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A Financial Planner told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. How can take advantage of compound interest and potentially grow your retirement savings overtime?
That is exactly the reason I stopped trusting the financial advice of UA-camrs; in the long run, I only end up with a jumbled collection of stocks and bonds. Whereas all I needed to earn over $350k in less than two years was guidance from a true market expert.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
I worked in a retirement plan call center after college and the most common call was from people wanting to take a loan or withdraw from their 401k! So I dare say that if the average person only invests in a 401k despite the fees and limited investment options, they are doing better than most people who keep trying to take the money out of it.
I think a lot of people are withdrawing nowadays to simply afford a home they can call their own. When a 20 percent downpayment takes 100k and people are overbidding on houses left and right, the 401k that’s the place they look so they can compete. It’s sad but aye you need a roof over your head.
I borrow $25k every two years and use that $25k of tax free money to make $25k taxable money within two years. Withdrawal is stupid, but investors love to borrow.
If you want to be successful, you must take responsibility for your emotions, not place the blame on others. In addition to make you feel more guilty about your faults, pointing the finger at others will only serve to increase your sense of personal accountability. There's always a risk in every investment, yet people still invest and succeed. You must look outward if you wanna be successful in life
The first step to successful investing is figuring out your goals and risk tolerance either on your own or with the help of a financial professional but is very advisable you make use of a professional like I did. If you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain financial security over the years and enjoy the benefits of managing your funds.
If you work in New York, California, or a high tax state the Traditional is worth considering. You can leave your state when you retire (or at least change your permanent address).
Changing your address will help with state tax, a few states tax retirement withdrawals. California, Oregon, Virginia and North Carolina a few that do.
Do a Roth conversion later in life when your earnings are less. Using a Roth in your higher earning years means you paid higher taxes up front. Having both is a savvy investing option. Everyone needs to give Jespreet a thumbs up to push the signal. 😉
This is exactly what I'm doing now‼️Beginning of January 2024, I've converted my 401K rollerover (rollerover IRA) to ROTH IRA. YES, I will have to pay taxes next April (2025) I'm willing to bite the bullet now since I want more control of money. I won't have to worry about minimum distribution since taxes will be paid.
If you do a Roth conversion later in life, you have given up the benefit of the Roth account: the tax-free compounding. The whole point is to put it in a Roth account and let it double over and over and then not pay tax when you withdraw.
The current Roth 401K provider at my place of employment is quite limited on investment options, which is why I only contribute up to what the company matches. I have an independent ROTH IRA outside of work which affords many more investment options that I max out every year.
It’s amazing how many people have these retirement accounts and have NO IDEA what they are or how they work. The most basic plans. It’s a shame really!
It's only shameful if they don't research or call whatever institution they have to learn about it. Companies don't always give people information about their 401k and how it works
Roth or traditional doesn't really matter, as long as you max out your contribution and invest aggressively, you will end up with substantial balance when retire. At the end of the day, all we are looking for is a comfortable retirement after paying tax.
It does matter, but I get what you are saying. Going in, it doesn't matter. It is a positive that you are putting funds away. The difference is when you pull money out.
I mean, assuming the employer pays enough to live off what you’d get after the 401k contribution. Not every job does; and I used to work for one that technically offered a 401k with contribution matching… but my pay checks were only between $15 and $35/ month above my bare-minimum expenses WITHOUT the 401k they offered. As my mom put it, “it’s starvation wages!”
@@jacobcarlson4010 it's not. You still have to invest your after taxt dollars into a Roth Ira. If your wife is on the same program. You can be retired in 20 years.
Yup. There is really no "one size fits all" solution to personal finance. You can't say that 100% of the time Roth or Traditional 401ks are the right decision, or that real estate or IRAs are better. As a rule of thumb I do think the employer match is a no-brainer, but contributions beyond that I'd likely put into an IRA as that is more portable and often has a wider variety of investment options - plus the contribution limit is relatively easy to hit once you're making a decent income. For myself, I would reconsider the 401k after maxing out the IRA - but only up to a certain percentage of my income. I may never make enough money to max out both my IRA and 401k - so pursuing those beyond 15-25% of my gross income doesn't make sense. Can't forget to build a life while building a portfolio.
Great advice. One thing a person needs to check is if the company is actually putting funds in the 401k. Had a company go bankrupt on my 401k. Found out they hadn’t put the money from my check to the investment firm for months. So the statements were actually a credit to the company and the money wasn’t there.
You don't lose anything unless you sell, just like all the other options. You get what you get if you are ignorant enough to sell while things are down, regardless of choice. Balances go up and down, that is what they do.
@@robshell5367yep. That's why having more income producing assets is good in retirement. That way you're less likely to need to sell in a down market.
On top of the Roth 401k, I think it’s important to also contribute to a taxable brokerage to focus on your early retirement fund and not have to wait until you’re in the 60’s
Most people fail to mention that when you retire means stops working, you will be lower tax bracket than current even if Tax rate increases- deduction increases too. Also most states has very high amount of deductions for retirement income as well. So 401k is better for most people.. Also the tax you save in 401k earlier in life , use that money for other investments such as rent home etc will substantially generate more money..
@@tb1951 Thought about bringing it up. But I can transfer my stuff to a self directed plan. It cost $100/year to maintain. But it's better than paying a 1.5% fee. I'm paying 0.03% with VTI instead.
I literally just did this because they try to persuade you to buy those high end fee Bonds too lol😂. Once I learned about the self directed I put it in SPY500 with 0.01 in fees.
When I was younger and finally came to realize that everything thing in my 401k would be taxed at the full rate ( not capital gains rate), and that taxes only go up (never down), I started putting most in my Roth and regular brokerage account. I am very happy to have a small 401k. Also I had no company match.
I'll say this a million times... If your employer does not match your 401k contributions, then there is no point! You're better off opening your own investment account.
@rolandosouffrain7957 The company matching money will always be considered pretax when you start to withdraw. Then your own Roth 401k money is tax-free on withdraws. But the company money in your Roth 401k will always be considered pretax.
Mathematically this doesn’t make sense especially the higher your tax bracket is. If I’m saving 30% on $20k that’s $6k a year saved. If you don’t spend that and invest it instead in a brokerage then your annual investments would be 30% higher than they would have been otherwise.
It’s not just the expense ratio, which is the cost of each mutual fund / ETF in your 401k, there is also a financial advisory fee, whether you ever see an advisor or not. These two need to be added together to get the true cost in fees you are paying.
Most people don’t care about the expense ratio because the fees are already factored in. They see what they see and a gain is a gain and they’re happy with it, not realizing that they could’ve gotten more.
when I "retired" from being an employee, I started contracting as a temp and discovered individual 401k (being self employed), higher maximum contributions per year, self directed so I can invest in mutual funds, etfs, stocks, money market funds. personally I favor tradition not Roth, big believer in magic of time working to maximizing total return.
Precisely. My folks, oh your mortgage interest is a tax write off. $700 return every year. At the time, if i didn't have a mortgage it would be $700+ a month in savings instead. $8400 a year saved instead of holding out for that write off. Haha! Nah I'll choose no debt.
You can have a paid off mortgage but the house is always going to need repairs and there's always insurance and taxes. If you have a house paid off and no income you're still fucked lol
I believe that every 401K has to have at least one low-cost fund in it, which will typically be an index fund. My company has an index fund with a an expense ratio of 0.01%, which is really good, with another random fund I picked at 0.44%, or 44x as much.
My philosophy has always been to contribute to your 401k as much as it takes to get the full benefit of your company match if you’re employer does that, Then maximize your Roth IRA, then if you have any money left over do some Roth 401(k) after tax contributions as much as you can afford. When you leave your job, roll over your Roth 401k into your Roth IRA. Leave your regular 401(k) money where it is or move it to the next company and rinse and repeat. Nothing wrong with doing additional 401(k) contributions but if you don’t have these things done with your money first, then you are missing out on some great tax advantages for the future. Also, if your company allows for annual bonus money to be contributed to your 401(k), then there is likely to be the corporate matching policy applying to that as well… free money baby.
Great video. The 12(b)1 fee is the reason I’ve switched jobs on an average of every 30 months. I roll the 401(k) to an IRA. The only downside is getting pestered by financial advisors who work for the brokerage house; it’s a small price to pay.
I only use my 401k because of my employer matching. I don't believe it is the best retirement vehicle. But free money is free money. I look at my 401k like social security. And my Roth and other investments as my real retirement money. Also planning on living in a lower cost of living area is going to help me retire early.
I’m considering that. “Matching out” is one term I’ve heard used to describe that. Then whatever I have left that was contributing over the match I could invest personally or in some sort of individual retirement account that owns rentals or small businesses or loans or something.
Yes... I totally relate to that. My 401k is like a glorified savings account with matching employer $$. Have other investments. Dividend income... preferred stocks etc. I just read about it and make decisions in a small way. Also direct stock purchase and maintaining positions which takes daily work but it's real and teaches me more. Won't retire in Massachusetts!!
I don't know how common it is. But my company offers brokeragelink via Fidelity. I can't take all of it but I can invest 95% of the funds in basically anything on the stock market.
Generally its advised to take your match, then max your IRA then contribute what you can in 401k until its maxed. A regular brokerage account isnt tax advantaged and if you take gains before a full year on stocks, youll pay income tax on it instead of the lower capital gains tax. So this money is taxed twice (its after tax and then taxed on sale). You likely arent beating the rate of return by enough to make up the tax difference unless your 401k only has really terrible options. Imo the real advantage of regular brokerage is its more liquid and you can trade options.
This is not for vast majority of low to median income population. Invest 401k, take tax benefit and put that tax benefit into ROTH IRA. Even if you don’t get a match! It’s good discipline to put aside money before you even get to see it. If you really need money, you can get a loan of 50% 401k value.
My company lets u control up to 90% of your 401k if u choose to u can have a seperate brokerage acct and buy your own stocks.but like he said this is an option in my 401k plan.
this might be true if you still working at higher tax bracket but when you're retired, you dont have job to be tax that high so I still think 401k is the best vehicle for your investment with its matching. I would say the suck thing about 401k is that someone else manage and take some fee. I rather rollover once retired and manage this my own.
I base my future retirement on a three legged stool: 401k/IRA, Social security and personal investments. The shortness or length of stool legs will combine for the hole.
Do your employer match for the 401k and maximize your roth. Keep them in an index fund like vanguard. If you do that, your doing alright. The rest of your money is living expenses/ play money provided you are on track to hit savings goals.
We in India have a far superior product called PPF (Public Provident Fund). It has a lock-in period of 16 years, but works under the EEE (Exempt, Exempt, Exempt) tax regime. So, it is completely tax free in the period of contribution every year, in the period when it earns interest every year and finally when you withdraw the entire corpus, that amount is also tax free.
Future governments can change tax laws. For example, long term capital gains were tax free but are now taxed at 10%. It’s highly unlikely that ppf tax rule will change but nobody knows the future
Thankfully, my employer plan offers a Roth option, which they match with just like a normal 401. So I have been putting my money into that for most of my career.
Theres a difference between working at Walmart as a senior greeter cause you want to or cause you have too, save early and now and you won't have too. P.s. stop with the hardship withdraws and loan's, leave your retirement account alone, its not your checking or savings account, stop it.
I think the biggest thing to consider is that this money can potentially run out. No one knows how long they will live. The best investment is to pay all of your debts off, especially your mortgage BEFORE you retire.
It all depends on your plan administrator honestly. If you just want to set and forget a certain percentage (usually at least the company match), and it has index funds, then its a pretty good idea.
I am contributing 100% to a Roth 401K. Because my current effective tax rate is 19% , that is for the state and federal combined. I also do In plan Roth rollovers in small amounts. which allows me to convert traditional money into roth withing the same plan. I am very aware of the fees that is associated with my account and always keep a close eye on it. Great video! Can you please do a video about Secure Act 2.0 and focus on the Roth 401K , like no more RMDs and company match now being able to go to Roth. Thanks
*Amazing content, You are still the best! It's been a year since I found ways to improve my finances and by working with a recognized professional, I was able to achieve financial independence, I have to say this; "As long as you have determination and work hard, you can achieve anything you set your mind to.❤"*
Thank 🙌 you so very much for your excellent crypto report, I'm excited i can eat ice cream every day, Even though I don't hold memes coins, I make $35k weekly trade profits
Sounds great. Do you think it's a good time to consider selling some crypto, or is better to hold onto them for the long term? I'm considering Rebalancing my $600k portfolio, so I'm curious about the best strategies for potential market downturn
Find quality stocks that have long term potential, and ride with those stocks. I have found it takes someone who is very familiar with the market to make such good picks.
Ma'am Alice understands the market movements and knows exactly when to call/putt, the risk rate and loss rate were completely less. I have never met her in person, but if I work with her for a month, you will see that she is a genius and an entrepreneur. I have never met a better mentor and philanthropist.
It's a delicate season now, so you can do little or nothing on your own. Hence I will suggest you get yourself a professional that can provide you with entry and exit points on the securities. you focus on.
Dear Jaspreet, I really enjoy both your videos and Market Briefs. One thing no one points out when deciding between a traditional and Roth 401k is the amount of money subject to compounding. Let's say I invest $100/wk in my 401K. In a traditional account, all $100 dollars is subject to compounding. In a Roth 401k, since I'm paying taxes on it, only $78 (or so) is subject to compounding. So over the course of 30 years or so, the gross amount in my traditional 401k will be much higher than it would be in a Roth 401K. Am I making a worthwhile point here?
The money going into a Roth 401K is a specific dollar amount or percentage of pay. Since it’s taxed prior to going in, it just reduces your net pay. When it goes into a traditional, it is like your gross income is reduced because the money goes into the 401k untaxed.
A few exceptions based on your situation though. Employers can do match and profit share contributions to a Roth 401k which can't be done to a normal ira Roth. Of you know for sure that you are going to be stupidly wealthy in retirement, this can be far more convenient and helpful than doing Roth conversions. My employer just started giving us a Roth 401k option this week, and while my initial speculation is that it wouldn't be ideal for me, it may make sense to split off the amount I normally put in a traditional Roth into a Roth 401k contribution instead. Not sure yet if I even can split between the two types or if it becomes one or the other, but I need to look into it a lot deeper to see what the nitty gritty details are to see which makes more sense.
I don't get these shirts tailored - I found some shirts that just fit well 🙏🙏 (although I have gotten some of my more "formal" dress shirts tailored) And yes, I do read the comments 🥑
Regarding finances and investments, I know very little. I am good with money at spending it judiciously and saving. I woulike to say that I hope you are a beautiful soul inwardly as you are a beautiful man outwardly Many blessings to you and yours
As defined pension plans becoming obsolete, Congress needs to fix 401k investment limitations issues.. the investment vehicles are so limited its really suppressing your growth- ETFs is not a bad place to start - they're the closest thing to a mutual fund while giving you better upside
So wise to have multiple investments. Some tax sheltered pre tax, some ROTH IRA , trad IRA, and then brokerage funds , perhaps some with dividends and others just value funds that will grow over time. With just the barest of planning, you can have great income in retirement without paying any federal taxes. Or pay a little in tax, it's not the end of the world. Most people are going to be in the lowest brackets they have been in since they started working once they retire, so not a big deal unless you are going to be pulling 100K+ in retirement.
There’s way more ways to limit your taxable income in retirement so you pay lower taxes when you pull money out of a traditional 401/IRA. If you’re not in real estate you’re missing out on huge tax advantages. But the decision to do Roth/Trad is personal and there’s no one right answer and no one knows the future of taxes just like no one knows what the market will do. But we all assume it’ll grow and be worth more later.
There's a statistic which stats, the best performing accounts where those about which people forgot about, it that sense 401k is the best combine that employer match, no other individual account or ira can beat that.
From the Millionaire Next Door survey, I believe that 90ish percent of millionaires used a retirement account and it had a considerable, or majority of their net worth.
I am a millionaire. my net worth is mostly 401k / retirement accounts, and I still have a mortgage. I credit this to long term income tax reduction through the 401k (I live in CA), and owning a home (even with a mortgage). I simply lived my life the last 25 years, went to work, fully funded all the accounts I had access to, financed cars and other projects, and I still have a seven figure net worth. I don't feel that debt free is required, just sustained financial prudence.
Brah, I think the biggest question is, what will the returns be in the future? Could there be negative % returns? No one mentions that, just the positive %s.... It's not automagic....😮🤔🤔🤔
Not a financial advisor and this is not advice. When you are invested over the long term for 40 years in low risk options that are very diversified it's pretty safe as long as the world doesn't end.
I guess the answer is it depends on what you invest in. Could be average funds, low performing funds, high performing funds, a great rental property, a terrible rental property, a great performing stock, a terrible performing stock.
the only metric that Ive been told is to look at past returns since inception of the markets. although the dow and S&P very quit a bit, im all in with S&P, if its good enough for Buffett, than its good enough for me, over 18% ytd compared with the dow 6.5% ytd 🤷🏽♂️
401k having limited investment options is a good thing because the majority of people aren’t investing savvy and could potentially lose all their money trying to beat the market….
Your point No.3 is wrong. 401k investments are not limited to a few funds which the provider gives. You shall open a brokerage account and link it up with your 401k account and invest in any individual stock you want.
Jaspreet can you please talk about 529 in detail? I’m most interested if I can open one for myself right now & in anticipation passing it along to my child, at some point in the (unplanned) future.
I see benefits of both. But definitely consider rolling your 401k into a Roth as you move into your 50s. This is what a FA told me as I plan for generational wealth. I won’t really need my 401k, so it’s best my future children inherited a Roth with no RMD vice iRA which must be cashed out in 10 yrs
In Canada we have an RRSP and a TFSA. Sounds like the RRSP is similar to your traditional 401k - any money you deposit into your RRSP is deducted from your taxable income that year, potentially resulting in a nice tax return, and the money in the RRSP grows tax-free until you start to withdraw it, then you pay taxes on the withdrawl. The TFSA is a Tax Free Savings Account. Every year, each citizen gets an increase to how much they can deposit into their TFSA by about $5000 (some years it's a bit more). This capacity rolls forward, so if you haven't used it it accumulates. You are despositing after-tax money into it, and there are no tax implications when you withdraw, so this sounds like a 401k ROTH. It's nice because if you invest in a huge growth stock and make a ton of money, you can withdraw it all without any tax implications whatsoever. And the withdrawl creates space for next year to deposit again, but you can't re-deposit in the same year you withdraw, if you have already maxed your deposits.
BUT ... one major problem ... according to the laws of mathematics ... which no human in the history of earth existing has ever broken ... it's 100% impossible to save in a 401k while being in debt. What does this mean? Can't save for retirement while having a mortgage; car payments; student loan debt, etc. People in debt .... aka Debt Slaves ... CANNOT save for retirement and/or taxes.
You're talking about the old, expired financial system. The world is transitioning into aa entirely new system that is totally different. Traditional investments that Financial Investors only know about will be going down the tube. People invested in stocks/bonds/401's/etc will lose everything. Dollar is now in the exponential phase of inflation and it will take out the dollar IMO.
Roth is the BEST! Because you don’t know the tax rates will be 20-40 years from now, you are assuming everything will stay the same for 20-40 years, and with the record deficits happening as we speak, the Government will need to tap those income streams in the future.
Why get a retirement account at all then you are agreeing to be penalized for withdrawing your funds, you could just get a general investment account right. Any opinions?
So I take a 1 year 401k loan and noticed that the particular 401k outperforms my other 401k that is indexed to the S&P 500. Part of it ia because it is essentially forced savings and part is because the loan acts as a bond fund. That being said, only take loans if you are disciplined about repaying.
My biggest concern with Roth because of what you mentioned about the debt and taxes. If things start to get really bad, then they’ll come for the Roth and call all of us “the rich who need to pay their fair share”.
To add to what you said, they'll leverage the ignorance of the people who don't know what Roth is and have them believing people with a Roth are not paging their fair share"
What? We did pay. A roth is with after tax money. We payed the taxes. Now the traditional 401k didn't pay taxes. U can say they didn't pay their fair share of taxes.
Roth 401k: Your employer contributions have not been taxed yet, even though it is Roth. So Roth will still have some taxes, assuming there is a match or other employer bonus that goes to 401k.
@@tpinellas4141 I understand that the statement was about a Roth IRA and if you contribute to a Roth IRA and have an employer match, the match will go into a traditional IRA not the Roth IRA. Which is what I said, I guess you didn't read it or something.
My company has 40k and 457 Plan B, now they offer ROTH options too on these. I want to invest 46K on these four options. Kindly let me know which way is it better to invest for Max returns. I am 40, and I want to retire in 10 years and still be able to access some of these Money. Kindly advise and thank you!
That’s how Roth works by definition. The money you’re using to invest was already taxed (via income tax) before you received it. So when you invest that money (called your principal) into your Roth, you are not taxed on that money or the gains received as a result of that money. With a traditional 401K, the money invested (the principal) is NOT taxed up front, so you pay taxes on that money and the gains upon withdrawal.
@@chriss4365 because they already taxed the principle. If they taxed you on the gains as well, then a Roth IRA would be no different than a traditional IRA.
When you say 401k is not really a limited investment option for most people... are you talking about people who hold a stable 9-5 jobs, instead of entrepreneurs (cause the latter takes more risk and needs diversification to reduce it)?
The federal government doesn’t “need your taxes” to pay debt. That isn’t a reason taxes would go up in the future. The money starts at the government when they print it.
The government doesn’t print money. The Federal Reserve prints money. That being said, the Federal Reserve tends to lend the government money whenever they ask for it, but the government absolutely generates its revenue from taxes.
@@scottkasper6378 Wages from their jobs or, in the case of entrepreneurs, revenue generated from their businesses. Money only comes directly from the government in the case of government assistance programs.
@@scottkasper6378 Yeah they definitely spend more than what they actually have. Funny how the government mirrors the behavior of most of the population it governs lol
Really surprised you didn’t mention brokeragelink Depending on what the company you work for allows you might be able to invest in the ETFs and individual investments with your 401K
When I deposit 1k on my roth I can invest 1k. You pay taxes on that money during tax season yes but your contribution to the roth goes in 100%. Why does everyone make it seem like your contribution gets deducted right away? Am I wrong or am I missing something?
The money you invest into a Roth was already taxed before you even touched it (via income taxes), so it is allowed to grow without any additional tax being imposed.
@@MichaelM2K23 I understand that. My argument was most people I watch online make it seem like you can only invest a portion of what you contribute to a Roth ira. I don't understand why almost everyone phrases it that way and makes it confusing to people
I assume so people don’t gamble their money and can actually retire. Imagine you started working in 1985. You’re like, “everyone has a phone so I’ll invest in AT&T, they’ll never go bankrupt”. So for 15 years you throw money into AT&T and you are doing well. Then 2000 comes and your cost basis is $30. For 25 years now, that stock has consistently gone down and now worth about $20. If you figure that $30 in 2000 is like $100 today, you lost a huge sum of money. Mutual funds tend to give consistent returns rather than huge wins or losses.
@@Uriah625Great example, I seem to find all kinds of companies like that!😅. But at least I don't let more than a third of my account go to the brokerage link/ individual stocks.
@@rm3141593 think of a 401(k) as time in the market and a brokerage account as timing the market. I certainly contribute to my company 401(k) to get the match, but most of my money goes into: HSA, Roth IRA, and a brokerage account. The last three I have much more control over as I can buy individual stocks.
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There are many fake accounts impersonating me, and there are many bots promoting fake/scam investments. I will NEVER ask you to contact me through UA-cam comments, telegram, or WhatsApp. I have a checkmark next to my name and my comment will be highlighted. Fake accounts do not have that. Please be aware of fake accounts trying to scam you using my name and picture!
401 is scam
@@SamuelClemente7718 401k is a Sam
Vlad is an idiot
A Financial Planner told me Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. How can take advantage of compound interest and potentially grow your retirement savings overtime?
In times like this it is better to seek help from a professional as such key decisions are better guided by experts with market experience.
That is exactly the reason I stopped trusting the financial advice of UA-camrs; in the long run, I only end up with a jumbled collection of stocks and bonds. Whereas all I needed to earn over $350k in less than two years was guidance from a true market expert.
Thanks for replying, That's a very impressive return, You must have a good idea of stocks. How did you go about it?
Melissa Jean Talingdan is the licensed advisor I use. Just search the name. You’d find necessary details on the web to set up an appointment.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
I worked in a retirement plan call center after college and the most common call was from people wanting to take a loan or withdraw from their 401k! So I dare say that if the average person only invests in a 401k despite the fees and limited investment options, they are doing better than most people who keep trying to take the money out of it.
I disagree.
100% correct. Most people are not saving nothing at all or very little. And very having a debate about taxes lol.
@@SamuelClemente7718 Will you please elaborate? (I’m still trying to form an opinion)
I think a lot of people are withdrawing nowadays to simply afford a home they can call their own. When a 20 percent downpayment takes 100k and people are overbidding on houses left and right, the 401k that’s the place they look so they can compete. It’s sad but aye you need a roof over your head.
I borrow $25k every two years and use that $25k of tax free money to make $25k taxable money within two years. Withdrawal is stupid, but investors love to borrow.
If you want to be successful, you must take responsibility for your emotions, not place the blame on others. In addition to make you feel more guilty about your faults, pointing the finger at others will only serve to increase your sense of personal accountability. There's always a risk in every investment, yet people still invest and succeed. You must look outward if you wanna be successful in life
True words spoken. Take responsibility for your own life basically. I vibe with that.
The first step to successful investing is figuring out your goals and risk tolerance either on your own or with the help of a financial professional but is very advisable you make use of a professional like I did. If you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain financial security over the years and enjoy the benefits of managing your funds.
Can you introduce me to Benjamin, l'd love to learn more about his service.
Thanks a lot for the recommendation.
I have heard so much about him and have been trying to get in touch with him. thanks for the info. His popularly known here Australia
If you work in New York, California, or a high tax state the Traditional is worth considering. You can leave your state when you retire (or at least change your permanent address).
Thank you for your opinion. As we all know, everyone's financial situation is different.
Change your permanent residential!🤔🤔😉😉🤫🤫🤫🤫🤫
Changing your address will help with state tax, a few states tax retirement withdrawals. California, Oregon, Virginia and North Carolina a few that do.
@@toranaga1969 Isn’t it illegal change your address to a place where you don’t reside, to avoid taxes? I thought it was.
@audreyandrea460 it is. If the state finds out it's tax evasion. They can levie penalties and you can even go to jail.
I have had my 401K 38 years. Best financial vehicle ever. .002% fee from Fidelity.
That was very low ROI buddy.
@@rambaan2615 My 401K was sitting in the S&P 500. Terrific ROI buddy.
@@rambaan2615how would you know his ROI when he didn’t mention that?
@@rambaan2615that.002 was the fee not the return😂
Do a Roth conversion later in life when your earnings are less.
Using a Roth in your higher earning years means you paid higher taxes up front.
Having both is a savvy investing option.
Everyone needs to give Jespreet a thumbs up to push the signal. 😉
I don't think this random guy on youtube has thought about Roth conversions. too advanced.
@@cybrainx72He has to feed many little by little. Too much to the public is overwhelming.
This is exactly what I'm doing now‼️Beginning of January 2024, I've converted my 401K rollerover (rollerover IRA) to ROTH IRA.
YES, I will have to pay taxes next April (2025)
I'm willing to bite the bullet now since I want more control of money. I won't have to worry about minimum distribution since taxes will be paid.
That's my strategy.
If you do a Roth conversion later in life, you have given up the benefit of the Roth account: the tax-free compounding. The whole point is to put it in a Roth account and let it double over and over and then not pay tax when you withdraw.
The current Roth 401K provider at my place of employment is quite limited on investment options, which is why I only contribute up to what the company matches. I have an independent ROTH IRA outside of work which affords many more investment options that I max out every year.
It’s amazing how many people have these retirement accounts and have NO IDEA what they are or how they work. The most basic plans. It’s a shame really!
These random guy on internet does not seem to have an idea too. So caution there.
It's only shameful if they don't research or call whatever institution they have to learn about it. Companies don't always give people information about their 401k and how it works
The 401k “education” you get from your company is generally a cheer-session to sell the employee on the account, not a complete pros and cons list.
You are correct. They are 100% tax advantage plans. If you ignore the tax aspect, then you are MUCH better having it all in a standard brokerage.
Roth or traditional doesn't really matter, as long as you max out your contribution and invest aggressively, you will end up with substantial balance when retire. At the end of the day, all we are looking for is a comfortable retirement after paying tax.
It does matter, but I get what you are saying. Going in, it doesn't matter. It is a positive that you are putting funds away. The difference is when you pull money out.
Don't leave matching on the table.
I just contribute enough to get the match. I invest in the stock market.
Yeah u just contribute for match and get into the s&p500 index since the fees are extremely lol. And I have a personal account to invest
I mean, assuming the employer pays enough to live off what you’d get after the 401k contribution. Not every job does; and I used to work for one that technically offered a 401k with contribution matching… but my pay checks were only between $15 and $35/ month above my bare-minimum expenses WITHOUT the 401k they offered. As my mom put it, “it’s starvation wages!”
@@jacobcarlson4010 it's not. You still have to invest your after taxt dollars into a Roth Ira. If your wife is on the same program. You can be retired in 20 years.
Yup. There is really no "one size fits all" solution to personal finance. You can't say that 100% of the time Roth or Traditional 401ks are the right decision, or that real estate or IRAs are better. As a rule of thumb I do think the employer match is a no-brainer, but contributions beyond that I'd likely put into an IRA as that is more portable and often has a wider variety of investment options - plus the contribution limit is relatively easy to hit once you're making a decent income. For myself, I would reconsider the 401k after maxing out the IRA - but only up to a certain percentage of my income. I may never make enough money to max out both my IRA and 401k - so pursuing those beyond 15-25% of my gross income doesn't make sense. Can't forget to build a life while building a portfolio.
Great advice. One thing a person needs to check is if the company is actually putting funds in the 401k. Had a company go bankrupt on my 401k. Found out they hadn’t put the money from my check to the investment firm for months. So the statements were actually a credit to the company and the money wasn’t there.
Also, in Roth 401k, if the balance goes down, you don't get your taxes back.
Something to think about with conversions.
You don't lose anything unless you sell, just like all the other options.
You get what you get if you are ignorant enough to sell while things are down, regardless of choice.
Balances go up and down, that is what they do.
@@robshell5367Sad thing, most employers don't offer Roth401ks
Lmao duh
@@robshell5367well when you retire if you're living off your 401k you can't exactly not sell because the market goes down 🤷🏻
@@robshell5367yep. That's why having more income producing assets is good in retirement. That way you're less likely to need to sell in a down market.
On top of the Roth 401k, I think it’s important to also contribute to a taxable brokerage to focus on your early retirement fund and not have to wait until you’re in the 60’s
Most people fail to mention that when you retire means stops working, you will be lower tax bracket than current even if Tax rate increases- deduction increases too.
Also most states has very high amount of deductions for retirement income as well.
So 401k is better for most people..
Also the tax you save in 401k earlier in life , use that money for other investments such as rent home etc will substantially generate more money..
My 401k options suck. The fees are insane. I had to create a self directed IRA connected to my 401k account to get some low fee ETFs.
The 401k doesn't suck. Your employer sucks at selecting options.
@@tb1951 Thought about bringing it up. But I can transfer my stuff to a self directed plan. It cost $100/year to maintain. But it's better than paying a 1.5% fee. I'm paying 0.03% with VTI instead.
I literally just did this because they try to persuade you to buy those high end fee Bonds too lol😂. Once I learned about the self directed I put it in SPY500 with 0.01 in fees.
@@tb1951Yes, that's why they said their options suck not that all suck.
Look for index funds... They're usually cheaper
When I was younger and finally came to realize that everything thing in my 401k would be taxed at the full rate ( not capital gains rate), and that taxes only go up (never down), I started putting most in my Roth and regular brokerage account. I am very happy to have a small 401k. Also I had no company match.
So committed with XAI20H and a bit of XRP, too much potential
I'll say this a million times... If your employer does not match your 401k contributions, then there is no point! You're better off opening your own investment account.
Negative. I am maxing out my Roth 401k. At retirement all my money will be tax free. That is a big advantage even if my company doesn't match
If your current tax bracket is high, still a good idea to do 401k
@rolandosouffrain7957 The company matching money will always be considered pretax when you start to withdraw. Then your own Roth 401k money is tax-free on withdraws. But the company money in your Roth 401k will always be considered pretax.
Mathematically this doesn’t make sense especially the higher your tax bracket is. If I’m saving 30% on $20k that’s $6k a year saved. If you don’t spend that and invest it instead in a brokerage then your annual investments would be 30% higher than they would have been otherwise.
If you are in low tax bracket you could do regular 401k
It’s not just the expense ratio, which is the cost of each mutual fund / ETF in your 401k, there is also a financial advisory fee, whether you ever see an advisor or not. These two need to be added together to get the true cost in fees you are paying.
THIS! If I could move this comment to top I would.
Most people don’t care about the expense ratio because the fees are already factored in. They see what they see and a gain is a gain and they’re happy with it, not realizing that they could’ve gotten more.
Thanks Jaspreet. Self education is KING🎉🎉🎉🎉
when I "retired" from being an employee, I started contracting as a temp and discovered individual 401k (being self employed), higher maximum contributions per year, self directed so I can invest in mutual funds, etfs, stocks, money market funds. personally I favor tradition not Roth, big believer in magic of time working to maximizing total return.
I have both the Roth and Pre-taxed 401(k). Thanks for the video.
Thanks for the great content at 4:30AM, sir.
Lol. The video is pre recorded. So u know how long it takes to edit a video 📹? Many hours.
This is why I took my money and paid off my mortgage twice. No debt is better than needed money to pay debt.
Precisely. My folks, oh your mortgage interest is a tax write off. $700 return every year.
At the time, if i didn't have a mortgage it would be $700+ a month in savings instead. $8400 a year saved instead of holding out for that write off. Haha! Nah I'll choose no debt.
You can have a paid off mortgage but the house is always going to need repairs and there's always insurance and taxes.
If you have a house paid off and no income you're still fucked lol
I believe that every 401K has to have at least one low-cost fund in it, which will typically be an index fund. My company has an index fund with a an expense ratio of 0.01%, which is really good, with another random fund I picked at 0.44%, or 44x as much.
Great video Jaspreet! Very informative, and also thank you....All of your content has motivated me to be wise with my money!
This is so important to be educated about and fully understand. I went the Roth route.
You own or rent?
My philosophy has always been to contribute to your 401k as much as it takes to get the full benefit of your company match if you’re employer does that,
Then maximize your Roth IRA, then if you have any money left over do some Roth 401(k) after tax contributions as much as you can afford. When you leave your job, roll over your Roth 401k into your Roth IRA. Leave your regular 401(k) money where it is or move it to the next company and rinse and repeat.
Nothing wrong with doing additional 401(k) contributions but if you don’t have these things done with your money first, then you are missing out on some great tax advantages for the future.
Also, if your company allows for annual bonus money to be contributed to your 401(k), then there is likely to be the corporate matching policy applying to that as well… free money baby.
Great video. The 12(b)1 fee is the reason I’ve switched jobs on an average of every 30 months. I roll the 401(k) to an IRA. The only downside is getting pestered by financial advisors who work for the brokerage house; it’s a small price to pay.
I only use my 401k because of my employer matching. I don't believe it is the best retirement vehicle. But free money is free money. I look at my 401k like social security. And my Roth and other investments as my real retirement money. Also planning on living in a lower cost of living area is going to help me retire early.
I’m considering that. “Matching out” is one term I’ve heard used to describe that. Then whatever I have left that was contributing over the match I could invest personally or in some sort of individual retirement account that owns rentals or small businesses or loans or something.
Yes... I totally relate to that. My 401k is like a glorified savings account with matching employer $$. Have other investments. Dividend income... preferred stocks etc. I just read about it and make decisions in a small way. Also direct stock purchase and maintaining positions which takes daily work but it's real and teaches me more.
Won't retire in Massachusetts!!
I don't know how common it is. But my company offers brokeragelink via Fidelity. I can't take all of it but I can invest 95% of the funds in basically anything on the stock market.
Generally its advised to take your match, then max your IRA then contribute what you can in 401k until its maxed. A regular brokerage account isnt tax advantaged and if you take gains before a full year on stocks, youll pay income tax on it instead of the lower capital gains tax.
So this money is taxed twice (its after tax and then taxed on sale). You likely arent beating the rate of return by enough to make up the tax difference unless your 401k only has really terrible options.
Imo the real advantage of regular brokerage is its more liquid and you can trade options.
This is not for vast majority of low to median income population. Invest 401k, take tax benefit and put that tax benefit into ROTH IRA. Even if you don’t get a match! It’s good discipline to put aside money before you even get to see it. If you really need money, you can get a loan of 50% 401k value.
I have a Roth 401k and the employer match goes into traditional and I do roth conversions on some of it each year.
Do you max out your Roth with the conversion?
My company lets u control up to 90% of your 401k if u choose to u can have a seperate brokerage acct and buy your own stocks.but like he said this is an option in my 401k plan.
Great video. I always try to avoid fees, whenever I can and this is very useful 😊
this might be true if you still working at higher tax bracket but when you're retired, you dont have job to be tax that high so I still think 401k is the best vehicle for your investment with its matching. I would say the suck thing about 401k is that someone else manage and take some fee. I rather rollover once retired and manage this my own.
That's the KEY.
ROLLOVER and CONVERSION.
I base my future retirement on a three legged stool: 401k/IRA, Social security and personal investments. The shortness or length of stool legs will combine for the hole.
This should be taught in high school.
I think you're speaking for the majority of us. At least the ones reading your comment.
Do your employer match for the 401k and maximize your roth. Keep them in an index fund like vanguard. If you do that, your doing alright. The rest of your money is living expenses/ play money provided you are on track to hit savings goals.
We in India have a far superior product called PPF (Public Provident Fund). It has a lock-in period of 16 years, but works under the EEE (Exempt, Exempt, Exempt) tax regime. So, it is completely tax free in the period of contribution every year, in the period when it earns interest every year and finally when you withdraw the entire corpus, that amount is also tax free.
Future governments can change tax laws. For example, long term capital gains were tax free but are now taxed at 10%. It’s highly unlikely that ppf tax rule will change but nobody knows the future
Thankfully, my employer plan offers a Roth option, which they match with just like a normal 401. So I have been putting my money into that for most of my career.
Theres a difference between working at Walmart as a senior greeter cause you want to or cause you have too, save early and now and you won't have too.
P.s. stop with the hardship withdraws and loan's, leave your retirement account alone, its not your checking or savings account, stop it.
I think the biggest thing to consider is that this money can potentially run out. No one knows how long they will live. The best investment is to pay all of your debts off, especially your mortgage BEFORE you retire.
Not if you put ur 401k money into a CD IRA and simple draw the interest.
The money won’t run out if the returns are greater than your withdrawal rate.
If you have $5-$10 million in your 401(k) you shouldn’t run out.
@@Joenzinator even 0ne million especially if you have other sources of income.
It all depends on your plan administrator honestly. If you just want to set and forget a certain percentage (usually at least the company match), and it has index funds, then its a pretty good idea.
I am contributing 100% to a Roth 401K. Because my current effective tax rate is 19% , that is for the state and federal combined. I also do In plan Roth rollovers in small amounts. which allows me to convert traditional money into roth withing the same plan. I am very aware of the fees that is associated with my account and always keep a close eye on it. Great video! Can you please do a video about Secure Act 2.0 and focus on the Roth 401K , like no more RMDs and company match now being able to go to Roth. Thanks
*Amazing content, You are still the best! It's been a year since I found ways to improve my finances and by working with a recognized professional, I was able to achieve financial independence, I have to say this; "As long as you have determination and work hard, you can achieve anything you set your mind to.❤"*
Thank 🙌 you so very much for your excellent crypto report, I'm excited i can eat ice cream every day, Even though I don't hold memes coins, I make $35k weekly trade profits
Sounds great. Do you think it's a good time to consider selling some crypto, or is better to hold onto them for the long term? I'm considering Rebalancing my $600k portfolio, so I'm curious about the best strategies for potential market downturn
Find quality stocks that have long term potential, and ride with those stocks. I have found it takes someone who is very familiar with the market to make such good picks.
Ma'am Alice understands the market movements and knows exactly when to call/putt, the risk rate and loss rate were completely less. I have never met her in person, but if I work with her for a month, you will see that she is a genius and an entrepreneur. I have never met a better mentor and philanthropist.
It's a delicate season now, so you can do little or nothing on your own. Hence I will suggest you get yourself a professional that can provide you with entry and exit points on the securities. you focus on.
Absolutely great basic explanation for understanding 401(K)s!
You can opt out of money managers and target funds, and do a Self-direct trading account in your 401K. I asked for that set up at both firms.
Do you have to pay custodian fees for the self directed account?
My 401k was looking nice...then 2020 hit and I think I'm just now back up to where I was before 2020
Dear Jaspreet, I really enjoy both your videos and Market Briefs. One thing no one points out when deciding between a traditional and Roth 401k is the amount of money subject to compounding. Let's say I invest $100/wk in my 401K. In a traditional account, all $100 dollars is subject to compounding. In a Roth 401k, since I'm paying taxes on it, only $78 (or so) is subject to compounding. So over the course of 30 years or so, the gross amount in my traditional 401k will be much higher than it would be in a Roth 401K. Am I making a worthwhile point here?
Only difference is the tax rate now vs the tax rate at retirement. If the rate stays exactly the same, then no effect on expected return.
The money going into a Roth 401K is a specific dollar amount or percentage of pay. Since it’s taxed prior to going in, it just reduces your net pay. When it goes into a traditional, it is like your gross income is reduced because the money goes into the 401k untaxed.
A few exceptions based on your situation though.
Employers can do match and profit share contributions to a Roth 401k which can't be done to a normal ira Roth. Of you know for sure that you are going to be stupidly wealthy in retirement, this can be far more convenient and helpful than doing Roth conversions.
My employer just started giving us a Roth 401k option this week, and while my initial speculation is that it wouldn't be ideal for me, it may make sense to split off the amount I normally put in a traditional Roth into a Roth 401k contribution instead. Not sure yet if I even can split between the two types or if it becomes one or the other, but I need to look into it a lot deeper to see what the nitty gritty details are to see which makes more sense.
Jaspreet do you get your shirts tailored? They fit well. When I buy off the rack they never look great on me
He doesn't read comments. He's here to make money
I don't get these shirts tailored - I found some shirts that just fit well 🙏🙏 (although I have gotten some of my more "formal" dress shirts tailored)
And yes, I do read the comments 🥑
Regarding finances and investments, I know very little. I am good with money at spending it judiciously and saving. I woulike to say that I hope you are a beautiful soul inwardly as you are a beautiful man outwardly Many blessings to you and yours
As defined pension plans becoming obsolete, Congress needs to fix 401k investment limitations issues.. the investment vehicles are so limited its really suppressing your growth-
ETFs is not a bad place to start - they're the closest thing to a mutual fund while giving you better upside
Roth 401k is best for the peace of mind, no guessing about the future. Also max fees should be 0.1% or less otherwise pass on that option.
So wise to have multiple investments. Some tax sheltered pre tax, some ROTH IRA , trad IRA, and then brokerage funds , perhaps some with dividends and others just value funds that will grow over time. With just the barest of planning, you can have great income in retirement without paying any federal taxes. Or pay a little in tax, it's not the end of the world. Most people are going to be in the lowest brackets they have been in since they started working once they retire, so not a big deal unless you are going to be pulling 100K+ in retirement.
My employer offers traditional 401k and Roth 401k with a 5% match.
There’s way more ways to limit your taxable income in retirement so you pay lower taxes when you pull money out of a traditional 401/IRA. If you’re not in real estate you’re missing out on huge tax advantages. But the decision to do Roth/Trad is personal and there’s no one right answer and no one knows the future of taxes just like no one knows what the market will do. But we all assume it’ll grow and be worth more later.
There's a statistic which stats, the best performing accounts where those about which people forgot about, it that sense 401k is the best combine that employer match, no other individual account or ira can beat that.
I manage my own..in a converted IRA…NO FEES doing that.
I came from MindValley because education never ends so I came to support you here too and learn more
Roth conversion ladder could be a part of one's retirement strategy too. It's not dire - just do your research.
From the Millionaire Next Door survey, I believe that 90ish percent of millionaires used a retirement account and it had a considerable, or majority of their net worth.
Most millionaires today get to that point by a combination of their retirement account and net worth of their home.
@@TheFirstRealChewy but it’s typically a paid off house and being debt free.
I am a millionaire. my net worth is mostly 401k / retirement accounts, and I still have a mortgage. I credit this to long term income tax reduction through the 401k (I live in CA), and owning a home (even with a mortgage). I simply lived my life the last 25 years, went to work, fully funded all the accounts I had access to, financed cars and other projects, and I still have a seven figure net worth. I don't feel that debt free is required, just sustained financial prudence.
@@blanketwodahs6741 awesome! I think that you would most likely invest those payments when the pay off a car or house.
Brah, I think the biggest question is, what will the returns be in the future?
Could there be negative % returns?
No one mentions that, just the positive %s....
It's not automagic....😮🤔🤔🤔
Not a financial advisor and this is not advice. When you are invested over the long term for 40 years in low risk options that are very diversified it's pretty safe as long as the world doesn't end.
I guess the answer is it depends on what you invest in. Could be average funds, low performing funds, high performing funds, a great rental property, a terrible rental property, a great performing stock, a terrible performing stock.
the only metric that Ive been told is to look at past returns since inception of the markets. although the dow and S&P very quit a bit, im all in with S&P, if its good enough for Buffett, than its good enough for me, over 18% ytd compared with the dow 6.5% ytd 🤷🏽♂️
Right, 40 years is a long time.
Be careful out there
I have a Roth 401k, but my companies match is traditional.
My company is willing to match in both, so I'm lucky.
@@bobbobbington3615 The match you get from your company goes into a traditional 401k they are not allowed to put it in a roth.
401k having limited investment options is a good thing because the majority of people aren’t investing savvy and could potentially lose all their money trying to beat the market….
Warren Buffet would agree. Simple S&P 500 and Nasdaq/growth funds are simple and historically have great returns.
Amen! Truely
Your point No.3 is wrong. 401k investments are not limited to a few funds which the provider gives. You shall open a brokerage account and link it up with your 401k account and invest in any individual stock you want.
I'm comfortable and not trying to die with lots of money left on the table for ppl that didn't sweat for it or deserve it... that just me !
Jaspreet can you please talk about 529 in detail? I’m most interested if I can open one for myself right now & in anticipation passing it along to my child, at some point in the (unplanned) future.
this guy is right unless your money is in a roth you pay taxes, state and federal
I'm in Nvidia,cmg,SQQQ for dividends,pltr,sofi and tesla on 401k.😮😮😮
Why?
Good job!
Jaspreet, what will stop the government from double taxing Roth IRAs in the future? Heck they will probably double tax trad iras too.
I see benefits of both. But definitely consider rolling your 401k into a Roth as you move into your 50s. This is what a FA told me as I plan for generational wealth. I won’t really need my 401k, so it’s best my future children inherited a Roth with no RMD vice iRA which must be cashed out in 10 yrs
In Canada we have an RRSP and a TFSA. Sounds like the RRSP is similar to your traditional 401k - any money you deposit into your RRSP is deducted from your taxable income that year, potentially resulting in a nice tax return, and the money in the RRSP grows tax-free until you start to withdraw it, then you pay taxes on the withdrawl.
The TFSA is a Tax Free Savings Account. Every year, each citizen gets an increase to how much they can deposit into their TFSA by about $5000 (some years it's a bit more). This capacity rolls forward, so if you haven't used it it accumulates. You are despositing after-tax money into it, and there are no tax implications when you withdraw, so this sounds like a 401k ROTH. It's nice because if you invest in a huge growth stock and make a ton of money, you can withdraw it all without any tax implications whatsoever. And the withdrawl creates space for next year to deposit again, but you can't re-deposit in the same year you withdraw, if you have already maxed your deposits.
my 401K has a 1% match and a 1.79% in fees with out counting the Mutual fund management fees... It's a IRA for me.
BUT ... one major problem ... according to the laws of mathematics ... which no human in the history of earth existing has ever broken ... it's 100% impossible to save in a 401k while being in debt. What does this mean? Can't save for retirement while having a mortgage; car payments; student loan debt, etc. People in debt .... aka Debt Slaves ... CANNOT save for retirement and/or taxes.
I have a Roth, a Traditional, and invest in stocks. So far, the stocks have had the best growth.
You're talking about the old, expired financial system. The world is transitioning into aa entirely new system that is totally
different. Traditional investments that Financial Investors only know about will be going down the tube. People invested in
stocks/bonds/401's/etc will lose everything. Dollar is now in the exponential phase of inflation and it will take out the dollar IMO.
😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂 😂😂😂😂😂
Did you ever get a newer car? I recall you talking about it in another video. If so what did you get
Roth is the BEST!
Because you don’t know the tax rates will be 20-40 years from now, you are assuming everything will stay the same for 20-40 years, and with the record deficits happening as we speak, the Government will need to tap those income streams in the future.
Why get a retirement account at all then you are agreeing to be penalized for withdrawing your funds, you could just get a general investment account right. Any opinions?
So I take a 1 year 401k loan and noticed that the particular 401k outperforms my other 401k that is indexed to the S&P 500. Part of it ia because it is essentially forced savings and part is because the loan acts as a bond fund. That being said, only take loans if you are disciplined about repaying.
Thank you for the content.
My biggest concern with Roth because of what you mentioned about the debt and taxes.
If things start to get really bad, then they’ll come for the Roth and call all of us “the rich who need to pay their fair share”.
This
To add to what you said, they'll leverage the ignorance of the people who don't know what Roth is and have them believing people with a Roth are not paging their fair share"
What? We did pay. A roth is with after tax money. We payed the taxes. Now the traditional 401k didn't pay taxes. U can say they didn't pay their fair share of taxes.
@@rolandosouffrain7957 100% agree and I hope I’m wrong, just saying I could see this easily happening.
Roth 401k: Your employer contributions have not been taxed yet, even though it is Roth. So Roth will still have some taxes, assuming there is a match or other employer bonus that goes to 401k.
Your employee matches don't go into your Roth IRA, they go into a traditional IRA.
So yes there will be taxes but not in your Roth.
@@DarkRahl69 The statement was pertaining to a Roth 401k, not an IRA. The statement is correct, employer contribution to a Roth 401k is pretax.
@@tpinellas4141 I understand that the statement was about a Roth IRA and if you contribute to a Roth IRA and have an employer match, the match will go into a traditional IRA not the Roth IRA.
Which is what I said, I guess you didn't read it or something.
My company has 40k and 457 Plan B, now they offer ROTH options too on these. I want to invest 46K on these four options. Kindly let me know which way is it better to invest for Max returns. I am 40, and I want to retire in 10 years and still be able to access some of these Money. Kindly advise and thank you!
Why would a Roth Ira not be taxed on the growth? 401k is only popular because it's the only thing offered by employees.
It's not taxed on the growth
That’s how Roth works by definition. The money you’re using to invest was already taxed (via income tax) before you received it. So when you invest that money (called your principal) into your Roth, you are not taxed on that money or the gains received as a result of that money. With a traditional 401K, the money invested (the principal) is NOT taxed up front, so you pay taxes on that money and the gains upon withdrawal.
@@MichaelM2K23 why would they let you earn and not pay taxes. that's not like the government.
@@chriss4365 because they already taxed the principle. If they taxed you on the gains as well, then a Roth IRA would be no different than a traditional IRA.
@@MichaelM2K23 I still do not get why they would let you earn anything tax free.
When you say 401k is not really a limited investment option for most people... are you talking about people who hold a stable 9-5 jobs, instead of entrepreneurs (cause the latter takes more risk and needs diversification to reduce it)?
You still have to pay taxes unless you live in a state with no sales tax.
You cant 100% avoid tax but with proper planning you can pay significantly less.
You pay taxes and if you pull it before you 59 you pay a penalty
Can You Provide a U-tube video of Government Bonds and any other secure investments ❓❓❓❓
I don't understand using a 401k, and relying on it to be a major savings/retirement factor in my life... yet being so LAZY to not do basic research.
The federal government doesn’t “need your taxes” to pay debt. That isn’t a reason taxes would go up in the future. The money starts at the government when they print it.
The government doesn’t print money. The Federal Reserve prints money. That being said, the Federal Reserve tends to lend the government money whenever they ask for it, but the government absolutely generates its revenue from taxes.
@@MichaelM2K23 where do people get money from in the first place?
@@scottkasper6378 Wages from their jobs or, in the case of entrepreneurs, revenue generated from their businesses. Money only comes directly from the government in the case of government assistance programs.
@@MichaelM2K23 I’m always amazed people still think the government waits to get our tax money so they can spend when we’ve run deficits for decades
@@scottkasper6378 Yeah they definitely spend more than what they actually have. Funny how the government mirrors the behavior of most of the population it governs lol
13' 21" time well spent. Thank you!
Company pays monthly fee while employed.
What is the best thing to do with your 401K when you leave your job and move to a job that doesn't have a 401k?
Didn't have VladTV making it onto a Minority Mindset video on my Bingo card. This is a strange world I live in now.
Really surprised you didn’t mention brokeragelink
Depending on what the company you work for allows you might be able to invest in the ETFs and individual investments with your 401K
When I deposit 1k on my roth I can invest 1k. You pay taxes on that money during tax season yes but your contribution to the roth goes in 100%. Why does everyone make it seem like your contribution gets deducted right away? Am I wrong or am I missing something?
The money you invest into a Roth was already taxed before you even touched it (via income taxes), so it is allowed to grow without any additional tax being imposed.
@@MichaelM2K23 I understand that. My argument was most people I watch online make it seem like you can only invest a portion of what you contribute to a Roth ira. I don't understand why almost everyone phrases it that way and makes it confusing to people
@@guiltyred6144 I think when “they” say portion, they’re referring to the annual contribution limit.
Why can’t we invest 401K in individual stocks? Brokerages allow opening brokerage link account to buy stocks.
I assume so people don’t gamble their money and can actually retire.
Imagine you started working in 1985. You’re like, “everyone has a phone so I’ll invest in AT&T, they’ll never go bankrupt”. So for 15 years you throw money into AT&T and you are doing well. Then 2000 comes and your cost basis is $30. For 25 years now, that stock has consistently gone down and now worth about $20. If you figure that $30 in 2000 is like $100 today, you lost a huge sum of money.
Mutual funds tend to give consistent returns rather than huge wins or losses.
@@Uriah625Great example, I seem to find all kinds of companies like that!😅. But at least I don't let more than a third of my account go to the brokerage link/ individual stocks.
@@rm3141593 think of a 401(k) as time in the market and a brokerage account as timing the market.
I certainly contribute to my company 401(k) to get the match, but most of my money goes into: HSA, Roth IRA, and a brokerage account. The last three I have much more control over as I can buy individual stocks.