Borrowing from 401k?

Discussion in 'Professional Trading' started by pdwst33, Mar 23, 2007.

  1. I just went to my Fidelity 401K web account and looked to see what the loan terms are. You can borrow up to 50% and the rate quoted for me was 9.25%

    Even though you're paying the interest to yourself, it's still a bit steep in my opinion.

    Also, the max is 50% or $50,000, whichever is smaller.
     
    #11     Mar 23, 2007
  2. pdwst33

    pdwst33

    One more thing Options Poet/Risk Genius...Something about this site...people spend more time picking apart questions and highlighting selections as you do and copy/pasting them so you and others can harp all over them, to prove they are superior or smarter, or simply more clever than the poster. I notice it all the time. Is this American Idol, and you are in Simon Cowell's seat so you can be the boss, the tough guy, what have you? It's ridiculous..why not get back to trading? I plan to after this message.
     
    #12     Mar 23, 2007
  3. jim c

    jim c

    The 401k loan is probably better than any other loan you could get. I understand what people are saying here but its your money. I took out a 5k loan 3 years from my 401k. I set it up to be payed back over three years. I think there is a limit of 50k or half of your balance. Nt for sure about his. Who cares what your gonna use the money for and I dont think anyone will even ask. Jim
     
    #13     Mar 23, 2007
  4. pdwst33

    pdwst33

    I agree Steve, thats very high...higher than a Sallie Mae loan if you were to borrow to pay that back...which at one time I was considering. I actually found that getting a Prime Equity Line of credit was much cheaper for that.
     
    #14     Mar 23, 2007
  5. Jaxon

    Jaxon

    I don't understand this statement.

    Wouldn't you rather pay 10% on a 401k loan (paying interest to yourself) than borrow at 1% from a bank?
     
    #15     Mar 23, 2007
  6. I'm sorry. I am a simple person. I borrow as little money as possible, from myself or anyone else. The semantics of borrowing from yourself, paying interest to yourself, etc is specious at best.

    If you need money, work and save. Only spend money you have. That's all. This sounds very old fashioned, but it's kept me out of trouble.
     
    #16     Mar 23, 2007
  7. My apologies. I'm trying to eliminate the last few unnatural things in my diet and it's killing me. I've just gone 3 days w/o coffee. So I'm a bit irritable. Remember my initial post and forget about the second one...

    OP
     
    #17     Mar 23, 2007
  8. Agree. Who cares what % it is...it's moving the funds from your right pocket to your left pocket.
     
    #18     Mar 23, 2007
  9. semiopen

    semiopen

    There are a few 401 brokers that allow this to happen. It is possible to take out multiple loans if your money is split into more than one qualifying plan.

    Pioneer allows it, and a place called 401Brokers.com can set it up with multiple funds.

    Assuming that you have set up your own 401k, taking the money out and paying it back is arguably a better strategy than simply leaving it in place.

    Some of the comments about this are rather odd, one might expect trader's to have a better than average knowledge of finance.
     
    #19     Mar 23, 2007
  10. pdwst33

    pdwst33

    True..but at my firm, and I suspect many others, finance is not a prerequisite. You'd be surprised how many Physics geniuses convince themselves that they are smarter than the market and end up imploding because of this hubris.
     
    #20     Mar 23, 2007