I came across a Grant Cardone video where he explains the 401k is a scam…but is it? Lets do the FACTUAL analysis and find out 😉 Enjoy! Add me on Snapchat/Instagram: GPStephan
Original Video:
Join the private Real Estate Facebook Group:
MeetKevin’s Channel:
For those that don’t know, a 401k is basically just a type of retirement account where the money you invest is deducted from your total taxable income, and therefore you end up showing less income and paying less taxes…by doing this, you end up having more money left over so you have a larger amount to invest with. Then when you hit the age of 59.5, you can begin withdrawing that money – but you pay taxes at THAT time, instead of paying taxes upfront. So this gives you a larger amount upfront to work for you and make more money long term.
But Grant Cardone says it’s a scam setup by politicians to steal your money….hmmm….
Here’s the moral of the story here, from my perspective. And as always, I do my best to be as neutral as possible and just stick with the facts and the way I interpret these strategies. A 401k is a fantastic part of a well diversified retirement portfolio by investing with pre-tax money that’s allowed to grow at a quicker rate with more money in invest. It should not be the ONLY thing you invest in, and you shouldn’t rely on this entirely for a retirement. But it’s absolutely not a “Scam” by any way I see it.
The ONLY thing to out watch for is that many employers offer extremely overcomplicated, overly expensive 401k plans that aren’t worth it – namely because of management fees. If you’re paying a 1% annual management fee, with an actively managed fund that underperforms the stock market, adjusted for inflation, you could basically be sitting there earning only a few percent per year and tying up for your money until retirement. That’s terrible. Many employers have also been under fire for secretly PROFITING from your 401k plans, but using these companies to get free services elsewhere, but making up for that cost with high-managed 401k fees. This isn’t the norm, but it does happen…for employers, they don’t care what fund they use because it doesn’t effect their bottom line…but it effects YOURS. So it’s important to do your research and understand what the 401k management fees are and decide from there if it’s worth it. I pay 0.04% annually with Vanguard…although the average is 0.97%, which is over 2400% HIGHER than I pay…and that’s absurd.
So my biggest recommendation is to check what your employer offers, decide if the fee is worth it to you – but you may as well contribute up to their employer match, where they give you $1 for $1 what you put in, since this is absolutely free money.
And yes, it is true that I invest the MAJORITY of my money in real estate…but I utilize everything I can so I have as many options to chose from. I have a Roth IRA, which is money that grows tax free until 59.5…I have a SEP 401k, which is pre-tax money that is reduced from my earned income so I pay less in taxes, and I have real estate which is my focus. They each have their benefits, they each have their drawbacks, but nothing is a “Scam.” Except Bitconnect.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness@gmail.com
Suggested reading:
The Millionaire Real Estate Agent:
Your money or your life:
The Millionaire Real Estate Investor:
How to Win Friends and Influence People:
Think and grow rich:
Awaken the giant within:
The Book on Rental Property Investing:
Favorite Credit Cards:
Chase Sapphire Reserve –
American Express Platinum – …(read more)
LEARN MORE ABOUT: 401k Plans
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
I have had to deal on a couple of times dealing with 401k on my part and my parents part and it's most definitely a scam boss.. I have a few horror story's of how they will cheat the money away from you or the family
I love your non-biased opinions.
One 401k scammy point is, my old 401k had >3% fees. These days, I have a Vanguard 401k…that has fees up to 3.45% depending on the fund. Still, I can use the 0.04-0.16% funds and so long as I’m careful where my cash goes, it’s all good. Too bad bond funds crashed and took with it a LOT of my money (I made the mistake of moving stable value cash into bond funds in December 2020…the peak of the bond fund market…oops).
i love people like this , giving advice against people who do / have done more than they have… would love to see you 401k advice while most americans are loosing their asses on it !!!!!!
I can prove a 401K can make you 100% ROI. Make the full contribution that the employer will match, usually 6-7%, put the money into a cash account within the 401k plan at 0.01%, and you have 100% protection from the market, 100% deduction from taxes, and 100% profit from the match. GUARANTEED!!! All the $ you put in was doubled.
money tied up til I'm almost 60…no thanks.
401k is a scam. Wake up people. Buy real estate.
NEWS FLASH, YOUR EARNINGS ARE NOT SUBJECT TO THE INCOME TAX UNLESS YOU ARE ENGAGED IN FEDERALLY PRIVILEGED ACTIVITIES
It's important to consider a Roth 401k!
The government does not allow less wealthy people to invest in "high-risk" investments but allows them to buy as many cigarettes and lottery tickets as they want. The system is built to keep you poor, BUT you can still make something of yourself. Don't limit yourself because the system hates you.
I see it completely differently. I think the people who believe that 401k's are the best retirement investments are the people wearing tin foil hats. I'm not saying they're terrible I'm just saying there's better options.
I hope I'm wrong on this but, anyone who knows anything about currency, economics, and history can't look at the post gold standard 1971 situation we're in and believe this can go on forever. Everyone thinks it's going to be different this time but history and economic law proves otherwise, we are in the midst of the biggest monetary policy experiment in human history.
How on Earth is 100% profit a scam? Just put in what the employer matches.
He’s the greatest scam lol
Not to mention 401k typically comes with a match from your employer… If you don't take that match, you're passing on money.
Ok if you do not plan to use or beg them to use your own money until you are 59and a half years old then invest because if you can make more money with your own hard working money yes give it away so they can buy the real estate investment you are hoping to get in the future and sell it to you with profit and interest them yes stay behind the curb
Hopefully for them
Or dead
Until you are 59
If you know how to invest your own money before you die then invest in your own because if they do it for you they will tell you you can get it back
I ask my 401k to give me back my ending balance of 15 480.77dollars and they told me I have to be 59 years old to withdraw and because I'm 34 I wasn't allowed so I had had rather hear that I can't get it out until I'm hopefully dead for their convince
I cannot believe what Grant Cardone is saying. He is completely misrepresenting how these tools works. There is no way any of Grant's investment will be match the stock market. Finally if you look at Americas demographic and the current high price of real-estate there is very little chance that real-estate will do as well as they did the last 30 yeats.
ya so my ears are bleeding. thanks for that
This was an excellent video – thank you for the work you put into it. Dare I say that it seems better than many recent (2021) videos?
You mean my uncle just retired with $700,000 in his 401k and it was a scam? He probably disagrees
Why the Eff would I put money into a 401k account when I could Invest that money myself? I would have full power to take that money out anytime I want with no penalties AND pay way less in taxes due if held for the same amount of time as a 401k. They will tax you about half as income tax and let's not forget inflation of the US dollar. 401k is not a scam, it's just dumb as sh*t. Grant calling it a scam paints it pretty well though. Uncle G is trying to make you money while little insects are trying to hate. Capital gains held over a long period of time is how the rich does it folks. I believe in a well diversified diet too but that doesn't mean I should add dog sh*t into my diet just because.
The only thing I like about Grant Cardone is that he’s good at motivation and pounding the basics into his viewers (like multiplying money, investing more than letting it sit, etc.) but all of his advertisements and fluff in his videos don’t sit right to me.
I prepared taxes for retirees last season I met about 10 couples/ individuals worth about a million dollars all of them in 401ks
Wait if the 401K is for wallstreet to go up and your 401K is in wallstreet…whats the problem? Just invest into wallstreet
When I start binge watching Graham’s videos, I know that even if I look away or tune out for a few minutes, all of the information is just syncing with all the finance information in the background of my mind. Way better than binge watching TV streaming services and tuning out for a minute. Better ROI lol
401k is not a deduction!! It is a deferral!!!
I see where your coming from graham about the free money part maybe ill get into my employers 401k i just feel homesrly like it's worthless and i got better luck poping it in stocks myself
Dumb
It’s 30% tax in an early withdrawal from a 401k. I got hit with it this year.
All retirement accounts and 401K’s can be frozen at anytime if too many people sell at once. No matter what anyone tells u, u NEED tangible assets. Buy gold and buy real estate.
LMBO!!! I LOVE the Black and White cuts with the tinfoil hat.
You're 100% right, about diversifying your asset classes including your 401k. My problem with 401k's is too many people rely solely on the 401k for retirement. Of course, that doesn't make it a scam, it just means people need to be educated about it. Also…I feel like people should NOT be struggling in their youth (living paycheck to paycheck) trying to maximize contributions to their 401k plan.
Am I right about that?
Don't know. Do wealthy people have 401ks?
Most people won't understand what he is trying to say.
Jesus. What is that grifting meathead trying to sell? Thanks for explaining investing to some folks that might actually listen to that idiot. Way to keep your cool.
I don't know if you still read comments on old videos with thousands of comments already on them, but is the Bernard score to Psycho in the public domain?
I've never met anyone that regretted saving for their retirement in an 401k. I'm a CPA, so I see what people have saved and what they live off of when they retire. I hardly think that this is a scam, however, even if it is a scam, it's not working. I have lots of clients with lots of money in those accounts.
looking good graham
“In 1931 after the Great RECESSION“ I thought it was the after the Great Depression
what kind of idiots invest in a 401k that got wiped out over night? like going to Vegas and put all money on RED? Stupid fear monger from Cardone.