House Democrats Contemplate Abolishing 401(k) Tax Breaks

Quote from jmoo:

How is a 401k a scam??? Even if you invest all of it in bonds at 3% you still should get an average match of 100% up to 6% contribution. I realize some plans dont match at all, BUT ITS STILL YOUR MONEY. Once the gov't gets it who knows what will happen. You also get a dollar for dollar reduction on your gross salary.



The government idea is horrible. They are obviously looking at ways to fund the social security squeeze that the boomers will cause.

How about limiting SS benefits to those who really need them and a reduction of benefits to those who have good pension plans in place.
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Well, let's see.

First off, the standard cafeteria plan is usually saddled with high-fee mutual funds in a 'style box' which is supposed to give diversification. The reason for that, by the way, is so the employer gets the 401k at the least cost to them. Nice, huh? So, let's see, which has outperformed lately - value or growth? Large cap, mid cap, or small cap? Last time I checked, you're pretty much taking it in the shorts with any of those false 'diversifications.' Oh, sorry. You have one long bond index fund for diversification, or a money market fund which at a 1.5% fee (not to mention 12-b-1's) might actually net you a negative return.

Where's gold? Oil? Agriculturals? Timber? Where's foreign bonds? Where is specific eurozone or asian or country specific emerging markets? REITS? TIPS? And where are inverse funds to hedge your market exposure if you get nervous?

Not there, huh? What a surprise.
 
First off, the standard cafeteria plan is usually saddled with high-fee mutual funds in a 'style box' which is supposed to give diversification. The reason for that, by the way, is so the employer gets the 401k at the least cost to them. Nice, huh? So, let's see, which has outperformed lately - value or growth? Large cap, mid cap, or small cap? Last time I checked, you're pretty much taking it in the shorts with any of those false 'diversifications.' Oh, sorry. You have one long bond index fund for diversification, or a money market fund which at a 1.5% fee (not to mention 12-b-1's) might actually net you a negative return.

dude, look at the standard gov't plan, SSI. We are getting a negative return guaranteed and it is ill concieved from the get go.

My retirement funds have minscule fees and I can move them between cash, stocks, and bonds. I have outperformed the S&P 5 years running.
 
Well, let's see.

First off, the standard cafeteria plan is usually saddled with high-fee mutual funds in a 'style box' which is supposed to give diversification. The reason for that, by the way, is so the employer gets the 401k at the least cost to them. Nice, huh? So, let's see, which has outperformed lately - value or growth? Large cap, mid cap, or small cap? Last time I checked, you're pretty much taking it in the shorts with any of those false 'diversifications.' Oh, sorry. You have one long bond index fund for diversification, or a money market fund which at a 1.5% fee (not to mention 12-b-1's) might actually net you a negative return.

Where's gold? Oil? Agriculturals? Timber? Where's foreign bonds? Where is specific eurozone or asian or country specific emerging markets? REITS? TIPS? And where are inverse funds to hedge your market exposure if you get nervous?

Not there, huh? What a surprise.




A money market with a 1.5% fee? Way to high. 401k funds use institutional class shares which are typically under 1% and the money markets are lower then that. Of course nothing has outperformed everything is taking a hit. The beauty is everything is ON SALE if your not retiring soon. Dollar cost averaging into diversified funds (Indexes such as the S&P 500 is better imo). Even if we have Nikkei like performance the next 20 years, with dividends and dollar cost averaging you'll still be ahead nicely.

A lot of companies allow for in-service distributions where you can roll into an IRA and trade everything you mentioned and more.

Not to mention the fact the the typical 401k will match you with $6000 annually based on an average 100k salary.... The gov't proposal is $600 subsidy.
 
Quote from oktiri:

Excellent HONEST analysis.
and if you noticed last week, I've heard Maria Bartiromo at least TWICE reporting that people are telling her they aren't making any money in the SM, over a 10 years horizon. Hardly traders.
The buy & hold crowd are about to take notice of the scam. and move out.

401k is scam
Buy & hold is a scam
Talking heads bullshitting about a one in a lifetime opportunity to buy on the dips SCAM

I make money when it goes up, down and in between. but to assert that the stock market is a good investment long term is a big fat lie, you're better off with municipal bonds.
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As is so often the case in life, one answer rarely fits all questions. Extraordinary profits can be found in the buy and hold strategy. It just all depends on WHEN you bought and WHEN you sold. Some horrific loses have also been taken. It just depends on where you were on any given timeline.
 
All stock index analysis are frauds what with their changing contents and capitalization weighting.
The worst fraud is the use of current dollars. If you include the loss of purchasing power( the real one not the published cost of living index) I doubt you would show a profit in any 20 year period let alone over any working stiffs working life span. You would be hard pressed to show that retirement dollars would ever purchase what the saved dollars would have bought.
 
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