Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
I recently listened to the podcast GRE (Get Rich Education with Keith Weinhold) and his guest was Ted Benna, who has been credited to being the father of the 401K. (Here is the link to the episode for any who are interested: https://itunes.apple.com/us/podcast/get-rich-educa...)
In the interview Benna stated that the 401K has veered from what it’s intended purpose was and that the mortgage fund brokers are the ones getting rich through the fees that they charge rather than the actual participant. He shared that it’s benefit has been that it can be a forced savings plan for most people, especially for those who have a hard time saving.
Benna then shared that he is a real estate investor.
I think it is so sad that the majority of people think that the 401K is the way to go for retirement. It is definitely a cultural belief now and, in my opinion, it makes people lazy investors. Ultimately the 401K makes the brokers and managers rich while the investors get what’s left over, if anything. I agree with Benna. I think we should blow it up. What do you think?
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
8y
The employer match is both (1) the best return (by far) of any investment in my personal savings portfolio and (2) the easiest investment. Worst case scenario...take the 100% match and then take a hardship withdrawal down the road and pay the 10% penalty. And many of us are in index funds with minuscule fund fees (mine is 0.17%).
Rental Property Investor · Atlanta, GA · Member since 2016 · 325 posts · 253 votes
8y
I am a big fan of 401k and highly recommend to everyone. I have been maxing out my 401k until I reached income point where I am not allowed to. however, I have been investing my personal savings into real estate. I think the point is: you need to create your safety net or nets. I use my rental income to invest in select Vanguard funds, mainly VTI.
Sunnyvale , CA · Member since 2017 · 373 posts · 362 votes
8y
@Shiloh Lundahl
With ADR (all due respect), the economics of a 401k are quite solid.
1) It’s pre tax, so off the gate one earns a 30% return
2) Employer Match. Some of mine have matched up to 100% of my contribution which I max. So that is another 100% return on the cash.
3) My portfolios have generated an average annual return of 20% over the past 5 years. Factor in the compounding. You may just get a picture of how lucrative this is
4) My older 401ks got converted into IRAs. I manage that portion (not the broker or money manager) and there the annual return has been 35% over 5 years
5) I have also been very fortunate to cobble together a portfolio of RE assets mostly in A+ locations in the SF Bay Area.
In a nutshell I have seen both RE and 401ks and love the diversification I have.
Retirement Accounts Attorney · Southfield, MI · Member since 2017 · 3k+ posts · 1k+ votes
8y
The 401k plan also allows for both Roth 401k contributions and voluntary after-tax contributions which is good way to accumulate tax free growth on your investments.