Investing In Your 401(k) is a Bad Idea?! (Money Guy Reacts)
Take Your Finances to the Next Level ➡️ Subscribe now:
Download FREE Financial Resources from the show ➡️
Sign up for the Financial Order of Operations course ➡️
Download The Money Guy Net Worth Tool ➡️
Our professional focus is on financial planning and investment management, and we leverage our knowledge for your benefit. We help you focus on the things you can control and manage the things you can’t. Visit our site for more info ➡️
Facebook:
Instagram:
Twitter:
TikTok:
Let’s make sure you’re on the path to financial success – then help you stay there!
The Money Guy Show takes the edge off of personal finance. We’re financial advisors that believe anyone can be wealthy! First, LEARN smart financial principles. Next, APPLY those principles! Then watch your finances GROW!
We can’t wait to see you accomplish your goals and reach financial freedom! New shows every week on YouTube and your favorite podcast app. Thanks for coming along on the journey with us….(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
Investing In Your 401(k) is a Bad Idea?! (Money Guy Reacts)
There is no doubt that the concept of saving for retirement is a necessity in today’s world. As we work hard throughout our lives, it becomes crucial to secure our financial future, especially during our golden years. The most common advice to achieve this is to invest in retirement accounts, such as a 401(k). However, in a surprising twist, some financial experts argue that investing in a 401(k) is actually a bad idea. Let’s dive into the debate and see what the money experts have to say.
Before we jump into the opposing argument, it is important to understand the basics of a 401(k). A 401(k) is an employer-sponsored retirement account that allows employees to contribute a portion of their salary on a pre-tax basis. The contributions made into the 401(k) grow tax-deferred until withdrawn during retirement. Additionally, many employers offer matching contributions, further boosting the savings potential of a 401(k).
Traditionally, financial advisors and experts have touted the benefits of 401(k) plans. The tax advantages, employer match, and potential for long-term growth make it seem like a no-brainer. However, proponents of the opposing argument claim that investing in a 401(k) is flawed, and there are better alternatives available.
One of the main criticisms of 401(k) plans is the limited investment options they offer. Most 401(k) plans have a selection of mutual funds to choose from, and employees must stick to these predetermined options. Critics argue that this lack of variety limits investors’ ability to diversify their portfolios and potentially miss out on better investment opportunities.
Moreover, 401(k) plans often come with high management fees, which eat into the potential returns. These fees can significantly impact the growth of one’s retirement savings over time. Detractors argue that investors would be better off exploring alternative investment options that offer lower fees and higher potential returns.
Another point raised by those against 401(k) plans is the lack of control and liquidity. In a 401(k), funds are typically locked up until retirement age, with early withdrawals incurring penalties and taxes. Critics argue that this lack of accessibility and control over the funds can be problematic, especially during emergencies or sudden financial needs.
So, what do money experts have to say about this controversial topic? While there are valid points against investing solely in a 401(k), the majority still advocate for utilizing this retirement account. They suggest the alternative of maximizing the employer’s matching contributions while also diversifying investments outside of the 401(k) plan. By doing so, investors can benefit from the employer match and tax advantages of the 401(k) while also exploring other investment options to achieve a more well-rounded portfolio.
Additionally, financial advisors stress the importance of understanding the long-term nature of retirement savings. While it may be tempting to criticize the limitations and drawbacks of 401(k) plans, the reality is that consistently contributing to retirement accounts over time can still lead to substantial growth and financial security down the line.
In conclusion, while critics may argue that investing in a 401(k) is a bad idea due to limited investment options, high fees, and lack of control, it is important to look at the bigger picture. Maximizing employer matching contributions, diversifying investments outside of the 401(k), and understanding the long-term nature of retirement savings are key factors to consider. Ultimately, it is crucial to consult with a financial advisor to evaluate individual circumstances and determine the most suitable retirement savings strategy.
When I put my first 600 dollars in my 401k my paycheck only decreased by 350 because I got the rest back from Uncle Sam. Thise are your highest taxed dollars, giving you an immediate ROI of up to 60%. You can't find that anywhere else. Only an idiot would tell you not to use the 401k.
What I hate about 401k is they are horrible at providing things to invest in. Statistically, they barely beat inflation, from what I've read.
If your employer matches and you don't do it, then you are a moron. You don't want to be paid 2 ,4, 10% more? HOWEVER, as I have been telling people for years. If you are putting money away for the extra 2% and have a maxed credit card at 20%…you are not saving anything. Pay your debts off first, then put that payment into savings.
401k is useless in this day of age
I love how they advise you to put more money into your retirement than pay down your mortgage because the retirement yield anticipation will be greater
SOO … after fees , inflation, tax at withdrawal, now old age – would it not have an immediate benefit to get out from under the mortgage and purge thousands per month payment to boost your monthly availability of income a better life choice?
My mom once told me that when she passed I would be a rich man- I replied that if your wish was for me to have these funds – release some now so I can give up my second job and be present with her grandchildren as they grow up !
Buy AG and AU
You can invest in real estate through your 401k by buying shares of REITs.
And you're also taxed on real estate, so I don't really understand how he can think a 401k is bad. The only issue with a 401k is that you can't use the money until retirement, that's the only downside.
Guy acted like property taxes aren’t a thing either lol
I'll be dead before 50 idc
Put it in a Roth up to 10k now annually. No need to take distributions at 60, u can continue to contribute earned income and a Roth IRA is the best and tax free
401k makes tons of money if there's an employer match. If not, just do a Roth IRA
He forgot the 100% match
Also with 401k, If your company does a match, then that is free money, that will get interest upon interest upon interest. My ex wife got into her 401 k and the company was I think four and a half percent. She's been with them for fifteen years and makes over eighty thousand. She was literally getting an extra 2000 a year.
For the 401K. And after 15 years, it came out to be about 9 or 10 months of her salary. And the longer she stays with them the more it's going to be.
Invest is silver. It continues to go up as inflation goes up. So it’s always worth it’s weight. Very easy to spend too. Never had a gold or silver buyer try to under cut current weight value. Always walk out with cash. No taxes. No fees. Just an even exchange. Can bring it to a different country and sell it there for their money no exchange rate. Been doing it for 21 years. My investments grow 14% average annually. Plus what I put in.
Don't invest in a pension plan. Because I listen to random 24 year old kids on the googletube with ball caps.
Real estate is too hard for most people. Takes more time and money than most think. The 401k makes a person save money without seeing the money so they never miss it. Most people don't have the discipline to save and invest regularly.
If my job doesn't offer anything towards a 401k is it better to just put it into a Roth Ira account? I'm a beginner
Why get a 401k when you can get a life insurance policy with living benefits and borrow from yourself while your money's getting interest tax-free
In addition to 401k, also do a Roth IRA. My company actually offers and matches a Roth IRA. I'm doing both.
Keep your grubby hands off of single family homes, they're not for renting they're for single families to own
I will never let the government tell me how to spend my retirement, nope. I stopped putting money into it because I'm not letting the government lose my money like they did my dad's in 2008. 401k is trash
Everyones a genius in a bull market.
There is no guarantee in real estate. Since 08 it’s kinda been the investor fad.
I personally believe that when housing catches back up with demand, we are going to see a giant crash. Mainly because so much property is owned by a handful of investment companies. If those companies decided to sell, the market would be flooded, and housing would be cheap as heck.
real-estate is no longer the great investment it used to be. You have to have TONs of money to get started and be ready for huge expenses. I've owned real estate in the past and some properties were NOT good investments.
RothIRA is where it at, pay cheaper tax now instwad of higher tax in the future (inflation), plus with euity backed lending, you can borrow against your own assets for low interest (AND THEN if you buy assets with the debt against your equit, you can be making money with both Appreciation And Arbitrage)
Which, is what banks do
“Real estate is a good place to start” might be the dumbest sentence I’ve ever heard
Wheres the full episode?
Take the match, then go Roth, then go IRA. Nothing out there is going to beat a match.
laughs in 10 percent 401k match and 401a match
It’s not about the money you put in to your 401k. It’s about the money your company matches you one. I personally never go above what my company matches. No where else can you get a guaranteed double return on your investment.
Your 401k is a loan to someone else. Who is there to pay you back?
Problem with real estate is its all about timing. If you retire and the housing market tanks, you dont have anything. If you buy during a time when interest rates are high, you over pay. Its way riskier and you need a shit ton more capital up front.
Real estate is a great start duurrr hurrrr. As if everyone wouldn't love to go out and buy rental property.
Listen to an Asian man when it comes to finances on an app built by his people?
Nah fam. Go back to making my phones please and thank you.
Puts it in a roth ira…..