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I'm not sure why you would say that a 4% employer match isn't 'worth it'?
That's free money. Getting this match year after year and letting it grow will go a long way.
Employee matching always has a catch. Even the funds are high expense ratio or limited fund choices. I don't really care about matching at all. Rather have the freedom of rolling to a self managed 401k plan that gives me much wider choices, transparency, and ability to immediately execute orders without some long delays.
My current 401k with Fidelity I can buy any equities they offer.
Employee matching always has a catch. Even the funds are high expense ratio or limited fund choices. I don't really care about matching at all. Rather have the freedom of rolling to a self managed 401k plan that gives me much wider choices, transparency, and ability to immediately execute orders without some long delays.
My current 401k with Fidelity I can buy any equities they offer.
Explain the math behind not caring about a match if you have the time? It’s generally a terrible stance even with a high expense proposition
Explain the math behind not caring about a match if you have the time? It’s generally a terrible stance even with a high expense proposition
It's not the math it's the loss of opportunity. Most companies that offers matching are doing so with the kickbacks they receive from the financial institutions offers the IRA servicing. I noticed years ago looking through the list of funds they offer have poor overall performance and high expense ratios. You're paying more with the expenses and the bad performing funds than going with your own self directed 401k plan that you can choose ETFs, stocks, and wider choices of mutual funds.
Please explain using mathematical reasoning. I don’t need your opinion I want factual data hence why I asked for the math behind it
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Most companies that offers matching are doing so with the kickbacks they receive from the financial institutions offers the IRA servicing.
Can you detail these “kickbacks” for me? [Mod cut: personal]
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I noticed years ago looking through the list of funds they offer have poor overall performance and high expense ratios. You're paying more with the expenses and the bad performing funds than going with your own self directed 401k plan that you can choose ETFs, stocks, and wider choices of mutual funds.
Again please use math to demonstrate and or prove your belief
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There's no such thing as a free lunch.
How often do you willingly give up part of your compensation package?
It's not the math it's the loss of opportunity. Most companies that offers matching are doing so with the kickbacks they receive from the financial institutions offers the IRA servicing. I noticed years ago looking through the list of funds they offer have poor overall performance and high expense ratios. You're paying more with the expenses and the bad performing funds than going with your own self directed 401k plan that you can choose ETFs, stocks, and wider choices of mutual funds.
There's no such thing as a free lunch.
Some plans have poor choices, but you cannot make the general statement that all plans are bad. Each person can (and should) understand their plan options and the associated costs. Most of my jobs have been with large companies. The costs of my 401k plans have not been excessive, certainly not anywhere near a level to make me consider passing on a 50% or 100% match from my employer.
An employer's matching 401k contributions are just part of the compensation package, along with health insurance, bonuses, etc. The "lunch" is not free if a person is required to work for his meal.
Some plans have poor choices, but you cannot make the general statement that all plans are bad. Each person can (and should) understand their plan options and the associated costs. Most of my jobs have been with large companies. The costs of my 401k plans have not been excessive, certainly not anywhere near a level to make me consider passing on a 50% or 100% match from my employer.
An employer's matching 401k contributions are just part of the compensation package, along with health insurance, bonuses, etc. The "lunch" is not free if a person is required to work for his meal.
The problem with most plans offered by company matching is that they their returns are no where near the S&P500, adding the high expense ratios, and the vesting periods.
The main catch to employer matching is to keep people. Every firm has a vesting period of atleast 2 years so that you must keep the money there locked in to their plans.
That's the missed opportunity.
If you had $30k invested in a employer plan that only has a positive return of 5-15% the 1st 5 years even with employer contribution of 4-6% you maybe lucky your portfolio sees a double digit growth annually which is decent after expense ratio fees.
But if you take the $30k you directed into many good ETFs you're seeing 20% growth this year alone and no fees. I've bought AMC stocks with my roth 401k that is already post-tax and the profits I sold recently is completely tax free and I'm buying other hot stocks I could care less about the employer matching or pre-tax savings. I bought AMC stock at $12/share and sold at $37. It will take you a good 3-5 years to see this kind of appreciation with any mutual fund.
Please explain using mathematical reasoning. I don’t need your opinion I want factual data hence why I asked for the math behind it
Can you detail these “kickbacks” for me? I’m guessing you will have a hard time
Again please use math to demonstrate and or prove your belief
How often do you willingly give up part of your compensation package?
If you worked at any financial intuition then you know they make money on servicing wealth management or retirement. College 529 plans are the dumbest financial investment plans and the most restrictive. Once you lock in your portfolio with them they can offer so many ways to steer you to various tools they sell that guarantees them income.
The math is very simple, you are paying these financial institutions more than you pay your bank to park your money giving them a free loan to market make with your money.
I prefer the ability to move my money quickly and able to invest in whatever instrument I want using an open market system than a closed one that limits choice. When you are using an employer sponsored system you're being locked into limited choice like a casino where you have to play with the house rules.
I much rather roll my retirement fund to a self-directed one and let them earn my business and they have to offer me value or else I can roll to other institutions quickly.
The same retirement plan offered to me by Fidelity with an employer match is restrictive and offers no value with just a dozen funds to pick from.
Once I rolled over to self-directed Fidelity acct I had access to hundreds of funds, equities, and ETFs.
If you worked at any financial intuition then you know they make money on servicing wealth management or retirement.
I do work at a financial institution so I’m well aware of how we make money. [Mod cut: personal]
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College 529 plans are the dumbest financial investment plans and the most restrictive. Once you lock in your portfolio with them they can offer so many ways to steer you to various tools they sell that guarantees them income.
This is simply not true. [Mod cut: personal]
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The math is very simple, you are paying these financial institutions more than you pay your bank to park your money giving them a free loan to market make with your money.
I’ve asked you for the math you somehow can’t provide [Mod cut: personal]
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I prefer the ability to move my money quickly and able to invest in whatever instrument I want using an open market system than a closed one that limits choice. When you are using an employer sponsored system you're being locked into limited choice like a casino where you have to play with the house rules.
Your personal preferences don’t matter to me nor should they matter when we are discussing 401k plans and the functionality of it. Also plans can and some do allow self directed sleeves
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I much rather roll my retirement fund to a self-directed one and let them earn my business and they have to offer me value or else I can roll to other institutions quickly.
The same retirement plan offered to me by Fidelity with an employer match is restrictive and offers no value with just a dozen funds to pick from.
Once I rolled over to self-directed Fidelity acct I had access to hundreds of funds, equities, and ETFs.
Maybe you simply don’t understand you plan, the options [Mod cut: personal]
Last edited by elnina; 11-05-2021 at 07:42 AM..
Reason: Please stop discussing posters.
The problem with most plans offered by company matching is that they their returns are no where near the S&P500, adding the high expense ratios, and the vesting periods.
The main catch to employer matching is to keep people. Every firm has a vesting period of atleast 2 years so that you must keep the money there locked in to their plans.
That's the missed opportunity.
If you had $30k invested in a employer plan that only has a positive return of 5-15% the 1st 5 years even with employer contribution of 4-6% you maybe lucky your portfolio sees a double digit growth annually which is decent after expense ratio fees.
But if you take the $30k you directed into many good ETFs you're seeing 20% growth this year alone and no fees. I've bought AMC stocks with my roth 401k that is already post-tax and the profits I sold recently is completely tax free and I'm buying other hot stocks I could care less about the employer matching or pre-tax savings. I bought AMC stock at $12/share and sold at $37. It will take you a good 3-5 years to see this kind of appreciation with any mutual fund.
I doubled my money at the craps table in about an hour. That's a pretty good "return", but it's not investing. Neither is trading meme stocks.
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