38 PM

I'll start out by introducing myself. I'm am new to the community. I preload for a living and am full of questions.

For one as far as I know there are 3 vehicles to invest in my savings and retirement. And i'm only talking about within UPS.
1. 401k 2.UPS Stock 3. Pension
Is there something I'm missing?

Second question is about the 401k. As far as I know the company doesn't match a cent. When I go to UPSers.com I see 2 links to a 401k website. One takes you to UPS Savings Advantage, it handles 401k and Stock Purchase enrollment. The other Teamster-UPS National 401k Tax Deferred Savings Plan. Which is the 401k that I should invest in? Is one for management and the other for employees like me in the union that preload?

UpstateNYUPSer · 11-27-2007, 03:53 PM

You will be using the Teamster UPS 401k link (https://teamsterups.csplans.com). You can also purchase stock through payroll deduction. You cannot invest in your pension--that is done contractually for you by UPS.

XpostalWorker · 11-27-2007, 08:32 PM

Thank you for you help.

Should I invest in pre-tax (tax deferred) or after tax contributions? I believe you can invest 25%max pre-tax and 5%max if after-tax.

How then do I go about to purchase stock so it can be auto deducted from my pay.

helenofcalifornia · 11-27-2007, 08:55 PM

I go with the tax deferred. It is hard (read almost impossible) to get access to if you need it in an emergency. The post tax one you can get to anytime. If you are preload now, you are probably not taking home that much so I don't know if the 25% max. if feasible for you yet. If it is, go for it. When you go driving, max out if capable. Get lots of advice on what to invest it in now. Market is tricky right now and I have had mine in the stable Value Fund. Don't make much, but I sure don't lost that much either. Get as much advice as you can from everybody. I wish I had invested more when I was younger. Good luck and welcome abooard!!

Baba gounj · 11-29-2007, 07:25 AM

The best part of a 401K plan is that besides money you are investing in time.
Depending on how long you have until retirement, time is your best friend. What I mean by that is the stock market goes up and down constantly, but over the long run your investments will continue to grow .
For someone just starting out I would suggest that you keep all your money in 1-2 funds . { there are handling fees to pay ( small amount for each fund ) that can add up quickly if you add to many funds }
Since your main goal is growth look at what risk factors there are and decide how much risk you can handle. If you want to be safe then Bond or Stables Funds, but growth is really slow. If you really want growth then its stock funds. Historically the best place for investing.
Start out small [ depends on how much you can afford to invest ] say 5-10 % .

Please don't be checking your account daily It will drive you crazy.
Review your account every couple of weeks, set a dollar amount that you must reach before making any changes to your account.

The stock purchase plan is good, but it must be a long term plan. Again start off slow, just a small amount ( what you can afford ) But be warned changes to the plan can only be done once per quarter.{ I had a co-worker who decided to increase his weekly deduction to the max. but he thought only for a few weeks, and then switch it back. Instead he was at the max for the whole quarter, which on some paychecks he took home less that 10 dollars.}
The best way to make this grow is to take the dividend re-investment option. All dividends paid to you are automatically used to buy more stock, but at the current market price. Again time is a friend here.
Also when buying or selling this stock, Melon Bank uses a not the price of the moment ,but a combined price of the day. And when selling they can take a week to move funds to you.

XpostalWorker · 11-29-2007, 09:24 AM

The dividend re-investment option. Is that for UPS stock or 401k?

IDoLessWorkThanMost · 11-29-2007, 12:32 PM

Quote:

Originally Posted by Baba gounj

The best part of a 401K plan is that besides money you are investing in time.
Depending on how long you have until retirement, time is your best friend. What I mean by that is the stock market goes up and down constantly, but over the long run your investments will continue to grow .
For someone just starting out I would suggest that you keep all your money in 1-2 funds . { there are handling fees to pay ( small amount for each fund ) that can add up quickly if you add to many funds }
Since your main goal is growth look at what risk factors there are and decide how much risk you can handle. If you want to be safe then Bond or Stables Funds, but growth is really slow. If you really want growth then its stock funds. Historically the best place for investing.
Start out small [ depends on how much you can afford to invest ] say 5-10 % .

Please don't be checking your account daily It will drive you crazy.
Review your account every couple of weeks, set a dollar amount that you must reach before making any changes to your account.

The stock purchase plan is good, but it must be a long term plan. Again start off slow, just a small amount ( what you can afford ) But be warned changes to the plan can only be done once per quarter.{ I had a co-worker who decided to increase his weekly deduction to the max. but he thought only for a few weeks, and then switch it back. Instead he was at the max for the whole quarter, which on some paychecks he took home less that 10 dollars.}
The best way to make this grow is to take the dividend re-investment option. All dividends paid to you are automatically used to buy more stock, but at the current market price. Again time is a friend here.
Also when buying or selling this stock, Melon Bank uses a not the price of the moment ,but a combined price of the day. And when selling they can take a week to move funds to you.

Allah Akbhar

moreluck · 11-29-2007, 12:43 PM

Allah Akbar" = Arabic for "God is Great"

Baba gounj · 11-29-2007, 09:06 PM

Dividend re-investment is for ups stock.

And if you wish, you could use the Managed Fund option in the 401K plan.
In this fund you pick the stocks to buy . Unlike most other funds available which are indexes { a combined assortment of stocks & bonds }. There are many stocks out there that also have a re-investment option. But be very careful NEVER invest all your funds in just one stock, no matter how good you think they are.

satellitedriver · 11-29-2007, 09:34 PM

Quote:

Originally Posted by Baba gounj

Dividend re-investment is for ups stock.

And if you wish, you could use the Managed Fund option in the 401K plan.
In this fund you pick the stocks to buy . Unlike most other funds available which are indexes { a combined assortment of stocks & bonds }. There are many stocks out there that also have a re-investment option. But be very careful NEVER invest all your funds in just one stock, no matter how good you think they are.

When Baba says NEVER invest totally in one investment, he/she is correct.
If you chose to buy individual stocks, try and keep each holding between 2.5% to 5% of the total value of your portfolio.
Most importantly, diversify all your positions.
PAX

UPS Lifer · 11-30-2007, 08:46 AM

Pre-tax or After Tax - Depends on what your CURRENT tax bracket is and what you expect it to go to. If you are in a low tax bracket now, you might want to do after tax. When you are 60 and your tax bracket is higher you will have already paid taxes. If you don't feel you will be in a higher tax bracket than you are now in, put your money in a pre-tax account.

Every year you should re-evaluate where you are with all your investments.

I recommend a book "The Smartest Investment Book You'll Ever Read" by Daniel R Solin. It is simple reading and can help you with investment decisions.

My rule of thumb is defer - defer - defer.... Except in the above situation!!

Damok · 11-30-2007, 08:51 AM

Something to think about is a Roth IRA instead of the 401k plan if you are non-mgt /supervision and get no match.

As has been said - do research... don't take any info here as gospel. You have a lot of options depending on your age, financial situation, etc that will determine your choice.

raceanoncr · 11-30-2007, 10:31 AM

Quote:

Originally Posted by Damok

Something to think about is a Roth IRA instead of the 401k plan if you are non-mgt /supervision and get no match.

As has been said - do research... don't take any info here as gospel. You have a lot of options depending on your age, financial situation, etc that will determine your choice.

There's advantages to both Roth and 401. Roth is after tax. 401 is before tax. What's that mean?

When you are retired and start drawing out 401, as is required, you will be taxed then. Probably your tax rate will be much lower than it is now. Also, you can stash up to $15,000 (I think) this yr. Would have to look to be sure, but I max it out every yr anyway.

With the Roth, in most cases, you can only invest $4,000 a yr, unless you're over 50, then it't bumped to $5,000. This is after tax contribution, which means you've already been taxed on it, you don't get taxed again. Also, you don't get taxed on the growth during its life. My advisor simplified this: The IRS figgered they screw us enough as it is, they'd let us have all this.

Stock, as you can see, ain't been so hot. Today, is around 73 and has been for some time. Sure, you can re-invest dividends but @0.42 cents a share, it takes awhile to make a difference.

My advice: Max out the 401 and Roth and whatever options you have.

HazMatMan · 11-30-2007, 01:06 PM

I Got it ALL in the EAFE fund paying 13%..........

satellitedriver · 11-30-2007, 06:32 PM

Quote:

Originally Posted by HazMatMan

I Got it ALL in the EAFE fund paying 13%..........

All???
I have a diversified portfolio showing 16.8% gains for the last 12 months rolling.
If 20% of my investments go down the drain, I still would beat EAFE.(I do own a position in EAFE)
If EAFE bobbles, well, you have all your eggs in one basket, as the old saying goes.
PAX

brownmonster · 11-30-2007, 06:59 PM

I have all my money in a cigar box under my bed. I never have to worry about it losing value and do not have to pay taxes on it when I retire. I should write a book on my investing technique. Is "Investing for Total Idiots" already taken? BM

toeknee2gx · 12-01-2007, 07:35 AM

Quote:

Originally Posted by brownmonster

I never have to worry about it losing value and do not have to pay taxes on it when I retire. I should write a book on my investing technique. Is "Investing for Total Idiots" already taken? BM

better get some help writing that book.....

sc.jpg

teamsterdan · 12-01-2007, 07:52 AM

can't help but to add my two cents as a "hobbiest investor" I can't disagree w/ any of the advice offered here but investing is like buying socks and underwear.......you gotta get the stuff that works for YOU...........I would recommend doing your homework, try sites like motley fool, or just google "personal financial planning" and educate yourself and others, your success will be worth it........I always am amazed by the number of "us" who don't take the time to learn abt. our finances, it's the ONLY skill, everybody needs regardless of your career choice..........