I dont trust banks or the government, at all. When I ask coworkers about why i should contribute to my 401k they say shit like
>because employers save on taxes when they match
>the government wont be in a huge financial crisis if people are more prepared for reitrement
>because they want you to have a comfortable retirement :)
But im convinced these politicians are crooked to the core, this must be a scam SOMEHOW, even if its just opportunity cost. Does anyone know why its a scam?
Money now>money later
>Does anyone know why its a scam?
if you unexpectedly happen to die due to "natural" or "unknown" causes, then that money goes back to them, and that's what they hope for. if you have a lot saved up they might even go out of their way to make the "unknown" causes happen.
It goes to the beneficiary designated in your will you inbred donkey.
wrong. pay the price today so you an pay any price tomorrow
Which they could change to be them!
lol this
Your money is worth a lot more now than it will be by the time you retire. If it's mostly in shitty company stock you're even worse off. Also there is no guarantee that you will ever live to see old age without dying of some cancer at 50 and they will just keep shifting the retirement age upwards so you can live at most 2 years with your stack of money that you saved up for nothing.
You can invest money you have, retard.
You're a dumbass. I'm an investment advisor and the hypocrisy is stupid.
It's not a scam, because the government doesn't want to have your poor ass drag down the country when you finally have to retire.
If anything, the government is absolving itself of a major responsibility towards it's citizens, and putting you in charge of your retirement and give you some tools to help you help yourself.
You're right, they don't care about you. They want you to fix your own problems.
It could be considered a scam because while financial institutions just LOOOOVE selling people in the idea of compounding interest, what they are less keen on mentioning are the fee's associated with managing the account. Those feels also compound, so while you may be getting interest those fee's can chew up to 1/3rd of your profits. Now it's find if your company pays for your 401(k) and they handle the costs for the fees while matching, but beyond that it's all money in their pocket.
I say, pay the maximum matching point your employer will allow and then any money beyond that put it into a Roth IRA (or traditional depending on your tax bracket) with a focus on low-cost ETF's and let that money grow low and slow. That's why most people stick with Vanguard, because of their low fee's.
>Trusting investment firms with your money
>Trusting the same people who backed a fraudulent housing economy
Name me a fund with a lower fee than the VIIIX available in my 401k.
no they cant retard
how do you think 401k's stick with you even if you get fired?
>Invest your $$$ pre-tax
>Free money from employer match
>Lower your taxable income
>Withdraw when you're retired and in a lower tax bracket
The only real problem with 401ks is if you're company has shitty funds with high fees. But people have done the math, and even if you have shitty fund options with high fees, 401ks still win in the long run compared to post-tax brokerage accounts.
401ks are not a scam, but:
>401ks usually mean tons of fees for investment institutions. Sometimes companies get a kickback for offering 401ks from certain institutions.
>Forcing tons of people to park their money in one of a few funds (usually stocks or government debt) means you push a lot of money into the stock and bond market. That drives up the price of stocks. Especially since there are significant penalties for removing money from 401ks early, it means stocks can be more stably high forever, goyim.
>By giving people the option of saving in a 401k, companies and politicians can avoid bothering with costly pension funds. If pension funds run low on money, the company is fucked. And the federal government has to bail out pension funds (but just a bit). But if you're an idiot and don't save enough, or the stock market gives you shit returns and you're poor, that's you're problem. "Oh well we gave you a 401k, it's your problem you didn't invest enough" says the company and government
>Rich people can take the most advantage of these accounts. Sorry, if you're a normie making $40k a year you pay jack shit in federal taxes already. You're barely saving anything by parking money here. If you're well off though, you save a decent chunk of money here, and because your tax RATES are higher, you save a lot more on top of that. A 401k+IRA can allow you to stash away ~$50,000 a year. Now look, if you ARE rich, you're going to have so much income that $50k is just a drop in the bucket, but point is you're still getting more absolute use out of them than a normie.
Also, if you leave your company there's nothing stopping you from rolling over a high fee 401k fund into a better IRA.
I used to agree with you. Then I smartened up. 401k is a scam. The government supports it because it's popular with the masses.
1. The money today is worth more than the money tomorrow. There is no sign that inflation will not continue. The money you're socking away into 401k will be worth less when you finally tap into it.
2. Businesses love it not just because they get to write off their contribution/matching funds. They also love it because they hook up with 401k portfolio managers who pay the company for getting more employees on the 401k scam.
3. Then the portfolio manager charges fees for investing your money, even if giving you the control of where it goes to. Even if you select Vanguard funds, the 401k itself will end up with a fee for its services roughly equal to the "free money" contributions from your employer.
4. So at the end up the day, it's savings account with 0% interest, used to write off taxes, grease the wheel of the financial services sector, and keep the middle class poor and away from its own money.
You're just retarded. It's ok, plenty of people are. There's no shame in it.
cryptos will make me more money in a day than a 401k could do for me in 50
and? Your average chump will just spend their money on consumerist nonsense anyway or chuck it into a savings account.
It's investing for babbies but they literally wouldn't save otherwise.
Actually you can roll it over into a Roth IRA, pay taxes now and withdraw the principal in 5 years time. So technically it's money now vs money in 5 years.
sure it does. they tell you that so it must be true. but hey, you won't be there to know.
There's much better things to do with your money than put it in 0% savings account which charges you 10% for taking it too soon.
For example
>keeping the cash in a suitcase in your closet
This is preferable because you can actually have your own money
>putting your money to use today to improve your life
Like seriously, just using that money to pay for a gym membership and whole healthy foods is going to serve you a lot better in your 70s (which you might not live to see). And yes I said 70, because that's at least what the retirement age will be for us. Probably more like 77-78.
The system is going to be broken anyhow. The greatest generation and the boomers aren't living on their 401ks, they're living on the fact the government has to vote them more benefits. Plus in their day they got real retirement pensions for their employment, unlike today. When you're 77 and finally retired (and 6 out of your 10 friends are dead, because that's how this game works), you won't need your 401k, you'll have AARP demanding the government steal more money from your kid's kids so you can have free everything.
What shitty McDonalds tier companies are you working for where all they offer in a 401k is a 0% savings account?
You have to read my previous post here to get what I'm saying. All those matching funds get eaten up by the 401k portfolio manager. It ends up being LIKE a savings account because the "free money" cake is a lie.
Again, what kind of shitty companies are you working from? I have access to a wide array of Vanguard funds better than any you could ever hope to buy yourself with no additional fee from the custodian.
>All those matching funds get eaten up by the 401k portfolio manager
How so?
The total fees on my 401k end up to about 1.1% (which is still pretty shitty). My employer matches my contributions up to 5%.
Let's assume my investments make a grand total of 0%. Even with the fees and inflation I'm still making money just based on the employer match. And once i leave the company in a few years I'll roll everything over to an IRA.
You're not looking close enough. You're making pennies just to have your cash tied up, while inflation continues to devalue any money you hold on to.
I'm making more than I would ever make in an individual brokerage account due to lower taxes and fund fees.
Really? Go spend it.
Oh wait, you have to 67 years old first.
Good luck, grampa, try not to die. You're gonna be so rich one day, when the loaf of bread costs $30.
Easily accessible via a Roth rollover after I retire in my late 20s. Go back to shilling crypto, you are clearly uneducated on real finance topics.
>retire in my late 20s
So, tell me, how did you get to that point? At least the general gist of it.
Not a single thing you've said so far is correct. This has to be some elaborate troll, no one can be this misinformed, right?
401ks are for the masses who don't know much about finances. The elite definitely don't use them.
All your money is tied up in these shitty mutual funds, and lent out behind your back making banks rich.
You can't trade or touch it until you are practically dead. It's for suckers who don't know anything about investing.
>Money in a savings or investment account won't beat inflation
>Keep fiat in a suitcase instead
Also, the government will likely raid it by the time you need to cash it out, just like how social security won't be there when you reach for it.
US inflation was nearly 4% in 2016.
Suitcase portfolio is earning exactly 0% annual
You are taxed massively on them too.
Normally you can get a 15% tax rate on your long term stock holdings. With 401ks, you lose that benefit and pay the full tax bracket rate, which is basically twice.
Agreed, contribute until they stop matching, but the Roth IRA thing is a meme. Unless you plan on being a wagecuck for the rest of your life, don't bother.
Personally, market returns are shit tier, you're better off putting that 5.5K in crypto per year.
I'll be at the yacht club at 45 while you wait until 59 1/2+ to retire without penalty.
The government only creates vehicles like the 401(k) for two reasons: 1) financial firms who lobby them to encourage average people to invest (and pay them brokerage fees); and 2) bank for the opportunity to give the accounts haircuts later.
>You are taxed massively on them too.
>Normally you can get a 15% tax rate on your long term stock holdings. With 401ks, you lose that benefit and pay the full tax bracket rate, which is basically twice.
True, except you seem to be ignoring all the gains you made with untaxed money in the first place. This makes it more likely that you will gain (and gain substantially) by postponing the tax bill until retirement *even though* the tax rate may be higher than LTG tax.
Suitcase portfolio is empty by end of year, purchasing durable goods and going towards long-term investments in my health and wellness (mostly guns).
>401ks are for the masses who don't know much about finances. The elite definitely don't use them.
It's true I am probably not in "the elite". On the other hand, 401Ks made me a millionaire. I am not displeased.
>All your money is tied up in these shitty mutual funds, and lent out behind your back making banks rich.
How shitty the funds are depends on how your employer selects the custodian and the choices. Talk with your HR department if you really think the choices are terrible. (Pro tip: Do not suggest crypto to them, since they're over 17 and don't live in their parent's basement.)
>You can't trade or touch it until you are practically dead.
If you roll it over into an IRA later you can definitely trade with the funds, if you want to. But this is money intended for your retirement so of COURSE you wouldn't be stupid enough to withdraw it to buy that Harley or piss it away on whatever you are currently lusting after. But the rules mostly prevent you from pissing it away prematurely. Given the level of expertise in /biz, this is a very good thing.
It's for suckers who don't know anything about investing.
Explain how you plan to sustain yourself for 30 years when you body is old and broken. Imagine if perhaps, you get sick even with your focus on health. Shit happens. Are you prepared for it with no savings?
A better retirement strategy is real estate.
Instead of tying up your money in a shitty 401k, put your money toward a real estate investment.
By the time you retire, the income streams will pay you more than some shitty 401k withdrawal.
Real estate has historically underperformed the stock market even without considering the much higher tax burden involved.
The same way old people do it now. The government will cater to my needs because AARP will scam the younger working generation into doing something like forcing them to buy insurance and getting 401k's.
Old people today have no savings, they're welfare queens. All the congressmen are old too, so they take care of their fellow senior citizens.
>A better retirement strategy is real estate.
Nothing much wrong with real estate as a long term investment. However, the returns are lower unless you do a lot of the work, and if you do a lot of the work, you're really working for a living and not entirely just investing.
If you think dealing with problem tenants is fun, and getting calls at midnight about a broken water heater, etc., then you can make more money managing the places yourself. If you don't, then you have accept a lower return than the stock market has been returning.
Also, stock investments are available to people with only a modest amount of cash to start with, and doesn't depend on available credit, and isn't susceptible to problems in one locality like an apartment building would be...
Real estate gives you practically guaranteed income streams from your tenants. By the time you retire, the property is paid off and everything is profit. I know old people who life off it. And they keep making more because inflation effects rent more than anything else. While everything is getting cheaper over time, rents keep going up (as long as population is still growing).
You can't depend on a 401k when the stock market can crash by the time you need it, and you are forced to wait for the correction. A lot of retirees got burned during the past recession and weren't ready to ride it out.
Nice cherrypicking. I bet the ones who bought real estate in Detroit are doing real well right now.
Real estate has historically underperformed the stock market.
>A lot of retirees got burned during the past recession and weren't ready to ride it out.
There are stupid and panicky people in every investment you can think of. There are people that sold real estate at rock-bottom prices around 2009-10 as well. Not sure that proves much other than please don't panic over market volatility, in *any* kind of market.
P.S. Not sure pointing to SF real estate is meaningful since it's not exactly your typical real estate market, you know.
You can still rent out your property during a recession. You can't draw down your 401k without considerable losses. Maybe a 401k in dividend stocks would work if the dividends keep coming in.
>not exactly your typical real estate market
Location definitely matters. If it's a growing economy with the right long term indicators, other locations would work fine.
You draw out as much as you need to maintain your living expenses. If you were an idiot who doesn't have any self control maybe illiquidity might actually be good for you.