Friday, February 25, 2005
DCA and Your 401(k)
Sunday, Amy's parents and I struck up a debate on privatized social security. They're against it, which didn't quite surprise me. What did, however, is that Amy proposed a 401(k) style private account. Her parents seemed to agree with her that it would be the better way of approaching privatization.
Alas, I didn't realize until yesterday that they were agreeing with me (idiot that I am). If privatized accounts made it through congress, and I had the option of investing, due to the nature of the account (long term) I would invest in it very conservatively. Unless I figured out a less risky approach, I'd invest in the private account using dollar cost averaging, with of course a diverse portfolio of my choosing (something I don't think President Bush has proposed). What I didn't realize is that a 401(k) is a dollar cost averaging investment, the only difference is that your employer helps match your investment. Bush would do well to get into the public mind that privatization would be as secure (or perhaps more) than a 401(k) plan. If I recall correctly, Bush has proposed that the private investment accounts would be insured, which in my mind says that if you come up negative when your time is up, the government will give you the money necessary to break even. Seriously, who's against this, and why do they not want me to make a profit off of my own damn money? People, we need to debate this amongst ourselves, instead of debate the different parties' proposals.
Alas, I didn't realize until yesterday that they were agreeing with me (idiot that I am). If privatized accounts made it through congress, and I had the option of investing, due to the nature of the account (long term) I would invest in it very conservatively. Unless I figured out a less risky approach, I'd invest in the private account using dollar cost averaging, with of course a diverse portfolio of my choosing (something I don't think President Bush has proposed). What I didn't realize is that a 401(k) is a dollar cost averaging investment, the only difference is that your employer helps match your investment. Bush would do well to get into the public mind that privatization would be as secure (or perhaps more) than a 401(k) plan. If I recall correctly, Bush has proposed that the private investment accounts would be insured, which in my mind says that if you come up negative when your time is up, the government will give you the money necessary to break even. Seriously, who's against this, and why do they not want me to make a profit off of my own damn money? People, we need to debate this amongst ourselves, instead of debate the different parties' proposals.
