Put simply, never put your eggs in one basket, and know what you’re doing when you put money in an uninsured account.

Limit accounts to FDIC maximums

The combined balance of your savings and checking accounts is federally insured for up to $100,000 per person, per bank (joint accounts for up to $200,000). IRAs are separately insured for up to $250,000.

Some depositors are losing money that was with IndyMac because they kept more than $100,000 in checking or savings accounts. If you need to keep more than $100,000 in checking or simple savings, open multiple accounts at different banks.

Invest in your employer carefully

Finally, never invest primarily in one company—especially if that company is your employer. Anytime a company tanks—and I’m sure IndyMac is no exception—loyal employees not only lose their jobs, but they lose their nest egg, too. No company is immortal and no investment is a sure thing.

While employee stock purchase plans may make it attractive to invest heavily in your employer, remember that any problem your employer encounters down the road is double trouble: your job and you investments are at risk.

Bottom-line answer? Yes.

Employers often make new hires wait to get 401(k) matching funds, and many companies subject matching contributions to a five-year vesting schedule. When 401(k) matching contributions are subject to vesting, your employer puts money in your 401(k) account each pay period and it begins acquiring interest. But if you leave your job within fives years, you only receive a percentage of the matching contributions (usually 20% per year of employment), plus interest.

In either case, you should still contribute to your 401(k) from the first day you are eligible. Employer-matched funds are a nice perk, but a 401(k) plan’s real benefit is that you can invest pre-tax dollars and allow funds to accrue interest—tax-free—for your entire career.

According to a Hewitt and Associates study, only 31% of employed 18-to-25 year-olds contribute to a 401(k) compared to 63% of 26-to-41 year-olds and 72% of workers 42 and up. That’s too bad, because when you retire, $1 invested when you are 25 will be worth at least $5 invested when you are 45.

Related Articles

• The 401(k) Plan: An Introduction
• How Much Should Be In Your 401(k) at Thirty?
• 401(k) Vesting and Changing Jobs: Should You Stay or Should You Go?
• How to Take a 401(k) Loan – And Why You Shouldn’t

What do you think? Would you not contribute to your 401(k) in this case?

The temptations to take a 401(k) loan are plenty: to make a down payment on a home, to pay down high interest credit card debt, or as an alternative to traditional loans amidst a tighter lending market.

So, What Is a 401(k) Loan?

A 401(k) loan is a lump-sum disbursement from funds that you have saved in your retirement account. You must repay the loan over a fixed-amount of time – with interest – back into your 401(k) account. You can borrow between sixty and eighty percent of your 401(k) balance, and occasionally up to the full account value. The loan is set-up through your 401(k) plan administrator.

In some ways, a 401(k) loan seems like a good idea. Essentially, you borrow money from yourself, so interest charges go right back into your retirement account instead of to the bank. And, since it’s secured by your own money, there is no credit check to take a loan, and you can’t default and find creditors knocking down your door.

Why 401(k) Loans Are Bad

Despite these apparent benefits, 401(k) loans are a bad idea for two reasons. First, when you borrow money from your 401(k), those funds stop earning compound interest until they are repaid. Even if your 401(k) balance is small, a couple hundred dollars in interest over a few years could turn into many thousands over 30 years.

Even more important, contributions (including loan repayments) to your 401(k) are dependent on you being eligible to receive that benefit from your current employer. If, for any reason, you leave your employer, the entire balance of your 401(k) loan becomes due.

Can’t pay up? The remaining loan balance will be treated as a pre-mature cash withdrawal form your 401(k), subject to at least a 20% federal income tax, state tax, and a 10% early withdrawal penalty. So if you borrowed $10,000, had repaid $2,000, and loose your job – you are freed up from repaying the $8,000 to your retirement account, but you will be hit with a $2,400 federal tax bill.

That’s one expensive loan.

How to Take a 401(k) Loan

If you’re really in a pinch, or absolutely can’t get an alternative loan source, you can take a 401(k) loan by talking to your human resources or benefits manager at work, or by logging into your 401(k) plan’s website. Some plan providers – including John Hancock and Fidelity – allow you to request loans online.

Related Articles

• The 401(k) Plan: An Introduction
• How Much Should Be In Your 401(k) at Thirty?
• 401(k) Vesting and Changing Jobs: Should You Stay or Should You Go?

Have you taken – or considered taking — a 401(k) loan? Why did you do it, and how did it work out?

You don’t have to be a math whiz – or a millionaire – to invest in the stock market.

In fact, the sooner you get comfortable buying and selling stock (and start investing in some solid companies), the better you can leverage stocks in your portfolio as your net worth grows.

Here’s an explanation of the three most common trading methods new investors should understand.

This is highly simplified, but is essentially all anybody needs to know to log onto a discount online broker and start investing.

Market Orders

The most common way to buy or sell stock, a market order instructs your broker to take whatever price available to buy or sell X shares of stock.

Market orders are easy for brokers to execute, so they carry the lowest commissions of any trade.

Let’s say you want to buy 100 shares of Yahoo! (YHOO) on any given day, and the price happens to be $28.99. To place a market order you could log onto your online broker or call your broker and place a “market order for 100 shares of Yahoo.”

Since there is always a delay of at least a few seconds between the time you place your order and the time the order is executed, the actual share price for Yahoo! may have gone up or down. It could have jumped to $29.24, or it could have slid to $28.76. Therefore, you won’t know your final price for the shares, before commissions, until the order is executed.

Limit Orders

There will be times when you won’t want to pay more than a certain price for a certain stock, or you will not want to sell a stock for less than a certain price. In these cases you will want to place a limit order.

A limit order lets you set a minimum or maximum price for a stock but, unlike a market order, you will have no guarantee the order will actually be executed.

Take the Yahoo! stock example. If the price is currently $28.99, but you don’t want to pay more than $28 per share, you would place a limit order for $28 or less. If the stock falls to or below $28, your order is executed and you own the stock at that price. If the stock keeps climbing and never dips below $28, your order is never executed.

One risk of placing limit orders is the potential for a dramatic short-term swing in stock price. If you place a limit order to buy a stock at $28 but disappointing news hits about the company and the stock plummets to $22 in one day, your order is still placed at $28, meaning you are automatically out $6 a share.

Stop Order and Stop Limit Orders

Most new investors should be able to make due using only market and limit orders. For the slightly more speculative investor, stop orders and stop limit orders are often used as “stop loss” trades. These orders are most often use to guarantee profits (or stop continued losses) on a particular stock.

An investor can place a stop order to become a market order when a predetermined price is reached. For example, sell 100 shares of Yahoo! at $40. When Yahoo! reaches $40 a share, the stop order is converted to a market order, meaning the order is guaranteed to be executed. Since the order is a market order, however, the exact price may not be $40 – it may be higher or lower, but the fact that the stock reached $40 triggered the trade.

A stop limit order, on the other hand, automatically converts to a limit order when the target stock price is reached, meaning the order may or not be executed depending on the price movement of the stock. If the stop limit order is for $40, the order is triggered at $40, but if the price continues to climb (or falls back below $40), the limit order may not be placed.

Next Monday check out the investing and retirement planning topic to read: “Best Online Brokers for Newbie Investors”. Need a reminder? Please subscribe to my RSS Feed.