Nothing Inbetween (Pittsburgh: mortgage broker, loan, broker)

[zip95]

Originally Posted by hnsq

zip - if you want to believe that, go right ahead. If you are ever in Grove City, PA and have a minute to spare, I can give you the name of a few grad-school professors who would love to go over it with you, but it seems your personal experience is a higher source than the people I have learned from who have spent their lives studying such material.

I am done arguing - not going to post again about this. Its your money, if you don't want a 401K, that is absolutely your choice.

Whoa...when did this conversation turn adversarial?...And what makes you think I'm not a Grad School Professor? Or an invenstment Guru?

[lostinpgh]

Originally Posted by zip95

That only makes sense if a 401k is the best possible investment...which it isn't. Many investments show exponential return rates. That means that "If I'm smart with my investments" my $1 will easily beat your $2 over time. Understand that a 1-time doubling right-now is worse than good exponential return over time.......that's just the math.

Well, after money goes into a 401k, it usually goes from there into stocks or REITs or bonds. So the employer match is not the only possible gain on the investment, only the first gain.

So it's
investor deposits $100
+ employer match of $100
+ stock index fund (or whatever) return of whatever it is for this year
for 30 years

not just a one-time doubling. It's an instantaneous 100% return on the investment *plus* the interest earned on double the money you save.

And in at least some cases it can go into REITs, if you're into real estate investing, or into individual stocks instead of into a stock index fund. Not all employer-match 401k plans insist that that money be held in company stock and they certainly don't just shovel the money into passbook savings.

[hnsq]

Originally Posted by zip95

Whoa...when did this conversation turn adversarial?...And what makes you think I'm not a Grad School Professor? Or an invenstment Guru?

Are you? If so, I sincerely apologize.

[zip95]

Originally Posted by lostinpgh

Well, after money goes into a 401k, it usually goes from there into stocks or REITs or bonds. So the employer match is not the only possible gain on the investment, only the first gain.

So it's
investor deposits $100
+ employer match of $100
+ stock index fund (or whatever) return of whatever it is for this year
for 30 years

not just a one-time doubling. It's an instantaneous 100% return on the investment *plus* the interest earned on double the money you save.

And in at least some cases it can go into REITs, if you're into real estate investing, or into individual stocks instead of into a stock index fund. Not all employer-match 401k plans insist that that money be held in company stock and they certainly don't just shovel the money into passbook savings.

You deposit $100 into a 401k, your company matches your deposit, PLUS the 401k pays 5% continuously compounded.

I put $100 into a different investment where I can effectively get 7% continuously compounded.

Do you know that I have more money than you after 10 years. If I can find something that pays 40%....I beat you in under two.

Remember what I said.

Originally Posted by zip95

That only makes sense if a 401k is the best possible investment...which it isn't. Many investments show exponential return rates. That means that "If I'm smart with my investments" my $1 will easily beat your $2 over time. Understand that a 1-time doubling right-now is worse than good exponential return over time.......that's just the math.

And also,

Originally Posted by zip95

You have to look at your own situation, determine your appetite for risk, and see what's available to you. Whatever you decide, you should understand that a 401k is far from the ultimate investment.

[zip95]

Originally Posted by hnsq

Are you?

Wouldn't you love to know

[hnsq]

Originally Posted by zip95

Wouldn't you love to know

I am guessing this is a no, right? If you were, you would have no problem supplying your credentials.

I am basing what I say on what I have learned from professors at Grove City College, who were only teaching undergrad courses at the time, but were teaching the same material they have taught at graduate levels in the past.

I am not an authority on the subject by any means. I have learned extensively from those who are. If you are some sort of expert, people might believe you a bit more. Otherwise, I will find it very hard to accept what you are saying over what I have already experienced and learned.

[bboy36win]

Don't forget that contributing to a 401k lowers your taxable income by the amount of the contribution. So, hnsq is only paying income tax on 94k when he contributes 6%. Then, when he does have to pay tax on his contributions (and his employer's match), he is presumably retired, and in a significantly lower tax bracket.

Also, finding an investment with an "exponential return rate" is extremely high-risk. The likelyhood of finding that type of return - particularly over the long haul - is extrememly, extremely slim.

And so, for the average investor, a 401k is an outstanding investment option. There's really no way around that.

[Goodjules]

Originally Posted by bboy36win

Don't forget that contributing to a 401k lowers your taxable income by the amount of the contribution. So, hnsq is only paying income tax on 94k when he contributes 6%. Then, when he does have to pay tax on his contributions (and his employer's match), he is presumably retired, and in a significantly lower tax bracket.

Also, finding an investment with an "exponential return rate" is extremely high-risk. The likelyhood of finding that type of return - particularly over the long haul - is extrememly, extremely slim.

And so, for the average investor, a 401k is an outstanding investment option. There's really no way around that.

You're absolutely right. When it comes to investing; slow, steady, & safe usually wins the race over the long term. Remember the days traders of the dot-com boom? Most lost their shirts.

And, as has been mentioned earlier, your 401k is only part of your investment portfolio which normally includes a home that you own.

Julie

[zip95]

Originally Posted by hnsq

I am guessing this is a no, right? If you were, you would have no problem supplying your credentials.

Try again! Maybe you can bait your buddies by exploiting their ego....you're not going to bait me. The day I jeopardize my real-life credibility to gain internet credibility is the day the internet starts cutting me checks.

No clues from me...my identity remains anonymous.

Originally Posted by hnsq

I am not an authority on the subject by any means. I have learned extensively from those who are.

Firstly. I never said I was or wasn't an authority (no clues remember), I said a 401k is not the be-all-end-all of investments.
Secondly. In the world of money, professors are not the authority...not even close. Money isn't history or physics. Money is something all together different.

Originally Posted by hnsq

If you are some sort of expert, people might believe you a bit more. Otherwise, I will find it very hard to accept what you are saying over what I have already experienced and learned.

Great! Either way is fine with me?

[zip95]

Originally Posted by bboy36win

Don't forget that contributing to a 401k lowers your taxable income by the amount of the contribution. So, hnsq is only paying income tax on 94k when he contributes 6%. Then, when he does have to pay tax on his contributions (and his employer's match), he is presumably retired, and in a significantly lower tax bracket.

Even though taxes in capitalistic societies are designed to protect capital...they still suck, and can always ruin a good plan. You always have to take taxes into account.

Originally Posted by bboy36win

Also, finding an investment with an "exponential return rate" is extremely high-risk. The likelyhood of finding that type of return - particularly over the long haul - is extrememly, extremely slim.

And so, for the average investor, a 401k is an outstanding investment option. There's really no way around that.

I guess I can somewhat agree with that (except the extremely slim part). It's definitely not true in general, but could be true for the 'average investor'. You probably have to be a little savvy and have a little access to do better. That is why I said:

Originally Posted by Zip95

You have to look at your own situation, determine your appetite for risk, and see what's available to you. Whatever you decide, you should understand that a 401k is far from the ultimate investment.