401K Hypothetical

[Alpha_Cock]

Edit: they changed the video to read 4%.

CNBC article and video (link) says that if you put in $100/week from 22 to 67 (45 years) with 6% annual return (no match, no salary increases) you will have $654,100. That is low by $500,000, it should be about $1.15 million. Why would they under estimate that? Perhaps they are accounting for 2% inflation, but why would they not disclose that?

If I were 22 and saw that in 45 years, I would have only $650K, I would not throw $100 a week to an account that I couldn't touch for 45 years.

Do they have an agenda?

Trying to embed:

 

[America 1st]

CNBC article and video (link) says that if you put in $100/week from 22 to 67 (45 years) with 6% annual return (no match, no salary increases) you will have $654,100. That is low by $500,000, it should be about $1.15 million. Why would they under estimate that? Perhaps they are accounting for 2% inflation, but why would they not disclose that?

If I were 22 and saw that in 45 years, I would have only $650K, I would not throw $100 a week to an account that I couldn't touch for 45 years.

Do they have an agenda?

Trying to embed:

 

[BigBucnNole]

CNBC article and video (link) says that if you put in $100/week from 22 to 67 (45 years) with 6% annual return (no match, no salary increases) you will have $654,100. That is low by $500,000, it should be about $1.15 million. Why would they under estimate that? Perhaps they are accounting for 2% inflation, but why would they not disclose that?

If I were 22 and saw that in 45 years, I would have only $650K, I would not throw $100 a week to an account that I couldn't touch for 45 years.

Do they have an agenda?

Trying to embed:

Probably inflation unless an intern screwed the math up. 401k is a sheeple fund anyway.

 

[ChicagoFats]

CNBC article and video (link) says that if you put in $100/week from 22 to 67 (45 years) with 6% annual return (no match, no salary increases) you will have $654,100. That is low by $500,000, it should be about $1.15 million. Why would they under estimate that? Perhaps they are accounting for 2% inflation, but why would they not disclose that?

If I were 22 and saw that in 45 years, I would have only $650K, I would not throw $100 a week to an account that I couldn't touch for 45 years.

Do they have an agenda?

Trying to embed:

Did they compound the interest?

 

[Alpha_Cock]

Did they compound the interest?

Yes, their number works out to 4% compounded. I have to believe they just estimated 2% flat inflation annually.

 

[ChicagoFats]

Yes, their number works out to 4% compounded. I have to believe they just estimated 2% flat inflation annually.

Did you mis-read the assumptions? Looks like they are using 4% return and you are saying 6. Would be the 2% you are looking for.

 

[Alpha_Cock]

Did you mis-read the assumptions? Looks like they are using 4% return and you are saying 6. Would be the 2% you are looking for.

View attachment 25887

Haha, they changed the video after. Another example of NBC dishonesty.

 

[ChicagoFats]

Haha, they changed the video after. Another example of NBC dishonesty.

That is hilarious. No doubt in my mind they did another ghost edit. The news is awful!

 

[Pillow Pants]

Probably inflation unless an intern screwed the math up. 401k is a sheeple fund anyway.

Please explain. I need to know what I should be doing instead. I thought maxing out that free money from my employer was a good idea.

 

[SmokeHouse423]

Please explain. I need to know what I should be doing instead. I thought maxing out that free money from my employer was a good idea.

I don’t have a 401k but I am interested in his response. I neither agree or disagree with his comment as I make much bigger returns annually with my own investments and RE.

 

[BigBucnNole]

Please explain. I need to know what I should be doing instead. I thought maxing out that free money from my employer was a good idea.

Depends where you are in life and how close to retirement, but...

Most 401k plans have fees that are way too high, and anything pushed by the government through employers is always a mechanism for third parties to pull a shit load of money for themselves. I think a Roth IRA gives more flexibility and even though it's capped at 5k or 6k, that's still 400 to 500 a month. A lot of people can't spare more than that for their retirement.

If you have enough money where you don't really need a specified retirement account, always go with an actual advisor. The returns blow away anything you can get from a standard retirement plan.

 

[Pillow Pants]

Depends where you are in life and how close to retirement, but...

Most 401k plans have fees that are way too high, and anything pushed by the government through employers is always a mechanism for third parties to pull a shit load of money for themselves. I think a Roth IRA gives more flexibility and even though it's capped at 5k or 6k, that's still 400 to 500 a month. A lot of people can't spare more than that for their retirement.

If you have enough money where you don't really need a specified retirement account, always go with an actual advisor. The returns blow away anything you can get from a standard retirement plan.

Thank you. Any recommendations on an advisor?

 

[BigBucnNole]

Thank you. Any recommendations on an advisor?

You just need to shop around. I have an independent one that works through Schwab.

 

[Rusty Student]

You just need to shop around. I have an independent one that works through Schwab.

What kind of fees do they charge? 1%?

 

[BigBucnNole]

What kind of fees do they charge? 1%?

A good one you need to have at least $1 million. Then it slides on investment size. Usually it starts around 1%. They’ll net you a withdrawal rate of 4 or 5%.

 

[Rusty Student]

A good one you need to have at least $1 million. Then it slides on investment size. Usually it starts around 1%. They’ll net you a withdrawal rate of 4 or 5%.

1 million in investable asserts or Net Worth?

 

[BigBucnNole]

1 million in investable asserts or Net Worth?

Investable.

 

[Rusty Student]

Investable.

Do you have any advice for a someone under 30 and the 1MM threshold?

I spoke with a fee based advisor who hardly suggested any changes. Apparently, I was already on the right track.

 

[BigBucnNole]

Do you have any advice for a someone under 30 and the 1MM threshold?

I spoke with a fee based advisor who hardly suggested any changes. Apparently, I was already on the right track.

He told you to stay with the 401k?

 

[Rusty Student]

He told you to stay with the 401k?

She told me to stay with a Roth 401k and keep utilizing my Roth IRA with back door conversions.

 

[BigBucnNole]

She told me to stay with a Roth 401k and keep utilizing my Roth IRA with back door conversions.

The advisor guys, depending on who their whole seller/ broker is, have a lot more flexibility. And they can tailor your portfolio. Especially being young, you can afford more risk. 401k is mostly a one size fits all. That could end up costing you money in the long run at a compounding rate.

Was the advisor at a large organization, or tied to a major bank? If that is the case, they don’t have much flexibility either because the investment packages are relatively limited and handled way behind the scenes.

If you find a boutique investment house, they’ll contract with a whole seller and have more options and stock available to buy. Everything is so scripted and structured at the larger corporate level that it limits their effectiveness. Plus they stay close to you and are always just a phone call away.

 

[Peach-head]

The advisor guys, depending on who their whole seller/ broker is, have a lot more flexibility. And they can tailor your portfolio. Especially being young, you can afford more risk. 401k is mostly a one size fits all. That could end up costing you money in the long run at a compounding rate.

Was the advisor at a large organization, or tied to a major bank? If that is the case, they don’t have much flexibility either because the investment packages are relatively limited and handled way behind the scenes.

If you find a boutique investment house, they’ll contract with a whole seller and have more options and stock available to buy. Everything is so scripted and structured at the larger corporate level that it limits their effectiveness. Plus they stay close to you and are always just a phone call away.