By Marc Lichtenfeld At a recent presentation, I was asked whether it’s a good idea to borrow from a 401(k) plan in order to pay down debt.
My initial reaction was a resounding “no.”
To accumulate wealth, you want to stay invested for as long as possible. Disrupting that cycle of compounding by taking money out of your 401(k) plan will very likely lead to lower returns.
Consider: An employee who invests $1,000 per year and earns 9.8% (the average annual total return of the S&P 500 over the past 50 years) annually on their 401(k) ends up with $191,607 after 30 years.
But if they invest …read more
