Thursday, October 6, 2011

Pros and cons of 401(k) loans

Taking a loan from your own 401(k) account has some advantages, Robert Powell writes, but it can affect your retirement savings in unexpected ways. While the loans are a good source of cheap credit, it’s money that won’t keep growing for your retirement, and when you miss out on valuable compounding you may end up with a smaller nest egg.

Also in the day’s Personal Finance news, Freddie Mac reports that the average interest rate on the 30-year fixed mortgage dropped to 3.94%. While continued record-low rates are an advantage to some homeowners and would-be homeowners, they really reflect serious concerns over global recession. Read Amy Hoak’s column on what effect rates below 4% are having on the housing market.

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