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I don't trust the government enough to put money into a 401K. I might lose out on some profits by investing after tax, but I sleep well at night knowing that the IRS won't be in charge of deciding when I can retire.
Congress could just as well as change the tax code in other ways to take the money in your non-retirement accounts.
What do you imagine congress is going to do, steal everyone's 401(k)? Its just an investment account with special tax considerations. What are they going to charge you tax on your past contributions? Start taxing gains? Would be no different than putting your money in a standard account...
Also you could be losing a massive amount of money, not just "some". Depending on your tax bracket, you could be losing as much as 40% right from the start and then realize further loses on your gains. All for what? Being paranoid that the government is going to do something mysterious that they just as well do to standard accounts...
Congress could just as well as change the tax code in other ways to take the money in your non-retirement accounts.
I disagree. A simple rule change could keep you from accessing your 401K until you're 70. Another rule change could double the penalty for early withdrawal.
I prefer to invest in things I can see and touch, and those investments are much more difficult for the government to take away than electrons floating through our financial computer system.
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What do you imagine congress is going to do, steal everyone's 401(k)? Its just an investment account with special tax considerations.
Last year Congress considered a plan to convert 401Ks into a mandatory government retirement plan which would invest solely in treasuries.
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Also you could be losing a massive amount of money, not just "some". Depending on your tax bracket, you could be losing as much as 40% right from the start and then realize further loses on your gains. All for what? Being paranoid that the government is going to do something mysterious that they just as well do to standard accounts...
My grandparents managed to retire very well with a few simple philosophies, and I plan to follow their example.
A. A bird in the hand is worth two in the bush
B. Don't trust banks to do the right thing
C. Don't trust the government to do the right thing
D. Invest in yourself first (meaning to invest in things under your direct control)
I might be losing some money by doing things for myself instead of shipping it off to the pigmen of Wall Street and their lackeys in DC, but then again I might not. Either way, I never have to worry about what my investments while it seems like half the country lays awake at night trying to decide how to beat the odds in the 401K casino.
Last edited by sterlinggirl; 09-05-2009 at 10:38 PM..
I disagree. A simple rule change could keep you from accessing your 401K until you're 70. Another rule change could double the penalty for early withdrawal.
And another rule change could limit what you take out of your investment account. I'm not sure why you think congress can't also change the rules of your non-retirement accounts too.
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Originally Posted by sterlinggirl
I prefer to invest in things I can see and touch, and those investments are much more difficult for the government to take away than electrons floating through our financial computer system.
I assume you're talking about things like metals and if so your thinking is a bit short sighted. Although the government may not be able to take the physical good they can most certainly make it worthless.
Outside of perhaps real estate investments have no intrinsic value as a result their value rests on the government and/or cultural trends in general. But its not the government can't change private property rights and render any real estate holdings irrelevant....
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Originally Posted by sterlinggirl
Last year Congress considered a plan to convert 401Ks into a mandatory government retirement plan which would invest solely in treasuries.
Oh gawd, propaganda time.....someone spoke in congress about it that hardly implies congress is "considering" it in any realistic sense. You do realize people proposal all sorts of things in congress right?
But you're not even getting the proposal correct, the proposal is not to convert people's current 401(k)'s or even get rid of 401(k). It is to force people to save 5% into a federally managed fund that would guarantee some inflation adjusted return. 401(k)'s would still exist, they would just not have a federal subsidy (i.e., the contributions would not be tax deductible).
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Originally Posted by sterlinggirl
My grandparents managed to retire very well with a few simple philosophies, and I plan to follow their example.
Your grandparents lived in a much different world financially speaking, following their example is a recipe for failure.
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Originally Posted by sterlinggirl
Either way, I never have to worry about what my investments while it seems like half the country lays awake at night trying to decide how to beat the odds in the 401K casino.
This is just silliness. What investments are you talking about?! No investment is without risk... 401(k) casino? Huh? 401(k)s are what you make of them, in themselves they are just an account with a special tax code.
you made some interesting points sterlinggirl! there was a proposal last year:I hate to use the "S" word, but the American government would never do something as, well, socialist as seize private pension funds, right? This is exactly what cash-strapped Argentina just did in the name of protecting workers' retirement accounts (Efharisto, Fausta's Blog). Now, even Uncle Sam isn't that stupid, but some Democrats might try something almost as loopy: kill 401(k) plans.
House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, said that since "the savings rate isn't going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that's not generating what we now say it should." (usnews.com)
if the government runs out of money (AND IT WILL) it will find a way to pull money from the private sector rather than cut spending on itself. i think that the smartest people will be managing their own money and investing it as they see fit.
And another rule change could limit what you take out of your investment account. I'm not sure why you think congress can't also change the rules of your non-retirement accounts too.
They can do a lot with accounts, which is exactly why I prefer to keep investments in things I can touch.
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I assume you're talking about things like metals and if so your thinking is a bit short sighted. Although the government may not be able to take the physical good they can most certainly make it worthless.
I'm not talking about metals because I consider them to be storage of wealth rather than an investment.
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Outside of perhaps real estate investments have no intrinsic value as a result their value rests on the government and/or cultural trends in general. But its not the government can't change private property rights and render any real estate holdings irrelevant....
Your lack of imagination is truly dazzling User. Everything in life has an intrinsic value whether its a can of soup or a portable storage unit that can manage close to zero real depreciation while managing to achieve a 5 year ROI with virtually no risk of loss of capital.
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Your grandparents lived in a much different world financially speaking, following their example is a recipe for failure.
So did John Maynard Keynes, and we're still following his example from an even earlier era.
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This is just silliness. What investments are you talking about?! No investment is without risk... 401(k) casino? Huh? 401(k)s are what you make of them, in themselves they are just an account with a special tax code.
I agree that no investment is without risk, but you haven't addressed that one of the easiest ways to avoid risk is to avoid dealing with people with questionable morals....such as politicians, bankers, commissioned stockbrokers, realtors, or anybody else who stands to profit from giving bad advice.
They can do a lot with accounts, which is exactly why I prefer to keep investments in things I can touch.
As I said, whether you can "touch" it is irrelevant. The government can change its worth.
The only things with intrinsic value are food stuffs, equipment and land. But a quick review of history shows all of these things can be taken by force.
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Originally Posted by sterlinggirl
Everything in life has an intrinsic value whether its a can of soup or a portable storage...
This has nothing to do with imagination, it has to do with reality. Most things in our society have extrinsic value, outside of our culture/society they have no value. As a result shifts in culture can change the values of these things.
Here is a simple exercise, fly down to the Amazon and try to trade cutting edge microprocessor with them for food, or hell try to trade them an ingot of gold. You'll starve. Now, come down with some shiny new knifes and you're in business.
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Originally Posted by sterlinggirl
So did John Maynard Keynes, and we're still following his example from an even earlier era.
Keynes proposed an economic theory, one that has been updated since his original publication of "The general theory of employment, interest and money". Your grandparents just had dogma, as did mine. But hey, if you want to following it go for it.
Also, economic policy in this country has been much more based on monetarism than Keynesian since around the 1970's.
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Originally Posted by sterlinggirl
I agree that no investment is without risk, but you haven't addressed that one of the easiest ways to avoid risk is to avoid dealing with people with questionable morals....such as politicians, bankers, commissioned stockbrokers, realtors, or anybody else who stands to profit from giving bad advice.
Why would I avoid people of "questionable morals" if I can profit form them?
You still have not stated what sort of investments you're talking about, you know the ones you can "touch". Are you investing in cans of soup? A spare bedroom of toilet paper?
Why would I avoid people of "questionable morals" if I can profit form them?
Because they're just as likely to ***** you as the next sucker in line? There just doesn't seem to be a compelling reason to deal with that type of person when you can get a similar return from a safer investment.
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You still have not stated what sort of investments you're talking about, you know the ones you can "touch". Are you investing in cans of soup? A spare bedroom of toilet paper?
What I deal in doesn't matter. As you said, a simple set of kitchen knives can be a very lucrative investment in the right circumstances, and I happen to favor that sort of investment over the march of the 401K lemmings.
Because they're just as likely to ***** you as the next sucker in line? There just doesn't seem to be a compelling reason to deal with that type of person when you can get a similar return from a safer investment.
Why is that? If you know their game you can take advantage it, pretty simple really. And where can you get the same return with less risk? You keep talking about investments in vague generalities, what investments are you talking about?
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Originally Posted by sterlinggirl
As you said, a simple set of kitchen knives can be a very lucrative investment in the right circumstances, and I happen to favor that sort of investment over the march of the 401K lemmings.
That is not what I said. And to say it again, a 401(k) is just an account with a particular tax code.
But its clear you just want to speak disparagingly about particular investments while being completely vague and mysterious what what you think is better.
In the mean time people on wall-street are getting bigger bonuses in a year than you'll likely make in your entire life.
In the mean time people on wall-street are getting bigger bonuses in a year than you'll likely make in your entire life.
Where do you think those bonuses come from? If you support having your investments diluted that way, then by all means keep handing them your life savings and be happy with your decision.
You're obviously trying to prove that your decision is the only sensible one on the planet, so I'll concede that the best way to have a secure retirement is to put your money into a 401K account where scores of bonus hungry bankers and politicians seeking to be reelected at any cost will protect it for you.
...but I won't bet my future on it.
Last edited by sterlinggirl; 09-07-2009 at 01:32 AM..
If you support having your investments diluted that way, then by all means keep handing them your life savings and be happy with your decision.
Exactly why would my investment be diluted when I can do the same sorts of things they can? You don't have to work for Goldman Sachs to trade.
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Originally Posted by sterlinggirl
You're obviously trying to prove that your decision is the only sensible one on the planet...
No, rather what you're selling does not make much sense. I also don't know what the point of putting your views out there if you are not even willing to give concrete examples of what in the world you are talking about. I'll just assume your retirement is based on a room filled of marshmellows.
Anyhow, at the moment I don't have much in the financial markets, but not because I don't think you can make money but rather because I'm interested in making money in other ways. In the future when I have more time to follow matters I will undoubtedly spend some time trading.
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