Post Bad Financial Advice You've Heard

[TexasHusker]

Not necessarily. 401ks and business ownership are not an either/or proposition. You CAN do both.

Sure you can do both - I can soak in a plastic tub and a hot tub too!

[TexasHusker]

I really wish you would stop by bogleheads.org and tell this to all the millionaires that are retiring at age 50 so they can stop being stupid. I hate your attitude and it offends me. But I don’t care. I just like calling you a pompous arse.

I don't know anyone personally who is living off of their investments at age 50 that is doing so by virtue of investments in mutual funds, but I am sure they are out there.

It's a moonshot strategy, though, IMO.

[corn18]

I don't know anyone personally who is living off of their investments at age 50 that is doing so by virtue of investments in mutual funds, but I am sure they are out there.

It's a moonshot strategy, though, IMO.

I believe you. And you can not open up your aperture to realize they do exist. You’d rather just spout your singular point of view as the only way. Many roads lead to Dublin my “friend”.

[TexasHusker]

I believe you. And you can not open up your aperture to realize they do exist. You’d rather just spout your singular point of view as the only way. Many roads lead to Dublin my “friend”.

You made my point!

The problem with the 401K is, you are selling your soul to just a few roads.

Go outside the 401K and do your due diligence, you’ll find the 405 freeway!

[corn18]

Go outside the 401K and do your due diligence, you’ll find the 405 freeway!

All my savings is not in my 401k. How much of your net worth is in real estate? Ho much of your income is from real estate? From your endless diatribes, you love real estate. And from your constant bashing of mutual funds, you don’t think real estate ever goes down. I invest in every company in the world. How diversified are you “friend”?

[scfr]

If TH and corn18 were females:

https://www.youtube.com/watch?v=8Pp66FNd54M

[corn18]

If TH and corn18 were females:

https://www.youtube.com/watch?v=8Pp66FNd54M

[TexasHusker]

All my savings is not in my 401k. How much of your net worth is in real estate? Ho much of your income is from real estate? From your endless diatribes, you love real estate. And from your constant bashing of mutual funds, you don’t think real estate ever goes down. I invest in every company in the world. How diversified are you “friend”?

If you’re invested in every company in the world, then your returns are hopelessly middling. That’s not investing IMO.

My personal income is derived from investments as follows:

35-40% from a multi-location franchise that I invested in
35-40% from a property management company that I started in 2011
20-25% percent from vacation home rental income.

I also made a fair bit trading covered calls in 2017, but that’s more speculative in nature.

Please understand that I was asked for an explanation as to why I loathe 401K plans. If you don’t like my answer, you are entitled to your opinion.

[cypher1]

401K plans are seemingly the holy grail of all investments. After all, you get a company match and the earnings are tax deferred!

What are some of the other benefits? Chirp, Chirp. Nothing but crickets.

Truth is, those are the ONLY two benefits to 401K plans.

Here are the minuses:

1. Often, the bulk of your investments are concentrated throughout your career on the last 10 to 20 years of your life. That is a lot of wealth being tucked away that isn't being used to build wealth for today.

2. In the world of investments and financial opportunities, your options are limited to the little brochure of mutual funds that your employer chooses to offer. Want gold? Forget it. Silver? Real estate? Hahaha! How about natural resources? Oil? Foreign currency? Natural Gas? Coal? Raw land?
Palladium? Fine Art? Collector cars? Collector Coins? Cotton futures? A share of a business? Persian rugs? Options? Futures contracts? Viatical settlements?

No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, and no.

Instead, your financial future is in the hands of your XYZ Target 2030 Fund. And whether or not that fund returns zero percent or 12 percent annually between now and the time you're elderly, you're going to pay income tax on every single dime you withdraw.

In terms of acceptable investment returns, the vast majority of mutual funds are complete junk. You're banking on picking the outlier. You're also banking on not having a 2008 correction right before you start taking withdrawals.

Who cares if you get a match if you're buying junk? A one time 50 percent match is little consolation.

At the moment, I can't complain about the first two benefits. I've been with my current employer for almost 6 years (in May), while originally contributing 5% and now at 10% (company now matches at 6%, prior to 5). I just checked and have hit 100K mark, which I am I grateful for. Side note: I do max my roth IRAs, have separate EF, and admit I probably be more proactive in diversifying my investment portfolio.

Could I have just invested with post tax money in different areas? Absolutely, but I'm pretty sure I wouldn't have been able get to that current sum in that same timeframe. And I really wouldn't feel comfortable with putting the bulk of my money to be tied to real estate or other very volatile markets. But that's another story for risk level.

My point is, for a lot of us who aren't active for investing, it's not bad having 401 and 403 options from employers, even if the funds aren't always the best to select from. There are plenty of working professionals not contributing to theirs, which is their choice. I realize we shouldn't just depend on that for growing wealth for retirement, but it's a great start IMO. And I would agree no one should put all their savings in that one area either.

I'm a believer in paying my taxes, and investing dollars in stuff that can actually change my world, right now. There are so many good investment options out there that beat the pants off of mutual funds. It's sad to see so much wealth tied up. People will spend years of their life researching cars, boats, quilts, ancestory, watching movies, watching sports - but they are perfectly content to put 10 percent of their earnings in some fund they found in a leaflet. Amazing!

I have been working with my kids on HOW to invest for years now. The first rule is, when your employer offers a 401K, don't walk away, RUN. Let the herd do all of that - they'll still be working for the man at age 60, hoping like heck there will be enough in the kitty to live on. If you invest your money TODAY, on investments that are relevant and worthy TODAY, you very well might be living off of your investments by age 40.

Had I figured this out at 30 instead of 40, I would have walked away from corporate America at 36 instead of 46.

That's my take.

While I'm sure everyone on this forum would prefer to live off investments by 40, I'm sure the bulk us will be working to 60+. Or maybe only me, since I actually like working in my field which is nothing to brag about.

Could you be more specific on your own good investment options? If you don't like mutual funds, that’s fine as it's your opinion. Otherwise feel free to enlighten us peasants on what we should be doing for investing. Or I would love to hear more advice on what you're teaching your kids for following investments.


Back to the original topic, my favorite one right now is "Don't pay your CC bill in full each month. You need to keep a balance in order to build good credit over time." The last I checked my score was around 815. I wonder how much higher it should have been if only I didn't pay my bill in full each month.

[TexasHusker]

Could you be more specific on your own good investment options? If you don't like mutual funds, that’s fine as it's your opinion. Otherwise feel free to enlighten us peasants on what we should be doing for investing.

If I thought your question was a sincere one, I would gladly elaborate. But I don’t.

It’s amazing to me that folks take time to post a question, but as it turns out, the question was insincere and everyone’s time was simply wasted. Or the answerer is summarily tarred and feathered as an “arrogant arse” or similar because (s)he has a strong opinion that runs against the prevailing current.

I now realize why I didn’t frequent this site for several months: No one wishes to actually learn anything whatsoever. Folks only want responses that fit their narrative.

Good day.

[corn18]

If I thought your question was a sincere one, I would gladly elaborate. But I don’t.

It’s amazing to me that folks take time to post a question, but as it turns out, the question was insincere and everyone’s time was simply wasted. Or the answerer is summarily tarred and feathered as an “arrogant arse” or similar because (s)he has a strong opinion that runs against the prevailing current.

I now realize why I didn’t frequent this site for several months: No one wishes to actually learn anything whatsoever. Folks only want responses that fit their narrative.

Good day.

If that's what you think you've learned then good riddance. Seems there are several folks on here that are able to talk about alternative investment strategies and are heard quite clearly. You're Trump approach to touting you're way is moderately annoying and veils your message in arrogance. Clearly we are all idiots.

[Singuy]

If I thought your question was a sincere one, I would gladly elaborate. But I don’t.

It’s amazing to me that folks take time to post a question, but as it turns out, the question was insincere and everyone’s time was simply wasted. Or the answerer is summarily tarred and feathered as an “arrogant arse” or similar because (s)he has a strong opinion that runs against the prevailing current.

I now realize why I didn’t frequent this site for several months: No one wishes to actually learn anything whatsoever. Folks only want responses that fit their narrative.

Good day.

You know what makes Warren Buffett great? He doesn't sh%t on the s&p 500 even though he blew it out of the water. He understands that an individual's success may not translate the same way for the general population.

[MonkeyMama]

Back to the original topic, my favorite one right now is "Don't pay your CC bill in full each month. You need to keep a balance in order to build good credit over time." The last I checked my score was around 815. I wonder how much higher it should have been if only I didn't pay my bill in full each month.

Oh yeah, you have to have a car payment too, if you ever want to have good credit. (Said to me with 800+ FICO score; only outstanding loan balance I had ever had at that point in my life was a mortgage).

Bankers perpetuate this nonsense.

[TexasHusker]

You know what makes Warren Buffett great? He doesn't sh%t on the s&p 500 even though he blew it out of the water. He understands that an individual's success may not translate the same way for the general population.

When did I ever claim that a certain method on investing is good for the general population?

I simply responded to the OP’s question, that I believe 401Ks stink. I was then asked to expound, which I did.

Why the hate? I don’t get it.

[Singuy]

When did I ever claim that a certain method on investing is good for the general population?

I simply responded to the OP’s question, that I believe 401Ks stink. I was then asked to expound, which I did.

Why the hate? I don’t get it.

Claiming that 401k stinks because you can't get rich quick enough (or retire as early as you) is starting to claim that certain investment is better than others.

Or are you claiming that 401k is a scam and you are actually better off stashing money under your mattress?