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Are you a sucker to invest in a 401(k)?
- Thread starter crgarcia
- Start date
Quote from CasperCRF:
Dano,
What's your take on using a Whole Life Insurance policy for retirement? You ever heard of the LEAP system or the Infinite banking process? Both use whole life insurance as a base for building wealth.
Don't do it. Insurance isn't for the creation of wealth despite what the insurance companies spew.
I had a client come in with an old policy with 87m in cash value. Had he just bought the spx, he would have had over 300m today.
Amen!Quote from Spydertrader:
Amazing the amount of completely idiotic advice handed out in this thread.
1. If your employer matches your contribution dollar for dollar (up to whatever limits the employer or the IRS sets), not contributing to your 401k pisses away free money. If an employer matches 6% on a $100,000 / year income, your $6000 instantly becomes $12,000 for each year you invest - before rate of return. Are you all in the habit of turning down free money?
2. When one leaves employment and moves to Fulltime Trader Status (as I did), rolling over the 401k into a Self Directed IRA, allows near full access to the capital. One can then trade the funds, invest in property, buy or sell investment vehicles even purchase 'retirement' property which can then generate a 'rental income' for the Self-directed IRA. You can even 'borrow' against the funds for certain purposes (certain restrictions do apply) outside of investing.
3. Compound Interest. Since one need not pay taxes until withdrawl, even with an increase in the current tax rate for retirees, your returns are higher because of the Compound Interest Formula. Your account grows more rapidly becuase you do not need to withdraw funds to pay Uncle Sam each year.
Good Trading to you all.
- Spydertrader
Quote from CasperCRF:
Dano,
What's your take on using a Whole Life Insurance policy for retirement? You ever heard of the LEAP system or the Infinite banking process? Both use whole life insurance as a base for building wealth.
Anyone who sells Whole Life insurance as an investment for retirement could and should get in trouble.
It is not an investment, it is insurance, therefore, it is an expense. In my opinion a very wasteful expense. One that locks you into a big commitment.
If you compare the insurance to Term Life premiums and take the difference in premium and PV the investment using their market projections. The comparison will usually make your draw drop.
Buy term. Take the difference and put it in S&P ETF. Have the LIQUIDITY of that capital available to capture future, more favorable investment opportunities.
Pay little income taxes while holding (dividends), and currently, only a 15% long term cap gains tax when you sell.
(this one isn't as much of a pet peeve, because it is fairly common knowledge that whole life is a bad idea).
Paid off BIG time for this "termite" leader:Quote from danoXP:
...If you compare the insurance to Term Life premiums and take the difference in premium and PV the investment using their market projections. The comparison will usually make your draw drop.
Buy term. Take the difference and put it in S&P ETF. Have the LIQUIDITY of that capital available to capture future, more favorable investment opportunities...
http://www.forbes.com/lists/2007/54/richlist07_Arthur-Williams-Jr_DA4B.html