I haven't missed a 401(k) maximum match in 25 years. Yeah, I've done okay.

Kind of a spin off OP's question here -

I'm currently employed by a company that does not offer a 401k or retirement plan. However, I did buy into the company and am 3% owner with a substantial dividend payment each year on top of my salary. Family's health insurance is covered by the company, but it is not a HDHP. Currently have a backdoor Roth set up and I am maxing it out yearly. Also have a taxable investment account. Majority of my cash is kept in a high yield savings account. I am contributing to a 529 for kids. Are there any tax advantaged accounts I am missing out on that I am eligible for? Anything else I should be doing besides real estate?

Brian Earl Spilner said:

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Now is the time to build up a nest egg in a 401k, actually. $1 invested at this age goes much farther than $1 invested in 20 years.

This is the exact opposite advice he needs to take.

OP, please disregard this advice, for the love of Christ.

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Yeah this will put it in perspective:

https://instagr.am/p/CyBQc7ZuoMs

https://instagr.am/p/C3YEJCMRjMU

People always talk about the fees associated with some types of investments, particularly mutual funds. I haven't ever understood the hand wringing about that particular item . To me you look at the net return after fees and if it's better than the alternatives who cares? If it costs a lot of $ for someone to get you better returns then why does it matter? I don't mind paying a premium to someone that's getting me better returns .Would like to hear some counterpoints on that subject. I may be looking at it wrong .

I look at it like a high performing employee. If they make or save you more money than the average employee then it's worth it to pay them more. Am I missing something?

A counterpoint to focusing on a 401K match, is those typically don't vest for several years. Early in someone's career, I'd suggest that career mobility and yes, job hopping, will yield a higher return than an extra 3% or whatever your company match is worth.

Most vest in 1-3 yrs in my experience. Especially early in someone's career unless a situation is not anything like you expected it's generally better to not hop a whole bunch. Let your first employer teach you the basics. Job hopping faster than 1-3 yrs is a red flag to many employers imo. Changing industries or career paths is certainly a different beast.

chris1515 said:

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A counterpoint to focusing on a 401K match, is those typically don't vest for several years. Early in someone's career, I'd suggest that career mobility and yes, job hopping, will yield a higher return than an extra 3% or whatever your company match is worth.

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In my experience more companies are moving to fully vested 401k from the start nowadays.

Chipotlemonger said:

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chris1515 said:

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A counterpoint to focusing on a 401K match, is those typically don't vest for several years. Early in someone's career, I'd suggest that career mobility and yes, job hopping, will yield a higher return than an extra 3% or whatever your company match is worth.

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In my experience more companies are moving to fully vested 401k from the start nowadays.

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Man, I guess I'm just outside the norm in my experience. I've never been with a company that didn't have a 3-5 year vesting schedule.

Could be tied off differently depending on industries as well. I think percentage wise a company may choose to offer less % but have it fully best right away rather than have a vesting schedule with high matching. But that is complete conjecture on my part.

This . It's a balance.

What is the best index fund and can I get it through Fidelity?

I'll walk back my original statement a little. 401ks aren't scams. They are great financial vehicles for the middle class to secure their future and retirement in tbe middle class. However if your financial goals and aspirations are beyond that, and only you can make that determination, you will fundamentally have to take riskier approaches and more direct control over your own capital. Doesn't mea. "Get rich quick" schemes. You can buy a house with the extra capital, rent out the rooms, cover mortgage payments with rent, pay down principle etc. buy another house etc etc.

Another example is starting your own business. Will require capital ans of course you won't have a 401k starting your own business. But if you already have a 401k it's going to motivate you to stay employed vs venturing out yourself.

Again only you can set your financial goals but the statics don't favor 401ks for means to becoming a millionaire or financially free and early retirement. But to achieve those a yes a higher risk will be required than a 401k

Most people aren't comfortable with risks so 401ks make plenty of financial sense.

Less than 10% of 401ks worth a million dollars. Retirees average a net worth of 1.2 million by age 65.

I'm sorry but it's just not a great means of wealth generating. Strong at ppreserving your wealth by retirement sure. To become rich you are going to have to take risks. More risk more reward. 401ks are risk averse.

Maybe I falsely assume the young man had goals to become rich and for most people too.

I bleed maroon said:

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I'm still trying to figure out how Red Pear Realty and Yukon Cornelius could come up with their premise. I have been around some of these types (both the billionaire success-stories and the bitter failed entrepreneurs) at various times. I'm trying to keep an open mind, and here's what I came up with as to who this actually makes sense for:

- Entrepreneurial risk-seeking individuals who believe in themselves and their grand idea's potential
- Willing to forego security and mathematically superior retirement incentives to conserve cash to invest in favor of their big idea
- Want to invest every dollar (including renting out rooms in their own house?) earned into a "big idea" that will pay off handsomely in the future (in terms of financial freedom and status)
- More than a little bit paranoid about any savings or investment approaches which involve the government
- Willing to risk it all and start over if the first big idea doesn't pan out
- Doesn't mind if other family goals (lifestyle, college, etc.) have to be sacrificed if the idea doesn't pan out (but they are definitely convinced it will).
- Don't really care if they are potentially destitute in retirement, because they were able to follow their dreams
- Strongly believes that everyone not pursuing their approach is lesser intelligence or fortitude

I think this is fine, and certainly people like Elon Musk, Steve Jobs, and many other billionaires fit in these categories. Bernie Madoff, Sam Bankman-Fried, and Elizabeth Holmes also clearly fit this category. I think our own oldarmy1 falls in this group - especially the status-seeking self-proclaimed "Guru" part. Society needs these types in order to make major breakthroughs. They have vision, and can change the world if they set their mind to it. I encourage them and don't begrudge one iota of their success. BUT, they probably should not spend much time trying to convince the other 99.9% of successful people that they should change their ways.

Good discussion.

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Sorry… but this post is equally as silly of a meme post as what Yukon I think is trying to say but nobody is hearing because he's doing it in an internet edgelord sort of way. Prefacing all of this by saying I've always taken company match on 401k at minimum and at this point in my career I max it. So… I think it is the smartest thing for me.

There's the spreadsheet element of retirement plans which is logical and can be followed… and then there's the behavioral element of them which isn't quantifiable and harder to follow. What always strikes me in these conversations is everybody knows and can state what the benefits are of a retirement plan… but nobody ever can articulate what the alternatives are… which means most people who are faithfully contributing to their IRA and 401k never ask that question and it is the higher minded question to ask.

I'll put it another way… if you were approached independently with a business plan where up you continuously contribute money into the business, it projects intermediate excess returns vs. the norm but the catch is you won't be able to touch a dime of it for 20 years without it costing you prohibitively… you'd probably be a hard pass on it. And while you might not articulate this the reason you are passing is you are just sacrificing liquidity. This really isn't that different than what a 401k is offering from a liquidity perspective. Liquidity is valuable but hard to quantify. I've invested in alternatives that on aggregate have paid off immensely better than a retirement account would have where I don't think I would have had the liquidity to had I just blindly maxed retirement out early in my career.

There are no free lunches in investing and you absolutely should be asking yourself what the catch is for you individually. And it is an individual answer that this board can't answer for you. Scan all of your alternatives carefully and what the implications would be for you personally rather than just think about what you get from the obvious.

Bluntly, if you have aspirations of starting your own business (which doesn't have to be some big grand idea as the post above infers) but are in the corporate world… unless you become a really high wage earner, you probably aren't ever going to save the capital to go out on your own if you plug the max into your 401k. It's just pretty impossibly to do if you lock yourself out of that much liquidity for that long as you get older and start families and more expenses and things you want to save for start piling up. The 401k match companies do isn't out of benevolence… they are doing it to retain you. Now, consider that there aren't actually a hell of a lot of jobs in the corporate world where you are going to become a high earner independently.

I bleed maroon said:

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Quote:

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Sorry… but this post is equally as silly of a meme post as what Yukon I think is trying to say but nobody is hearing because he's doing it in an internet edgelord sort of way.

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I am not remotely understanding what this means, but...

It appears that the rest of your post agrees with my "meme post" (?). My point is that there are exceptions where exceptional people both have the strength of conviction and single-minded focus to turn down a slam-dunk financial foundation to bet it all on following their passion. They also have to benefit from good or lucky timing and market conditions. The problem is that there are a lot more people who think they have "it", and pay throughout their lifetime for their failure. You don't get that foundational period back. It's called risk for a reason.

Just think of a 22-25 year old recent college graduate - how many of them have the life experience and drive to both have a great idea, and possess the relentless desire to see it through. I think I was quite generous in saying 99.9% of people don't.

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Your post reads as if only people who want to be outright rich or outright grifters with big fantastical ideas are those who don't understand the value of a 401k.

All I'm saying is that there are degrees to it and there's LOADS of people who say they want to be their own boss or start even just a normal business one day (don't even have grand big ideas) when they are 22-25 but never are able to because they sock all their liquidity away in tax deferred retirement accounts as it is perceived as most optimal. As a result, they are kind of shooting themselves in the foot on their own long term aspirations.

This is why quite a few people see it as a trap… because at 22, when you put into that account for example, you are locking yourself out of your own money for like 37 years in most circumstances. You talk about great ideas and relentlessness and say 99.9% of people don't have it… but there's a HELL of a lot more than 1 out of 1000 people who have chosen to own their own business. It's not that grand of a thing… most people say they want to do it… but then do things antithetical to it… like put money in accounts you can't touch for year and years.

ATM9000 said:

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I bleed maroon said:

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Quote:

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Sorry… but this post is equally as silly of a meme post as what Yukon I think is trying to say but nobody is hearing because he's doing it in an internet edgelord sort of way.

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I am not remotely understanding what this means, but...

It appears that the rest of your post agrees with my "meme post" (?). My point is that there are exceptions where exceptional people both have the strength of conviction and single-minded focus to turn down a slam-dunk financial foundation to bet it all on following their passion. They also have to benefit from good or lucky timing and market conditions. The problem is that there are a lot more people who think they have "it", and pay throughout their lifetime for their failure. You don't get that foundational period back. It's called risk for a reason.

Just think of a 22-25 year old recent college graduate - how many of them have the life experience and drive to both have a great idea, and possess the relentless desire to see it through. I think I was quite generous in saying 99.9% of people don't.

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Your post reads as if only people who want to be outright rich or outright grifters with big fantastical ideas are those who don't understand the value of a 401k.

All I'm saying is that there are degrees to it and there's LOADS of people who say they want to be their own boss or start even just a normal business one day (don't even have grand big ideas) when they are 22-25 but never are able to because they sock all their liquidity away in tax deferred retirement accounts as it is perceived as most optimal. As a result, they are kind of shooting themselves in the foot on their own long term aspirations.

This is why quite a few people see it as a trap… because at 22, when you put into that account for example, you are locking yourself out of your own money for like 37 years in most circumstances. You talk about great ideas and relentlessness and say 99.9% of people don't have it… but there's a HELL of a lot more than 1 out of 1000 people who have chosen to own their own business. It's not that grand of a thing… most people say they want to do it… but then do things antithetical to it… like put money in accounts you can't touch for year and years.

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That's not at all what I'm saying. A big idea (that produces substantial wealth) can be any size or scope. There is a poster on here who turned a part-time pool service business into real wealth (MPython?) by sheer determination, hard work, and I suspect with the help of historically low interest rates (cheap capital) to enact his acquisition model, and we should applaud these success stories. It doesn't have to be inventing the electric car or iPhone. Let's be real, though - these uber success stories are still one out of a thousand. For reference, 90%+ of food service businesses fail.

The original poster wasn't asking how to enact his dream business, but how to invest his extra cash to enable a better (and more flexible) future. Let's keep it in context, here. And yes, maxing a 401(k) match is a very good foundational bet for the other 999 out of 1000.

I think back on page one I saw a few "buy a duplex" comments. I wish someone had told me this one simple thing years ago.

We were always self employed so didn't have any employer options or pension to count on. All we were going to have is what we put back. We had SEP-IRAs that we maxed out every year & money in the stock market. We began to buy rental units in a small, affordable town - that doesn't apply now on the scale we were able to do it, but we put in the sweat equity and started making good money - enough that our investment guy said "keep doing that & you will come out much better in the end". We stopped funding those & saving for real estate purchases when we came across a deal so we could pay cash.

He was correct. It's less feasible now because we're older & don't want to do the work, but if you had just one duplex that your tenant in the other side essentially paid for, you could move on eventually & have 2 units of income or sell after letting someone else build your equity.

Sounds like you are going to figure it all out though. Best of luck to you.