You can never have enough foreman grills....

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1994 C 280 117.5k, White (Good as new)
1997 Toyota Camry 149k Miles (Not so pretty anymore)

1990 190e 2.6 95k (Sold-Should not have)
1981 240d Stick ??? Miles...sold

in my companys 401k plan if you do decide to take out a loan from, the interest is payable to you as you are borrowing the money from yourself.
the balance of the acct is still the same, the net resultis you put more in it with the interest.

if you do leave the company during the loan period you are required to settle the full balance though.

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'O=00=O'
bmw 2002.
long live the legend

Yes, you are paying yourself back the principal amount plus interest.

However, even though you are technically putting more money back in, the end result is that you are left with significantly less money.

Why?

Because the amount that you loaned yourself is not there, so it is not earning interest. You are therefore losing the compounded interest, which in the long run is an enormous amount.

Compounding interest has more of an impact on your return than you can possibly imagine.

Let me point out an example.

Let's say that you have a child, and on the day that child is born, you put aside $1,000.00 into a retirement account.

You never touch the money. Never add to it. You put it into a general stock index fund, i.e. the total stock market index (Wilshire 5000).

You put the money in a trust so that your kid cannot get the money until he or she retires at age 66.

So, you have 66 years of compounded interest.

To make the calculation simple, I am going to use an average return on the money of 12%, which actually is a little higher than the historical average return of the modern stock market, but it makes this illustration easy to figure in my head.

Your $1,000.00 will turn into $2,048,000.00.

Yes, that's right.

You are left with $1,000.00 of principal and $2,047,000.00 of interst.

So the moral of the story is:

DON'T TOUCH THE MONEY.

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Paul S.

2001 E430, Bourdeaux Red, Oyster interior.
79,200 miles.

1973 280SE 4.5, 170,000 miles. 568 Signal Red, Black MB Tex. "The Red Baron".

Yeah.. I was gonna try this until I realized...I only have a enough in there to buy a pocket bike. The real question is: Does anyone know how to borrow money from your boss' 401K ....payback penalties are ok...........

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Brandon



2008 S550
1957 Dodge D100
1967 VW Microbus 21 Window
2001 Suburban
2004 Beach cruiser bicycle
-----------------GO DUKE!-----------------

"It cannot be emphasized too strongly or too often that this great nation was founded not by religionists, but by Christians; not on religion, but on the Gospel of Jesus Christ. For that reason alone, people of other faiths have been afforded freedom of worship here." Patrick Henry 1776