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"Advisers recommend 10% as a baseline minimum", on top of the 7.5% Social Security ?
So, 40 years after the introduction of a "supplement", the core defined benefits are gone, Social Security is going broke, the management fees of 401Ks can suck decades out of you, and trillions of gambling chits went into Wall Street, the private sector employees are facing a $4.3 trillion shortfall in their old age?
Doesn't that sound like one of the biggest rip offs of all time???
Urging the suckers to put mor money into their 401K does make sense though. God forbid they'd be allowed to put 15% into Social Security, and trust in their government instead of Wall Street.
You definitely need to understand what you are doing ! I went to a financial advisor ONCE...basically you give them money, they take a commission and than some computer program tells them when things need to be adjusted....Most of them do not know any more than the average person.
That is not personnalized guidance. I have had better luck on my own.
Here are my issues with them:
1. You have no other option to contribute as much tax-deferred if you're unhappy with the plan. I guess you could change employers to get a better plan but that's extreme.
2. You aren't allowed to rollover the balance into your own IRA unless you leave the company.
3. Your employer (in league with the provider) determines what investment choices are best for you.
I suggest you do what I've done and email congress to BREAK the 401k connection to the employer. Why is it 'employer-sponsored?' That's the scam! It should work just like your self-directed IRA; you simply tell your employer how much you want deducted and the acct # of your IRA to send it to, and if there's a match they can send that there too. Thus you control the expenses and the choices just like you already can with all other aspects of your financial life.
1. Ask for a self-directed 401k that's not employer sponsored.
2. Ask for the option to rollover some or all of the balance to an IRA once a year regardless of life circumstance.
You ever wonder where these so called Business Analyst and or Stock Analyst are coming from with their comments and articles on the market. Good case in point, the past weekend all the analyst were commenting on the record year for retail sales over the past weekend. Now just this morning because the market goes down and so do retailers like Target go down the analyst claim it's due to "Fiscal Cliff"'.
They are all a bunch of liars and truly do not know what the hell they are talking about.
It's due to profit taking and overall market manipulation by the big guns. Just plain screwing of the small 401K investor
I assist fellow employees on investing in their 401 k's. I am not a advisor, but, I study the markets, and educate myself. I assist my fellow co-workers. I try to explain the basics, of which many don't have a clue. Of course 401 k plans want you to invest into mutual funds, as they reap big profits off investors in these funds. For the average Joe, a mutual fund can sometimes do ok, but, the mutual fund makes money off of you whether that fund makes money or not. It's in their expense ratio..another name for a FEE to run the fund. 401 k plans would be better off just paying the company that runs the 401 k for the company to charge a flat fee for investments made in the respected employees plan. Expense ratios vary widely, especially in emerging funds and specialty funds. I can see the mutual fund companies charging higher fees to people outside of a 401 k plan, but within 401 k's....a flat fee should be the norm. Larger companies will have the advantage there, as more employees investing into 401 k's, the fees could be lower, and the employees company could use leverage with different 401 k plan providers. So, a disadvantage to the smaller companies.
I dumped all my mutual funds in my 401 k plan at work, when our company allowed us to invest through the 401 k plan brokerage account. it's still before tax 401 k dollars, but, I invest my money into whatever i want. Stocks, bonds, cd's, all kinds of investments. There are a few no no's as investing in MLP's and my own companies stock. I have far greater control of my investments. I invest in individual stocks, and especially stocks that pay dividends. Dividends are free money paid by companies, just for investing in that companies stock. I can choose whether to reinvest my dividends into more shares of that company, or take it as cash, and use that cash to reinvest it somewhere else in my 401 k plan. That is a far greater choice allowed to employees investments. My return for the year at present is 17.6%. My goal is at least a 10% return a year on my investments, and believe me, dividends , are a key driver to better returns. Usually in mutual funds, the dividends you receive are at the end of year, like now. Most companies pay dividends once a quarter, and reinvesting those dividends every quarter can help your investment right away. By waiting until the end of the year to get paid those dividends, they haven't compounded during the course of year. By the way, I pay a flat fee of $12 a year and a (little high) $8.75 a trade. A trade is when you buy a stock, and when you sell a stock. Most mutual funds in 401 k plans charge the fee based on how much money you have in your account. The more in the account, the more you pay in "FEES". those fees over time will erode your returns, especially when you amass a big account.
So, i know a long winded post here, but, your company or investment "professionals" won't look out for your best interests like you will. You work hard for your money, so now work hard for your investments to prosper. There's no free lunch in life, so do yourself a favor, and get educated.
My old 401K had one option which was "guaranteed", but with a low return. My new 401K doesn't have this option. So technically, although unlikely, it could be wiped out.
Wall Street loves high risk because it often comes with a possibility of high returns. For some middle class people, that prospect doesn't have the same appeal, especially if we're no longer "Spring chickens".
I ran my own 401k acct., but opted to pay them at the investment acct. to do it because I'm too tired to learn this stuff all over again. They claim they ONLY take 1.25% out. But watching my acct. lose thousands for this 1.25% is a bust. I don't have that much in it to need to lose so much each year. I'm sure whoever is running this thing is filling their pockets plenty, since I am but one investor. No wonder these places are rich as Hell.
Plus...if I want to take out my money, I have to shell out 20% taxes right off the bat. Since my acct. is filled with before tax money, that was chosen by my Ex. When he took his portion out, he took out all the after tax contributions for himself. Screw me !! By all of them !!
But...I'd much rather keep my money under the mattress these days. When ya don't...every Tom, Dick & Harry has his hands in it.
you are in a ponzi scheme when you give somebody your money to save for you you are a fool!!! and if you do get it back 50% goes to the government!!! put your money in the mattress
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