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My company has a 401k plan where they would take out money from my paycheck and match whatever I put into it. The concept of taking money out of my paycheck every two weeks and put it into a investment is cool. The fact that you can just throw money at something and it will do all the stock selection for you is great I don't like how I can't touch the 401k and that it doesn't produce income. I want the assets I invest in to generate income.

My question is:

Is there any way to automatically take money out of my paycheck every two weeks and invest it in an income producing asset that sends me back (check or Direct deposit) a small amount of whatever income that was generated every two weeks? Could this all be configured with a brokerage account?

Could I theoretically configure my brokerage account to:

  • Automatically put money towards dividend paying stocks that I specify originally

  • Send me back a check or a direct deposit of the quarterly payouts configured Bi-weekly

Overall is there any kind of financial product that I can just put money towards that would automatically do all the investing for me and just send me back a check every month or two weeks?

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    What do you think an income generating asset would be? – quid Jan 6 at 21:08
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    Why don't you like the 401(k) option? Just because it's locked in until retirement? – D Stanley Jan 8 at 14:39
  • @DStanley Exactly. Not much point in being a millionaire in the grave :) – Jonast92 Jan 9 at 14:42
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You should contribute as much as you can to get the full company match. That is a 100% return on your investment and you're not going to beat that - it is literally free money.

Once you've done that then you can look to other investments. You can certainly have money pulled from your paycheck into a brokerage account. Fidelity, TDA, Schwab, etc all support this. Once the money is in the brokerage account you then can decide what to invest the money in.

Why are you interested in receiving the income currently? Income producing investments are typically paid out quarterly or semi-annually; money market accounts (Ally, CIT Bank, etc) pay monthly. If you need this income to make ends meet then you shouldn't be looking into investing any money in anything other than a money market - a real investment needs a time horizon of 10+ years.

If you're doing this to "improve" your cash flow (based on the tag) then consider how much money you'll have to invest in order to get a meaningful dollar amount in interest. A money market pays 2.25% currently - putting $100,000 into this will return about $90 every 2 weeks. To get a higher rate of return, you have to take on more risk; more risk means you need a longer time horizon to weather the ups and downs of an investment volatility.

You could buy $100k of a dividend paying stock and get 6% yield, which means you'll get about $250 every two weeks. You'll pay taxes on that and your $100k may decline in value (or increase).

In short, the first move you should make is to get all of your employer's match.

Edit-the div stock example still means you get paid quarterly but it’d work out to that amount every 2 weeks

  • All good points. The main reason I like the 401k is that everything is automatic. The main reason i dislike the 401k is because it doesn't generate income. Is a money market the only thing that would be both automatic and generate income? – user55665484375 Jan 9 at 2:40
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Is there any way to automatically take money out of my paycheck every two weeks and invest it in an income producing asset that sends me back (check or Direct deposit) a small amount of whatever income that was generated every two weeks? Could this all be configured with a brokerage account?

Many brokerages allow you to move money electronically into your account, and then from there have it go into whatever investment you designate. I think most people have some sort of periodically scheduled transfer.

Some payroll systems will allow the employee to designate multiple "banks" where they paycheck can be deposited. These can be traditional banks/credit unions, the US treasury for Treasury direct purchases or even a brokerage. The availability of this option depends of course on the payroll system used by your employer.

Within the brokerage account you specify what to do with your dividends/interest/capital gains earned. You can either reinvest them in the same investment, invest them in other investments or send you the money by transferring it to another bank. It is up to you.

Most investments don't generate income every two weeks, even if you invested money in a rental property most income would be on a monthly period. You could invest in multiple funds and then have their quarterly payments spread over the calendar. It would be hard to make them exactly every two weeks, but you could get somewhere close to once a month or even twice a month.

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A 401K can hold an income investment but withdrawals from a 401K are difficult.

Withdrawals from a 401K before the age of 59 1/2 incur a 10% penalty plus income taxes.

Really, I don't think the employer would have a good viewpoint of an employee that is using a 401K for regular current income. It's more common to take a loan against a 401K.

Putting a regular small deposit into a commission-free ETF is okay but if that is done instead of deposits into the 401K then the matching employer deposits of the 401K are not received. However, monthly income dividends are available with ETF's and most major brokerage accounts offer commission-free ETF's. Also, commission-free mutual funds are available when directly from the sponsors and internet savings bank accounts are available that link to a checking account.

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