1917: Ask Farnoosh: Invest in Gold? 401(k) Changes? Buying a Home Without Raiding Retirement?

What It Covers

Farnoosh Torabi addresses Federal Reserve rate cuts, 2026 401(k) contribution changes, gold investment strategies, and whether withdrawing from retirement accounts to purchase a first home makes financial sense given current market conditions.

Key Questions Answered

• •401(k) Contribution Limits 2026: Under 50 can contribute $24,500 (up $1,000). Ages 60-63 get highest catch-up at $35,750. Combined employer-employee limit rises to $72,000. Annual compensation cap for calculating matches increases from $350,000 to $360,000.
• •Gold Portfolio Allocation: Limit gold investments to 5-7% of total portfolio as diversification hedge, not growth driver. Gold ETFs offer best liquidity and lowest fees compared to physical gold bars or mining stocks. Long-term returns significantly lag stock market performance.
• •Federal Reserve Rate Strategy: Fed cut rates but signals only one more cut in 2026 and one in 2027. Mortgage rates at 6.3% unlikely to drop significantly short-term. Fed buying $40 billion in treasury bills signals economic concern and need for market cushioning.
• •401(k) Home Purchase Warning: Withdrawing $40,000 at age 30 costs $300,000 in lost retirement growth at 7% return. Loan becomes taxable distribution with penalties if employment ends within 60 days. Renovation costs typically exceed estimates, risking additional withdrawals.