Why not borrow against my 401k?

Loans are not subject to the penalty. Withdrawals generally are...although Rule 72(t) allows penalty free withdrawal.

Quote from LiquidRetro : Why are you not a believer in the 401k?

Lemme guess, he finally woke up and figured out it was a scam?

Quote from barnz008 : Lemme guess, he finally woke up and figured out it was a scam?

Right and The moon landing was fake too . . . .

Quote from LiquidRetro : Right and The moon landing was fake too . . . .

Everyone knows you can't land a ship on cheese.

Quote from saladdin : Everyone knows you can't land a ship on cheese.

Anything is possible with Hollywood magic, a New Mexico warehouse, and a government budget.

Quote from saladdin : I'm almost 40 with a grasp on investing. Insulting my grammar doesn't bother me. Go aheed and do it.

it's been said and i'll say it again, you're a tool. stop flaming people's honest requests for advice.

Quote from LiquidRetro : Right and The moon landing was fake too . . . .

Real or contrived, no one's life savings is under the illusion.

Either funnel your money into the "safety" of a retirement savings plan or they will steal it through taxes anyway. What a great program!

Those of you who are so convinced that these vehicles are so great, take a look at the tax hikes coming in 2013 on capital gains, dividens and spend 5 min learning what the "fiscal cliff" is. Remember, the market moves on two primary factors...fear and greed. One must be espcially prudent "investing" in anything when greed and complacency run high.

Quote from barnz008 : Real or contrived, no one's life savings is under the illusion. Either funnel your money into the "safety" of a retirement savings plan or they will steal it through taxes anyway. What a great program! Those of you who are so convinced that these vehicles are so great, take a look at the tax hikes coming in 2013 on capital gains, dividens and spend 5 min learning what the "fiscal cliff" is. Remember, the market moves on two primary factors...fear and greed. One must be espcially prudent "investing" in anything when greed and complacency run high.

No one said investing is easy or simple. However its hard to plan for things when the future is so uncertain. Negative interest is a very real thing too, which is what you get for keeping that money under the pillow or buried in the backyard. There are ways the average person can earn a reasonable rate of return over their working year periods. What that is depends on your individual situations and tolerance for risk. I don't believe the 401k vehicle is broken for everyone. For some there might be better ways, but for average working Americans, it works pretty well over time.

Quote from LiquidRetro : No one said investing is easy or simple. However its hard to plan for things when the future is so uncertain. Negative interest is a very real thing too, which is what you get for keeping that money under the pillow or buried in the backyard. There are ways the average person can earn a reasonable rate of return over their working year periods. What that is depends on your individual situations and tolerance for risk. I don't believe the 401k vehicle is broken for everyone. For some there might be better ways, but for average working Americans, it works pretty well over time.

All great points.

However, many (most?) blindly put money into these vehicles *thinking* it's a "good idea" cause that's what's been sold to them by the financial services crew. Then, in this instance, the person begins to question it, needs the money, wants the money, etc....years later. Would it not be better to do all the leg work up front? I'm not talking about hiring a FA cause that's like asking the butcher if you should buy meat or not.

There are many ways to shelter your hard earned labor.

Quote from barnz008 : All great points. However, many (most?) blindly put money into these vehicles *thinking* it's a "good idea" cause that's what's been sold to them by the financial services crew. Then, in this instance, the person begins to question it, needs the money, wants the money, etc....years later. Would it not be better to do all the leg work up front? I'm not talking about hiring a FA cause that's like asking the butcher if you should buy meat or not. There are many ways to shelter your hard earned labor.

like?

Quote from SP33DFR34K : like?

Slick dealing is a good way.

If you get rewards back on your CC that is a guaranteed return on your money (as long as you are buying something that you would have otherwise purchased).

Quote from kark123 : Slick dealing is a good way. If you get rewards back on your CC that is a guaranteed return on your money (as long as you are buying something that you would have otherwise purchased).

That isn't sheltering.

Quote from PiratesSayARRR : That isn't sheltering.

It is "sheltering."

Say you were going to budget $500 a year to spend on Gas. You could purchase $500 in Gas cards from a store while Chase (or any other CC company) was doing a promotion where you get 5% back.

Your out of pocket is $475 ($500-$25 back in cash rewards). If you spend that $500 in Gift Cards during the next year, then your non-taxable return is 5.26% (5.26% APR). Mind you, that this is a low-risk investment that is not taxable ever. The only risk is that the company you purchase the GCs for could go out of business (or even out of state, like BP is doing with ARCO in California).

If you were to spend the GCs in only 6 months, that would double your annual return (APR = 5.26% * 2 = 10.52%). Also, these calculations do not account for the fact that these transactions are after-tax (making their pre-tax returns even higher based on your assumptions).

Quote from kark123 : It is "sheltering." Say you were going to budget $500 a year to spend on Gas. You could purchase $500 in Gas cards from a store while Chase (or any other CC company) was doing a promotion where you get 5% back. Your out of pocket is $475 ($500-$25 back in cash rewards). If you spend that $500 in Gift Cards during the next year, then your non-taxable return is 5.26% (5.26% APR). Mind you, that this is a low-risk investment that is not taxable ever. The only risk is that the company you purchase the GCs for could go out of business (or even out of state, like BP is doing with ARCO in California). If you were to spend the GCs in only 6 months, that would double your annual return (APR = 5.26% * 2 = 10.52%). Also, these calculations do not account for the fact that these transactions are after-tax (making their pre-tax returns even higher based on your assumptions).

Once again that isn't sheltering. I don't think it means what you think it means.

Sheltering has do to with reducing taxable income, hence a 401K. You are talking about discounts not tax sheltering. By your logic if I spent $475 for $500 worth of goods I am "sheltering".