Amazing what a difference the 2% fee average fund fee makes over a lifetime. More evidence that the only way to ensure financial security is to control your own destiny, not leave it in the hands of Wall Street.
Blue Bell, PA · Member since 2012 · 3 posts · 6 votes
13y
I couldn't agree more, Chris. It's hard to know which financial advisors you can trust these days. They are making a commission on products that they sell you. Are those products the best way to go if you're trying to build wealth? Maybe, but maybe not. You're taking a gamble to some degree, and using "hope" as your "strategy". Using a third-party administrator and self-directing some of those funds (from an IRA or 401k, or even from a HSA or ESA) puts some of the control back into your hands. Plus, the IRS allows so many different types of assets in a self-directed account...I think it's possible for everyone to find something that they are familiar with and understand, be it real estate, notes, LLC's or precious metals. You don't have to be an experienced investor to participate. You simply have to be willing to put in the time to educate yourself and carry out the necessary due diligence for whatever alternative asset you want to become involved with.
Civil Engineer · Orange County, CA · Member since 2012 · 189 posts · 45 votes
13y
This is what happens when you send your money to someone else to invest for you. Nobody cares about your money like you do and you have to take responsibility for it. If you are not engaged this is what happens. I agree it is not difficult but it does take time to educate yourself about your investing options (stocks, real estate, insurance contracts, a small business or any other investment). Since it is not a difficult thing it is an easily thing to put off and worry about later.
Denver, CO · Member since 2009 · 131 posts · 22 votes
13y
Exactly. This is just handing over the keys to your retirement, and most people don't even realize how much they're loosing to fees.
Even if you're knowledsgeable many times the options offered by your company are subppar. I had a CFP take a look at my 401K plan some years ago, and he laughed and said there was nothing he could do.. all the options were horrendous.
Real Estate Investor · Sun Prairie, WI · Member since 2014 · 68 posts · 100 votes
12y
@Chris F. If I might take a moment to comment on your question. "Are 401Ks a good investment vehicle?" The answer is "401Ks are NOT an investment vehicle."
A 401K is a trust that's given qualified tax treatment under section 401 of the IRS code.
Your question should properly read "Are mutual funds a good investment inside a 401K?" And of course, mutual funds are NEVER a good investment. They are, however, the necessary evil of corporate 401Ks. If you're employed by someone else, you have to dance to their tune.
If you have retirement money from other sources (old IRAs, SIMPLEs, SEPs, 401Ks from former employers), then the Solo 401K is the BEST place to self direct your funds. Remember, a 401K is NOT an investment. A solo 401K will help you eliminate taxes on ANY investment you choose (houses, notes, loans, dump trucks, fishing boats, mangos, wraps - the list is endless). There are only 3 types of investments you CAN'T hold in your 401K.
So don't curse the 401K because 99% of them out there are corporate, therefore are forced into mutual funds. If you establish a Solo 401K, there are NO CUSTODIANS, therefor there are NO CUSTODIAL FEES. The list of advantages goes on and on. Read all the posts here by me and Dmitriy Fomichenko. I think you'll be pleasantly surprised.