More On Big Ticket Decisions

Readers: a quick addendum to the other day's post on big-ticket decisions:

Some big-ticket decisions can hide in plain sight... by masquerading as small decisions. Consider:

1) Making (or failing to make) a one-time decision to contribute regularly to an IRA or 401(k) plan.

2) Making (or failing to make) a one-time decision to set up an automatic savings plan to build up a portfolio of income-generating investments like dividend-paying stocks.

3) Creating (or failing to create) an emergency fund of at least 1-2 years of expenses so you'll never have to borrow and pay interest when an unexpected large expense happens.

These may not look like big-ticket decisions today, but ten or twenty years from now, trust me, they will be gigantic decisions. In retrospect. The thing is, you have to make them correctly now, before the window of opportunity begins to close. You can't get these decisions right if you put them off.

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chacha1 said...

In my case, the 401(k) *is* the automatic savings plan. I'm saving now intentionally for a down-payment on a retirement property, but because that money I fully intend to spend, I don't really consider it "savings." :-)

Re: signing up for the 401(k) - anybody who has the option and doesn't use it needs, IMO, a kick in the pants. For a good 15 years, the bulk of the money in my accounts came from my employers through matching and profit-sharing - not from my own deferrals.

If I hadn't opened the account, they would not have been obligated (per the terms of the plan) to contribute anything for me.

Daniel said...

Chacha, after reading your comment, I went back and looked over some of my past statements, and I found the same thing! The bulk of my proceeds came from matching money from my employer. Granted, the time period skews the data a bit, since it was the 1998-2008 period which essentially had negligible market returns, but still.

Nothing--and I mean nothing--beats free money. :)