Where are the gold bugs now?

[Kooshiball]

It can be very long topic but once banking system is freezed, all other industries that depending on the financial system (basically every industries) would go down... So that's why all the mutual fund went down in dramatic scale. 401K or mutual fund can't protect from systemic stock market crash like 2008... On the other hands, some people who have assets outside of banking system were fairly unharmed...

[NetSkyBlue]

It can be very long topic but once banking system is freezed, all other industries that depending on the financial system (basically every industries) would go down... So that's why all the mutual fund went down in dramatic scale. 401K or mutual fund can't protect from systemic stock market crash like 2008... On the other hands, some people who have assets outside of banking system were fairly unharmed...

But the crash of 2008 was only bad for those people who had lots of money in the market and were counting on using it soon, right? If you have time to wait for the market to recover, it's not a terrible thing, is it?

For example, I'm 40-ish years from retiring. Do I (personally) need to worry if the market tanks right now? I'll be buying shares at a particularly low rate. As long as the market is healthy when I'm nearing retirement, I'll be doing just fine.

Or are you talking about something worse, like the firm I invest with (Fidelity) is in danger of collapse, and my shares of XYZ evaporating into thin air?

[Kooshiball]

But the crash of 2008 was only bad for those people who had lots of money in the market and were counting on using it soon, right? If you have time to wait for the market to recover, it's not a terrible thing, is it?

For example, I'm 40-ish years from retiring. Do I (personally) need to worry if the market tanks right now? I'll be buying shares at a particularly low rate. As long as the market is healthy when I'm nearing retirement, I'll be doing just fine.

Or are you talking about something worse, like the firm I invest with (Fidelity) is in danger of collapse, and my shares of XYZ evaporating into thin air?

If you study how financial system works, this kind of systemic crash will ocurr very frequently. I can certainly tell you that there will be numerous systemic crash like what I described will occur in the future as well.

Denger of mutual fund is that you can't move the money freely (only between fund to fund but problem of this is that most of stocks will go down significant in price once crash occurs). Worse, you can't take out your money from retirement plan like 401K unless you quit the job so there is much less flexible. In fact, I am not putting money in any mutual fund or 401K because there is virtually no advantage for me to use these as investment vehicle (You can get tax defer by 401K but only tax will definitely go up in significant amount in the future if you understand this state of the economy and future prospect of the economy). Read Prophecy from Robert Kiyosaki. You will understand why biggest economic crash will still come.

Since I am not financial advisor so I can't tell you what to invest, I am suggesting you to get educated in terms of investment and financial education. You will be able to find good investment vehicles that make sense in this economic condition (Not because you feel like this fund is good investment but you will be able to understand exactly why this investment will perform very good under the certain circumstance). Please PM me if you want my suggestion of other reading etc.

Good luck!

[photo]

Read Prophecy from Robert Kiyosaki. You will understand why biggest economic crash will still come.

If you mean read a book entitled "Prophecy," isn't the author one of the persons who suggested heavily investing in real estate, before the collapse? A lot of people who took his advice are probably very much wishing that they didn't.

[Kooshiball]

He was advocating in investing in real estate but he never said investing in capital gain (fliping) but cashflow. Many people who were flippers were burned but people investing in cashflow were not really harmed. At any time, people who are not educated will be burned in any economic condition no matter what kind of asset classes they are investing in anyway.

I am not pushing him or anything but his book prophecy has valid point that making sense.

Just for thought.

[Mr Nice Guy]

In fact, I am not putting money in any mutual fund or 401K because there is virtually no advantage for me to use these as investment vehicle (You can get tax defer by 401K but only tax will definitely go up in significant amount in the future if you understand this state of the economy and future prospect of the economy).

There is an advantage if your company matches a contribution...

[Kooshiball]

There is an advantage if your company matches a contribution...

To me, this is the only advantage and disadvantages are outweigh the advantage. Disadvantages to me is

1. You have to wait till 59 1/2 old to take the money out
2. Can only invest in specified funds that so much exposure to the risk
3. taking 100% of the risk (401K company does not make any risk). Once lost the money due to crash, that's it.
4 401K companies and fund manager will take 80% of the expense for the life of 401K if accumulated (Fees to fund manager and 401K companies etc in every single month).
5. You can only take 20% of the return if there is any return

Biggest disadvantage to me is that I can't take out the money from my account until 59 1/2 year old. This gives me much less flexibility.

If we educated and look for the opportunities, there are many opportunities that yield much better than retail investments like 401K. But, this is just my thought.

Hope this helps...

[disneysteve]

1. You have to wait till 59 1/2 old to take the money out

I generally make it a rule to stay out of the conspiracy theorist threads, but I'm bored so I'll jump in here.
A 401k is a RETIREMENT account. Why would you want or need to take the money out before retirement age? You should have other savings outside of your 401k for any other purposes.

4 401K companies and fund manager will take 80% of the expense for the life of 401K if accumulated (Fees to fund manager and 401K companies etc in every single month).
5. You can only take 20% of the return if there is any return

What the heck are you talking about here? What fund has an 80% expense ratio? Most are under 1%. Why would you only get to keep 20% of the return?

[photo]

1. You have to wait till 59 1/2 old to take the money out

The purpose of a 401(k) is retirement. Additional savings should occur for other needs and wants in your life.

2. Can only invest in specified funds that so much exposure to the risk
3. taking 100% of the risk (401K company does not make any risk). Once lost the money due to crash, that's it.

A 401(k) isn't necessarily invested in the stock market. You could potentially have it all in a savings account or in bonds.

4 401K companies and fund manager will take 80% of the expense for the life of 401K if accumulated (Fees to fund manager and 401K companies etc in every single month).
5. You can only take 20% of the return if there is any return

This is confusing. Would you explain?

If we educated and look for the opportunities, there are many opportunities that yield much better than retail investments like 401K.

Retail investment?

[Kooshiball]

I meant over the life of owning 401k. For example, if I started putting the money in the 401k when I am 21 and taking money out at age 65. Then you will incur all the fees all the way from 21 to 65 (44 years). The longer and more money you hold the money in 401k, the more expense will be taken out from your account. If we keep the money for such an long time, expense will be compounded up to 80% (many people explain about compounding interest but we need to remember there is compounding expense on the flip side...). Thats what I meant by accumulated. Expense can be much less if you hold short term like let's say 5 years.

Yes I understand about we can invest in bond and saving (I didn't really mention that as well. Sorry..). But with current inflation of more than 10% (not official government number since CPI is hugely manipulated by government), inflation will outperform the return of both bond fund and money market fund.

Retail investment is in my definition, investments advertised on TV (prudential retirement or some other mutual fund).

I am not saying mutual fund is bad but I don't personally invest them because of current economic condition..

Hope this helps...

[disneysteve]

Retail investment is in my definition, investments advertised on TV

I'm seeing gold advertised on TV all the time so I guess you should count that out as an investment option by your definition.

10% inflation, huh? While I agree that the CPI leaves out some important things like food and fuel, I don't think that would make the real number 10% or anything close to it. Heck, gas prices have dropped quite a bit lately and are now back under $3/gallon around here for the first time in quite a while and food prices seem to have moderated lately.

[photo]

If we educated and look for the opportunities, there are many opportunities that yield much better than retail investments like 401K.......Retail investment is in my definition, investments advertised on TV (prudential retirement or some other mutual fund).

I don't watch much TV, but when have 401(k) plans ever been advertised on TV (in the US)?

A 401(k) plan is established by an employer and thus is not the same for everyone; therefore, it makes no sense for a company to "advertise" its plan to the general public.

[97guns]

I generally make it a rule to stay out of the conspiracy theorist threads, but I'm bored so I'll jump in here.

what we are talking about here is much more than a theory or conspiracy, this stuff that is happening is factual. main stream media does not report on whats happening in europe. a very basic google search would reveal how really bad off the european countries are. i was not a "sky is falling" "theorist" 3 years ago but the writing on the wall tells the truth, you just have to open your eyes.

[kv968]

I meant over the life of owning 401k. For example, if I started putting the money in the 401k when I am 21 and taking money out at age 65. Then you will incur all the fees all the way from 21 to 65 (44 years). The longer and more money you hold the money in 401k, the more expense will be taken out from your account. If we keep the money for such an long time, expense will be compounded up to 80% (many people explain about compounding interest but we need to remember there is compounding expense on the flip side...). Thats what I meant by accumulated. Expense can be much less if you hold short term like let's say 5 years.

Since you're educating us about finance and investing, could you please show me how an expense ratio of a 401k "compounds" to 80% in 44 years? I've seen quite a few compounding and discounting formulas in the finance classes I've taken in college but never quite saw that one.

[photo]

Since you're educating us about finance and investing, could you please show me how an expense ratio of a 401k "compounds" to 80% in 44 years? I've seen quite a few compounding and discounting formulas in the finance classes I've taken in college but never quite saw that one.

I want to be the fund manager for that one!