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An IRA is limited in how much you can put into it each year. And it might be a poor choice as 'you' must put 'your' money into it. And it might also be a poor choice as it's interest rates are usually fairly low. And it might be a poor choice as it does not shelter you from taxes, it 'might' post-pone your taxes, but it does not shelter you from taxes.
401Ks have limits in how much your employer is willing to match you with. And it might be a poor choice as 'you' must put 'your' money into it. And it might also be a poor choice as it is invested in the stock market which typically does have ups and downs. And it might be a poor choice as it does not shelter you from taxes.
the keys to success are living below your means and doing the jobs that others are reluctant to do. meekness and gratitude are major elements. most people are completely unwilling to do any of the above. in fact they find such suggestions offensive and utter nonsense. silly "moralizing" cracks me up. for many eddy murphy "trading places" is a documentary.
I own a large Nike factory, where the materials going in/out of my facility are in excess of twelve million/mo. Add in the assets such as mats, sewing machines and child-size shackles and the net worth is well over thirteen five. Net income is around 2 MM/mo., on a BAD month. Really, it just requires fiscal dicipline and keeping an eye on the markets.
If you put your money you spend on a weekly latte into a 5% CD, you would be suprised at how quickly it can really add up.
I doubt there are many affluent folks who got there using a 401k, or an IRA account.
I will probably have a couple million in my 401k by the time I retire.
This isn't inconsequential considering that the Present Value of a 40,000 a year pension at age 55 is probably only about 400,000 as a ballpark number.
Your point is well made though that just a 401k is usually not going to be enough if you want to be "affluent".
If 40% of your money is going out to taxes, that is a huge leak, gain control of that quick.
Invest in things that are 'active investments'. Then the gain you get is your sweat equity. You control it, and you determine if you want it to show a profit, or to invest the money into growth.
Many of the families in 'The Millionaire NextDoor' own their own businesses. Catering, laundromats, auctioneers, pawnshops, janitorial services, coal mines, jewelry retailers, etc. All family operated businesses.
Folks that I have seen doing these, gain more in equity than any IRA or 401k is ever going to gain per year.
A far away investment, with someone else handling it, feels 'safer'. It is 'passive'. You are removed from the operation, so you do not see the risks. IRAs and 401Ks; have entire companies managing the 'risks'. It is their livelihood. Someone else is making their fortune from your money. Most of the money goes into stocks. The CEO of each corporation gets paid first, before the shareholders do. He is going to see the benefit long before the folks who have money in a 401k.
This goes back to why I like apartment buildings so much. Not that I bought in the 1980s and 1990s, I have been assisting my SIL to buy one right now, the process of buying property has not changed. You put up a tiny amount to close the deal, and renters pay you. Their hard work carries the expenses.
Right now I garden. I am a member of an Organic Farmer's Market. After I provide food for my family, I sell the excess for cash. If a crop fails, I get the right off on my taxes. If a crop does a little, I feed my family, which lowers my food budget [so I still did good]. If a crop does really well, I make cash [which I will re-invest, so that I do not pay income taxes]. I do this on a IRS schedule 'F'. I am actively involved with this activity, I deal directly with the 'risks', and I am in the position to gain the most.
If someone else wanted to invest 'shares' into my garden [which is commonly done, it is called a CSA], they could. But I will take my family's food out of the garden first each week. I will get my share of the food each week, their share of the food is greatly dependant on me. You see the person who manages the activity sees the greater risk, but also gets the great gain.
When we lived in Scotland, my Dw bought a catering service. She stocked our kitchen with food, advertised and lined up a group of other sailor's wives who would work for her on a phone call's notice. Well first our house was stocked with food, our monthly food budget went to zero. Then if she got a small party to cater, she did it herself. She only hired other wives to help her if it was a bigger party, or when she got 2 parties in one evening.
We were fed first, she was employed second and the other wives got employed third. My Dw saw the greatest risk, yet my household got a far greater benefit than did anyone else.
I'm curious. Did you go into the medical field for the money or to help people
I did it for the money.
Kidding aside, I'm not sure how you expect me to answer that question. I could say a politically correct thing like "I took a vow of poverty and donate all my earnings to Mother Teresa's order", but then I'd be lying to you. But it would also be incorrect if I said I did it all for filthy lucre. It's a mixture of both, I guess. Besides, the same question could be asked of any other occupation. Did you go to engineering school for money or to help people?
My parents did steer me towards med school. My dad was an engineer, and mom is a registered nurse, and they offered to pay for my entire education if I went to med school - an offer I couldn't resist. I also liked science (especially chemistry) and math since I was a kid, so medicine wasn't too far off from my inclinations anyway.
If you are interested in going into medicine, I encourage you to do it provided you don't incur too much debt in the process. If you are already an engineer with a minor in psychology, I think you have the aptitude to survive and even excel in med school. Good luck.
one thing I've noticed about this thread is that nobody (aside from DocAwesome) mentioned children! And DocAwesome and Dangerous-Boy, thanks for lightening the mood in here a little!
As wisemen Royston and Antony Langdon once said:
Be happy where you are Or as lonely as a star And Terry's only care Was To Be a Millionaire
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