Why You Shouldn’t Be Borrowing From Your 401k
A basic concept of financial planning is SAVING MONEY. This is pretty simple, but some people don’t get it.
Taking a loan from your 401k – borrowing money from your 401k account – can be very counterproductive.
Try as much as possible to not borrowing from your 401k. While not growing your retirement savings at all, you are also depleting it.
You also have to pay the loan you take back in monthly payments for five years. Not paying back the loan you take from your 401k can cause penalties and can make the amount of loan become taxable income.
Unless you are taking the loan to purchase your first home, you may want to think twice about borrowing from your 401k.
Saving money for retirement is a basic concept of financial planning, and it has become even more important in recent years. 401k accounts have become the sole means for funding retirement because of the disappearance of pensions.
Social security can’t be counted on to fund your retirement either. The importance of saving money cannot be stressed enough, and Tom and Brendan will explain why it is so significant in this video.