I'm listening to Cash Flow Quadrant audible and the author recommends against investing in 401k because such people are parking their money and leaving it to "experts" to grow the value of the money except those so called "experts" aren't really experts at all. They get paid whether your investments do well or not. In addition, the tax rate on withdrawing from 401k is quite bad. So far, he hasn't provided a simple solution for what should be invested in except to say you should educate yourself on how to be a smart investor. I'm an "I'm too busy investor" type who has almost all retirement savings in 401k and company-where-I've-worked stocks. I'm sure the author would consider me a poor investor. Seems like there are a lot of smart investors on Blind though 401k advice seems unanimous about using it. I imagine a better thing to do is to use it to get max company match but then roll over to Roth or something else? With all other investment funds I should put it into real estate? And no, I don't want to give my money to you to invest.
If you know of other tax-benefited investments with a guaranteed 50% ROI, I’m all ears
The 50% ROI is only on the portion your company matches and only at the point of purchase. There's no guarantee that your investments continue to grow after the point of purchase, though history has shown it's likely. No 50% ROI for the investing dollars beyond the company match though.
Sure, but 50% instantaneous ROI is pretty damn good. I would agree with you that it’s less clear if it’s beneficial to invest beyond company match. The primary benefit would be the tax advantaged nature (you can do after-tax contributions that you can then convert to Roth, aka backdooring), even if there’s no additional ROI per se. If you for some reason need the money more immediately, or can’t invest in the desired assets via your backdoored Roth 401k / IRA, then sure don’t feel pressured to invest beyond the company match. There’s a reason why they call it personal finance, not one-size-fits-all finance.
Certainly getting the company match is worth your investment in a 401k. What you invest in within a 401k is another factor. For smaller companies or companies that just don’t care, it is not uncommon to only have investment choices that charge at least 1% expense ratios. You’re giving up 1% of your money each year to “experts” in that case. Maybe that’s what they were referring to in the podcast. If you have good fund choices to choose, and you choose them, then the question is whether the tax benefits are worthwhile. It depends on the future, which is hard to know and reason about. But both traditional and Roth 401k contributions are quite beneficial options for retirement planning. And after tax Roth conversions for plans which allow it are extremely advantageous. Also, at the end of the day, they provide a vehicle to invest money which is more difficult to access. That is a positive for most retail investors who may have otherwise just spent the money and not saved anything. As for keeping a lot of stock from current and previous companies, yes, that is generally considered an under-diversified approach to investing. I recommend selling them and reinvesting into index funds. But it’s a personal decision of course. Obviously holding tech over the last ten years was a big win and I would have done better to hold company stock. But I didn’t and I’m okay with that.
There are several people who talk like this but it’s for a specific audience. The one scenario where you would forego a 401k maybe would be if you have an established cash flowing business that you can increase your earnings by supplying additional capital. Common one is always real estate where the more properties you can own, the more cash flow you would have. But this business isn’t for everybody and hence that advice is not for everybody.
I put all my 401k money in a vanguard target retirement fund. I contribute the max each year to my Roth 401k and Roth IRA. Any money beyond that, I just put it in a wealth front taxable account and let them pick my investments. I think the saved time is probably worth it and they are mostly just investing my money in index funds.
Another advantages of a 401k vs just investing your savings is that the former can't be liquidated in the case of a personal bankruptcy.
Robert Kiyosaki is a scammer. He made his money selling books on how to get rich, not by doing any of the things he's telling you to do in his book. Total fraud.
I don’t think this makes him a scammer. While I don’t like the guy, he has not misrepresented himself in his books. The discerning adults should determine if it’s worth the price.
He has misrepresented himself, actually. Some of his advice is outright illegal, in fact.
401k up to the match is the principle to follow. 2x your investment basically. Market crashes 50% you’re break even. After that get a CFA.
You cant short stocks in 401k....gov subsidy to wall st. Realky to keep your money locked in long only account.
You don’t invest in 401k. You invest through 401k. Its a vehicle. You can choose between stock and bond funds for your 401k. This is the best way if you are a busy person. Stock picking and investing takes a lot of investment if your time.
Are life path funds best or S&P 500 or something else?
Sp500 or total market funds are the generally accepted advice. Life expectancy funds generally have high fees but end up doing the same thing as a stock bond mix that weighs towards more bonds as you get older.