Protect Your 401(k)

Copyright......Page 5
Contents......Page 7
Preface......Page 9
INTRODUCTION AMERICANS' NEW MOST VALUABLE ASSET!......Page 13
What About All the Recent Bad Publicity?......Page 14
So, Why Even Bother With a 401(k)?......Page 15
Learn 10 Steps to Take Immediately......Page 16
Why Should You Read This Book?......Page 19
CHAPTER 1 PAY YOURSELF FIRST......Page 21
Pay Yourself First......Page 22
The Budget......Page 24
When You “Find” More Money, Invest It!......Page 27
CHAPTER 2 NCREASE YOUR CONTRIBUTIONS......Page 28
Eligibility (Who Can Invest?)......Page 29
Elective Contributions of Pre-Tax Dollars......Page 30
Exponential Growth Through Compounding......Page 31
Dollar Cost Averaging......Page 32
Retirement Plan Contribution Options......Page 33
Sources of Contributions......Page 34
Not Just for Retirement......Page 35
Using Both a 401(k)and an IRA Makes Sense......Page 37
CHAPTER 3 TAKE FULL ADVANTAGE OF MATCHING CONTRIBUTIONS......Page 39
Read Your Plan’s Fine Print......Page 40
Company Stock and Your Job......Page 44
A Definition......Page 48
Definitions......Page 49
The Process......Page 50
Liquidation......Page 53
Legal Protection......Page 54
Checks and Balances......Page 55
How can you tell if your company has a good 401(k) plan?......Page 56
Warning Signs......Page 57
CHAPTER 5 BECOME AN INFORMED INVESTOR......Page 59
How Aggressive Do You Need to Be?......Page 61
What Is a Reasonable Growth Rate of Return?......Page 62
Luck Does Play into Investing......Page 69
CHAPTER 6 USE THE SIX CONCEPTS OF SUCCESSFUL INVESTING......Page 71
Concept One —Why Diversify?......Page 72
Concept Two —The Art of Asset Allocation......Page 75
Concept Three —Asset Class Investing......Page 77
Concept Four —Rebalancing......Page 80
What Happens if You Rebalance Using Different Techniques?......Page 81
Robin Hood......Page 82
Reverse Robin Hood......Page 83
How to Use These Results to Add Value......Page 84
Concept Five —The Power of Compounding......Page 85
Concept Six —The Perspective of Time......Page 87
Individual Stock Picking......Page 90
Timing the Stock Market......Page 91
Informed Investing......Page 92
CHAPTER 7 UNDERSTAND YOUR INVESTMENT VEHICLE CHOICES......Page 93
How Do You Compare?......Page 97
How Mutual Funds Work......Page 98
Growth......Page 100
Value......Page 101
Balanced Funds......Page 102
Fixed-Income Funds......Page 103
Understanding the Prospectus......Page 104
Other Things You Should Know......Page 106
How to Read Newspaper Mutual Fund Tables......Page 110
The Rating Game......Page 111
CHAPTER 8 BUILD A CORE INVESTMENT PORTFOLIO......Page 114
Building the Portfolio......Page 118
401(k) Calculator......Page 124
Consulting an Advisor......Page 125
The Financial Advisor Community......Page 128
Financial Planners......Page 129
Bank Investment Representatives......Page 131
Independent Fee-Only Financial Advisors......Page 132
How Do Advisors Get Paid?......Page 133
The Distribution Rules......Page 137
Tax-Free Rollovers......Page 138
Minimum Distributions......Page 142
Section 72(t) Distributions......Page 143
Leave Your Money in the Plan......Page 144
Loans......Page 145
Repayment......Page 147
Hardship Withdrawals......Page 149
Safe Harbor Tests Set Forth in the IRS Regulations......Page 150
Withdrawals of After-Tax Contributions......Page 151
Free Information......Page 152
CONCLUSION PULLING IT ALL TOGETHER......Page 153
APPENDIX A THE WORKING DOCUMENT: YOUR INVESTMENT POLICY STATEMENT......Page 156
There Are Seven Steps to Establishing an Investment Policy......Page 157
APPENDIX B THE HISTORY OF 401(k) PLANS......Page 163
Enter the ERISA......Page 164
Problems with Pension Funds......Page 165
Differentiating Investment Styles......Page 166
The Era of Personal Responsibility —40l(k)......Page 167
Fidelity......Page 168
The Bull Market and Risk......Page 169
It’s All Up to You......Page 170
APPENDIX C GLOSSARY OF TERMS......Page 172
INDEX......Page 185
ABOUT THE AUTHORS......Page 194