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    401k Return on invested capital

    Was curious to see how my 10 year returns were doing for my 401k. You know, just to keep up with the real estate crowd. Here's my simple math:

    $143,457 Total Contributions
    $441,387 Current Value

    208% ROIC
    21% CAGR

    So, 401k investing over a 10 year period rocks, right? Maybe.

    That $441,387 is before tax. I think I can get all of it converted between age 55 and 70 before RMD's in the 12% tax bracket. So that leaves:

    $388,421 after 12% tax

    171% ROIC
    17% CAGR

    Still not too shabby and certainly keeping up with the RE crowd nicely.

    But that is not what's important. If I want to retire, I need income not savings. That $388,421 @ 4% withdrawal rate would generate:

    $15,537 of annual income

    I think the RE crowd can get that from one property with an initial investment of maybe $60,000. So less than half of what I have contributed to my 401k.

    Still, I'll take a 17% annual after tax ROIC any day of the week and twice on Sundays.





    #2
    Great numbers, and I'm certainly an equity investor myself.

    That said, it really isn't a competition between stocks and real estate. They are very different investments with different risks and different potential rewards. And it's not an either/or situation. You can do both and probably should if you're so inclined. Personally, I'm just not cut out to be a landlord so I stick with non-real estate investments. It isn't because I don't think real estate is a good investment. I just don't think it's the right thing for me.
    Steve

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      #3
      Not sure how to figure those numbers but I have contributed $68,900.00 to my 457(b) since 2004 and it is now worth 105,121.00. I also have 4 rental properties. I am playing both sides of it.
      Last edited by Atretes1; 10-06-2018, 04:51 PM.

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