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Tenpoundbass saysHad everyone's 401K been an actual interest baring Savings account, most people with 500K in their 401K now, would have over 1.5 million dollars in a savings account.
Not so, for two reasons:
1. interest rates are about zero and have been for years
2. you would get paid your interest each year and then the government would tax it
With a 401k, you get interest on the accumulated untaxed interest.
Similarly, if you trade stocks in a 401k rollover (where you are in control of investment choices instead of your former employer) you'd be able to take profits without tax and re-invest in other stocks until you retire. The compounding effect can put you way ahead of a taxable account.
It's a huge difference.
OK I'm not saying a thriving S&L Institution should be the only option, I'm saying it should be an option.
It's a great way to accumulate safe cash relatively quickly, to realize more lucrative financial goals. Like financing business ventures, or buying hard assets.
If I have to study the market so I don't lose my ass. I would just as soon study the breeders manual and racing forms and follow the horses. It's just as stable as financial bubbles. As long as you know what you are studying and looking for.
Yup. That's why I refer to my self-directed 401k as my "gambling account." That's where I do the short-term speculative trading.
7% is a long term (100+ yr) CAGR average of the s&p which includes inflation adjustments and dividend reinvestment.
http://www.moneychimp.com/features/market_cagr.htm
7% includes dips and rebounds.
This guy wrote an interesting article a while back and I really liked it. His blog has a lot of good info too.
https://www.gocurrycracker.com/never-pay-taxes-again/
After 5 years you can start taking tax free distributions from your Roth.
The Biden plan is stupid, but typical class warfare bullshit.
I have a lot of money in my investments.
I started saving 500/month in 1982.
My first mutual fund was high yield bonds, I got 5 grand from grandma's will.
After 1992 I went "all in" stock funds.
I started an IRA and a SEP-IRA.
The limits were low so I got a Vanguard Variable Annuity. Then I got a Roth IRA.
Then, I got a HSA at Fidelity and bought stock mutual funds for it.
I have other funds which are in non-retirement accounts.
I rolled the dice and bought AAPL a couple splits ago.
My shit has gone up like crazy, and I tell everyone to get some.
Half of the people won't do it.
Too bad for them.
I’m constantly amazed at the hot brown girls working as cashiers, waitresses, etc everywhere in Palm Beach County.
When you run the financial numbers at a compound growth rate for a short period, like 100 years, you end up with a palatable result. Example $100 @ 7% for 100 years is $87k. That is a number that you can wrap your head around, but try for a longer period...say 1000 years. You realize that compound growth is a mirage.
I'm not spoiled. I don't have a syndrome.
My take home after taxes was $950 every month, and I saved 500/month.
500/month invested for 33 years is a million bucks.
I of course have much more because I went all in and balls to the wall when I started making money.
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The more tax you pay, the more this saves you. If you have to pay the top, 37% federal tax rate on every extra dollar you earn, deducting that money from your tax return saves you $7,215 in income taxes. But if you’re only paying 10% federal tax on each extra dollar you earn, deducting $19,500 would save you just $1,950.
The Biden-Harris proposal would change that. If elected, and if they got this through Congress, in future they would replace these deductions with a flat deduction available to everybody.
“The current tax benefits for retirement savings are based on the concept of deferral, whereby savers get to exclude their retirement contributions from tax, see their savings grow tax-free, and then pay taxes when they withdraw money from their account,” the campaign states. “This system provides upper-income families with a much stronger tax break for saving and a limited benefit for middle-class and other workers with lower earnings. The Biden Plan will equalize benefits across the income scale, so that low- and middle-income workers will also get a tax break when they put money away for retirement.”
The proposals are similar to those put forward some years ago by the Urban Institute, a Washington think-tank. Analysts’ best guess is that everyone would save the same percentage each year on their taxes: 20.5%, equal almost exactly to $4,000 for someone making the maximum annual contribution. And if your tax bill for the year is less than $4,000, Uncle Sam—meaning other taxpayers, actually—would chip in the money on your behalf.
Good news for anyone currently paying less than 20.5% federal tax on each extra dollar. Not so good for those earning more.
https://www.marketwatch.com/story/will-bidens-401k-plan-help-you-or-hurt-you-2020-09-09?siteid=yhoof2&yptr=yahoo