Fri 5 Dec 2008
About That Second Money Path
Posted by RichSlick under Philosophy
[3] Comments
Get Rich Slick is about two paths: Get Rich Slow + Get Rich Quick. I don’t write too much about the Get Rich Slow path because it’s fairly basic and straightforward. The components to my get rich slow plan involve maxing out 401k each year, deferring compensation, minimizing tax liability, and saving.
This may come as a shock but I am actually considering halting 401k contributions in 2009 and possibly halting deferred compensation contributions as well. Although this may increase my tax liability overall, I don’t foresee investing in the market in 2009 as a wise or prudent move.
I won’t actually halt all contribution since I get a 100% match up to 6% match on both 401k and deferred compensation plans but I don’t feel comfortable investing 15.5k in a losing market.
Fortunately, I made a wise decision when I opted to have 100% of my deferred compensation plan invested in government securities because they haven’t lost a single penny. My 401k, although I haven’t checked, has lost probably around 40% or so.
I know I’ll likely get e-mails or comments about dollar cost averaging and indexing or similar theory but we’re in a whole new world now and if a few key events take place, the world will plunge into a global depression. We are still nowhere near the end of this economic credit mess and if you think stocks are on a great “sale” right now, wait till we spiral into a deflationary depression, stock will be sold at the bargain basement bin at the $0.99 store.
I’ll crunch the numbers this weekend and follow up later….
December 5th, 2008 at 1:46 pm
Why not just direct your 401k contribution into a money market account? Then invest when you feel safe. You still get the tax benefit this way.
December 5th, 2008 at 3:35 pm
Do you think money markets are safe? A few have already broken the buck and most banks are still insolvent so it isn’t as safe as it sounds.
December 6th, 2008 at 8:56 am
Not that it matters much since you’re talking about not doing it, but the 401k contribution amount for 2009 is $16.5K. I’ve got a post on my blog about where I’ve tried to summarize that and other changes.