401k or fixed savings account

[elixir2011]

little bit of background. I not from US but currently work for an american company which has 401K benefits. I am still debating which way to go; 401k or fixed saving account. I am 24. I was told that sooner I start for my retirement funding, the better I will be so I need some advice.

401K Contribution
Personal : $1168/month
Employer Contribution : $210/month
Total Contribution : $1378/month
13 month Perfromance from Vanguard : 15%


back in my country

Banks have fixed deposit plans (like CD) were the money get doubled in 5.5 yrs after all taxes paid.
There is no limit to the amount of money I can put in.

My dilemma is which one is better. Do I contribute to max on my 401K or put money in fixed deposit CDs for it to double in 5.5 yrs?
Any suggestion would be greatly appreciated.

[commentator]

Are you a U.S. citizen or resident alien?

[phil5185]

were the money get doubled in 5.5 yrs after all taxes paid.

Looks like an easy choice - your 13%/yr after taxes is much better/safer than the 11%/yr pretax (historical return) US market. Plus the risk of the market, compared to the certainty of the bank deposit.

Is there more to it? Political risk? Possibility of nationalizing your account? Other?

[schildi]

13% almost sounds too good to be true for a guaranteed return. Do you mind sharing some more details?

[elixir2011]

i am a resident alien. my permit expires on Dec of 2011. So i have save every nickel and dime to prepare myself for unseen future circumstances

at current times i don't see any political risk or nationalizing the account, but in future its a could be. No one knows that

here is the link

www.nconsumerbank.com/content/deposit-rates

check out section D

[azphx1972]

Those are fantastic interest rates! Are the deposits guaranteed? If so, maybe I need to consider moving to Nepal! On the other hand, the loan rates aren't too good:

www.nconsumerbank.com/content/loan-rates

[SVT]

You guys forgot about inflation! After doing a quick google search, the inflation rate in Nepal in 2010 was like 13%, so you're not gaining anything, if that kind of inflation continues at least.

[phil5185]

elixir2011, Happy New Year!

[azphx1972]

After doing a quick google search, the inflation rate in Nepal in 2010 was like 13%

Ouch. So in light of that fact, maybe the 401k would be a better way to go?

[elixir2011]

Apr 18, 2011 18:50:28 GMT -5 phil5185 said:

elixir2011, Happy New Year!

Thanks. happy new year to you too. I guess you are researching about Nepal.

After doing a quick google search, the inflation rate in Nepal in 2010 was like 13%

Ouch. So in light of that fact, maybe the 401k would be a better way to go?

13% inflation would render the interest rate useless but in my case, i am in US with lower inflation rate and compounding money at higher interest rate. to compound i can simple send money back to my country and when i need it transfer it back again.

even though the inflation is high, cost of living is low. In that case, if I have more money, then 13% on that will yield lot more than what i need for my survival. But thats when I go back to and plan to stay there.

[schildi]

I would assume that with 13% inflation, Nepal's currency would lose that much against the dollar per year, no? (well, minus whatever the US inflation is. Besides other currency influencing factors of course, so it could lose more or less than that).

[elixir2011]

I would assume that with 13% inflation, Nepal's currency would lose that much against the dollar per year, no? (well, minus whatever the US inflation is. Besides other currency influencing factors of course, so it could lose more or less than that).

that could be a possibility. however reverse is the case for the last five years. $1 = Rs 80 five years ago. Right now $1= Rs70. But yes, it possibly can loose value.


I think my best bet is to divide my portfolio to both 401K and fixed savings account. I don't know where I would eventually end up. Thanks for help.