Whether to invest in a 401k is one of the first questions that anyone has when they start working in the US. In this video, we talk about how much you could benefit by contributing to this plan even as a Foreign National.
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A 401K is an employer-sponsored retirement savings account that allows an employee to deposit a portion of his/her salary into long term investments. There are two types – Traditional and Roth, each with its own tax advantages.
Within your 401k, you can invest in a combination of assets like stocks and bonds. If all the different investment options feel too overwhelming, start with ‘Target Date Funds’ that auto-balance your asset allocation based on the date you wish to retire.
You could be missing out on thousands and thousands of dollars if you don’t contribute at least up to the employer match. This applies to visa holders (f1/h1b/l1) too who might not be sure how long they will actually stay in the country.
If you decide to leave the US to a different country, you have 3 options:
– Early withdrawal with a 10% penalty
– Leave in the US and withdraw after 59.5
– Rollover into an IRA
Allowing your investment to remain in the US (option 2 or 3) and compound over time is an attractive option due to the strength of the dollar Vs. other currencies.
2020 Contribution Limits:
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*** Personal Finance books I recommend:
I Will Teach You to be Rich by Ramit Sethi:
Little Book of Common Sense Investing by Jack Bogle:
Rich Dad Poor Dad by Robert Kiyosaki:
The Intelligent Investor by Benjamin Graham:
The Millionaire Next Door by Thomas Stanley:
DISCLAIMER:
The content in this video and the comments is for informational/entertainment purposes only. The creators take no responsibility for any actions or decisions you may take based on the contents of the video. Please consult a professional for strategies related to your specific needs.
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Some of the links in this description are promo links, meaning that I may receive a small commission when you sign up for these services.
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ABOUT US:
We want to share our stories and talk about lessons learned while first moving to America, planning our journey to financial literacy, and adopting best practices into our lives.
As internationals, it was difficult to find relevant resources to understand the aspects of life that were different in a new country. Some of us come from places that treat the path to success as a “competition” and as a result, we shy away from having open conversations about money.
This channel is a comfortable space to have those discussions and help each other out!
Type of content:
* Personal Finance
* Investing
* Managing the Move
* Adopting a Money Mindset
Music:
#401k #investingh1b #h1b #f1 #personalfinanceh1b…(read more)
LEARN MORE ABOUT: 401k Plans
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Great video.. I was looking for information over the scenario where one decides to leave the country. one question :
In a scenario where a person decides to leave US and plans to keep the 401k and decides to withdraw after 59.5, how will be the tax bracket decided since he wont have any source of income to be reported in the US?
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
What is the benefit of rolling the money into IRA when leaving US?
Should we pay any taxes for this amount like before investing into it?
this was so helpful! thank you so much 🙂
Unless its Roth Half of that money will go the government!!!!
Can F1 Visa student who is unemployed still investment in 401K ?
Hi Arjun, ur videos are very informative. If I have to get specific information per my case. How to reach u
If the employer does not contribute and my tax bracket is 25% does it still makes sense to invest ( as I avoid paying 25% tax and just end up paying 10 % penalty on withdrawal ) ?
Kudos to you guys, this was so helpful.
Hi arjun. have a question. if a spouse is not working and in h4 visa. fill status is married and joined. the agi is > 208k. if so that spouse who is not working can create traditional IRA
Thanks for this. Is it possible to switch from traditional 401k to a Roth at a later stage?
Thank you for sharing your knowledge..it's very straight n simple..
401K is a scam.
Basically you only are getting instant gratification that you are not paying taxes on part of your salary (<=19500 yearly) you contribute to 401k but most dont realize the taxes are just deferred or postponed until the time you withdraw. Its coaxed as a retirement plan however what it is doing really is forcing people to invest their salary in stocks/bonds and most people donot know how markets work. They might also lose money if they dabble too much when choosing funds.
The video that am looking for and convinced me to start 401k w.r.t immigrant point of view. Thanks
What are your thoughts on a 60 month 401k Loan in case you dont have an emergency fund and need the money right away?
My company matches 25% of what I invest * condition up to $400(I know it sucks).
i.e. if I invest $1600 my company will match $400 anything above 1600 they will still do 400.
Total $2000
I fall under 22.93% tax. Hence left with $1541.4 – the penalty.
For penalty how did you guys come up with $1000 is it a fixed amount or % of the amount I have in 401K?
If it is a fixed amount and if I have to withdraw then I will get 541.4 after investing $1600 which does not make sense.
And in my case does it still make sense to invest in it?
Thanks.
Great video ! Subscribed ❤️
I don't usually comment on YouTube videos but you guys are really doing a great job. Hope to see more videos regarding investing and financial awareness as a foreigner in US.
WHY would someone dislike this!
Amazing content guys!
photo one k @2:42
need a subtitle for the accent
Quite useful!
This was informative! If an employer does not offer 401k then skipping this and investing into an IRA is a good idea?
Hey Arjun, thanks for pointing to this video. Again Vera level!! Regarding options when leaving, how do we manage our funds from India without even a valid phone number? If we want to make a withdrawal at 40 in India will that be easy?
Thanks so much for such an informative video. Just curious to know if your take would be the same in case the employer doesn’t offer a match? i.e., is it worth contributing to a 401(k) if the employer doesn’t offer a match and you’re sort of uncertain on whether you may have to return to your home country? A similar tabular comparison of the tax benefits could be helpful for a future video segment.
Thank you so much to the both of you! I just started a new job and this was very helpful!
I love the acting hahaha easy and simple way to explain
My employer is not contributing any match, in that case I feel it doesn't make sense contributing to 401k as the money will be locked for ~30 years. Instead I am planning to put that contribution into a mutual fund/index fund and I promise to not touch that money. Need your advice on this , is this a wise approach?
I did not expect to find a quality video that applies to my situation. Thanks so much for creating this content!!
Hi, nice video guys! Is there any point in investing in 401k if there is no employer match?
Love love this video! I love the information and the dramatization. Thanks!
Hi, thank you very much for the video, you explained it so well!!
If you could help me with the following to make sure I understood, I'd really appreciate! For F-1 holders who plan to stay just a few years:
1/ With an employer match, would a Roth 401k make more sense? As you can withdraw without penalty fee on your contribution
2/ Do you think the target date fund is the safest option in the short-term? I understood that the target date fund would make sense on the long term (as they become less and less risky with time)
Thank you very much!
Let's say you have a Roth 401k in the US and you have left for India before retirement. At retirement age, you decide to withdraw the Roth 401k amount. Will you have to pay tax in India for this amount?
Thank you guys, very informative video.
One thing that I'm really confused about is should you max out your yearly 401K if you can? The point for consideration being if you have to go back you'll probably need a lumpsum to restart life back home so does it make sense to contribute until employer match in 401K and invest rest in a brokerage account with index funds but then that comes with the catch of capital gains and other taxes when you withdraw.
I appreciate the video, but I was hoping you would cover more on the title of the video for implications for Visa holders and return scenarios/ the tax implications. Mainly the 3 year funds repatriation treaty in India, the dual taxation treaty. Also if someone leaves their 401k in the USA there are could be larger tax consequences when withdrawing at 60 such as a flat 30% Non residence tax rate, India may also tax this withdrawal. Would be great if you guys can cover this in a followup video thanks!
Hi Arjun, I started with a 401k investment back in 2019. Earlier I did only 3% but now increased to 7% which my company matches. We use fidelity and per my company portfolio, they offer specific funds. Initially, I did a single target-date fund but I can see I have multiple options including some stock investments. I don't want to use Fidelity paid recommendation as it cost. What % allocation you suggest in 401K fund between Balanced Fund Invest vs Stock Investment?
Hey Arjun great video, could you talk about the fees involved with 401K.. I have seen quite a few videos on why not to invest in 401k due to hidden fees…
here is one: https://www.youtube.com/watch?v=4YdlcpxvF6c&ab_channel=MinorityMindset
Really confused on to invest or not haha thanks!
I suggest everyone to go for 401(k) for at least the amount that your employer matches. You are doubling bit of your money. Video captured hypothetical scenario of $5000 contribution. In reality, employers match only for 5% of the base pay that you choose to invest in 401(k). So if you draw $6000 per month for example, you contribute 5% which is $300 and employer does $300. If you choose to contribute 10% which is $600, employer still limits contribution to $300. All this money is invested into stock market and mutual funds by the company that holds 401(k) account. They are usually really good and calculative in getting profits.
Excellent video, exactly the information I was looking for. Kudos and jars full of cookies to you!!