I’m 30. My 401k is doing well but I have no outside investment besides commercial real estate and want to get the ball rolling.

Short answer:

NOOOOOOOOOOO.

NO NO NO NO NO NO NO!

Why?

Well because you sound like the typical joe six pack investor — he sees a year of stellar returns and assumes past performance equals future gains.

FALSE.

Remember the phrase BUY LOW, SELL HIGH? Well, we’re HIGH right now. LOW was wayyy back in 2008. We’re in a bull market that is losing its steam because stocks are way overvalued (undervalued in some but them are rare).

Here’s another way to look at it in case you aren’t convinced:

By taking out a loan against your 401(k) and investing it in the stock market, you’re assuming you can get better:

a) Trade commissions,

b) Returns (WHEN COMBINING the cost of taking the money out of your 401(k) in the form of transaction fees, taxes, and the loan interest, AND CAPITAL GAINS TAXES)

c) Better choices,

d) focused research

None of these will be better in the real world when compared to a 401(k). Investment firms pay big bucks to companies to manage their employees retirement funds, and provide all the research, low fees, and compete against other firms wanting your money to manage. You, on the other hand, in the real world, will be listless and clueless about what to do or what to invest in. Anyone claiming they have the deal of the century HAS AN AGENDA. And do NOT believe the perma-bulls (economy is always in state of growth) and never believe the perma-bears (economy is on the brink of collapse).

So, assuming you have a halfway decent selection of funds in your 401(k), you can at least gain the returns of the Dow or the S&P 500 index. YTD they are 7% and 5% respectively.

In order for you to GET AHEAD of that from your 401(k) investments, you’d need probably close to 12% gains, if not more.

Think you can get 12% gains? Given the market is at all time highs and REMEMBERING the old saying, buy LOW, sell HIGH?

It’s a gamble at best.

Keep putting away your money in a 401(k). Don’t get hit with fees on money you just put away and kept out of the government’s dirty mittens.

Hey I don’t blame you for thinking you can do well in the market. Humans have this terrible nature where we see prior performance and assume that the future will be no different. Well that is flat out WRONG when it comes to the stock market.

And since you have a 401(k) I’m assuming your day job is something different from investing. Therefore, you do not have the time, background, or education to do this the RIGHT way. Do you know technical analyses? Do you know fundamental analyses? Do you know where to look for reliable information? Do you know what a P/E ratio is? Do you have the time to spend 100 hours researching a company prior to investing, and having the guts to realize even then it may be nothing more than a gamble?

I’m guessing NO.

The only thing you should do with your 401(k) is two things: 1) invest in it, as much as you feel like (at least up to company match if available), and 2) take a loan out for a house, and even that is iffy if you have a job that someone in China or India can do (call center, some engineering, managerial, manufacturing, laborer, etc).

You’re the same age as me. We have 30 years of working ahead of us. Do the right thing and make sure you have enough to retire the right way, in style and without the worry of having to work or having to worrya bout medical bills. I’ve been investing for 12 years and gotta say I never beat the market. Golden opportunities were in 2008. They’re gone now. Wont’ see them again, not for 20 years or more.