What’s up with 401k?

[Seinfeld]

According to my mother in law, anyone that can afford to contribute to a 401k or IRA is rich. I wish I was kidding

 

[johnson86-1]

According to my mother in law, anyone that can afford to contribute to a 401k or IRA is rich. I wish I was kidding

Well, she is sort of right. Most people in the US are rich by world standards.

 

[horshack.sixpack]

If you wake up with running water that is potable, your in pretty high cotton. (my apologies to Jacksonians***)

 

[Jeffreauxdawg]

If you keep a bunch of money in checking that's on you, really. Independent of the interest rate climate, that is never the best place to find yield.

Best yield going these days? Buy a small business. I expect even better rewards from the SBA soon, but if you closed on a small business by the end of September, SBA makes the first 6 months of payments.

$18k of free money on a a $35-50k investment if you bought a business like this....

https://www.bizbuysell.com/Business-Opportunity/Tire-and-Alignment-Business-in-MS-is-Growing-Ask-about-20-Opportunity/1571895/

You would put about $50k down and get a 10 year SBA loan for a payment of around $3k per month. If the numbers are accurate, pay a manager $50k to run it and you will have $100k in free cash flow to pay back the loan and yourself.

You would break even on your initial investment by month 8 and then be in the black. At that point, you would net $50k+ a year in "free" income until you decide to sell. If you actually grew the business along the way, even better. And don't forget, you get to cash out at the end. If you waited 10 years and sold it for what you bought it for... You turned $50k into $850k in 10 years.

Of course, you might lose your mind having to deal with customers and employees... But the best returns I have seen lately are not in the markets or real estate.


**** Anybody want to run an allignment shop in DeSoto county for 10 years for me?***

 

[dawgoneyall]

The Clinton Administration fairly drastically increased personal and corporate taxes in 1993.

And even he saw the stupidity......and bad results.

 

[UpTheMiddlex3Punt]

If you bought TQQQ five months ago you'd have 4x your original investment today.

 

[Jeffreauxdawg]

If you hold for 5 more months from now you will lose everything you own and 4x your left nut. You are a space cowboy on that rocket.

 

[UpTheMiddlex3Punt]

If you hold for 5 more months from now you will lose everything you own and 4x your left nut. You are a space cowboy on that rocket.

If you can stomach the drawdowns it's great returns. It was at about the same price three years ago as it was five months ago and 4x over three years is still a helluva return.

Speaking of 4x, there was going to be a 4x S&P 500 ETF getting introduced a few years ago but the SEC squashed it. That's a little too crazy even for me , though I'd consider throwing it into a strategy along with TQQQ and TMF.

 

[goodknight]

Depends on what happens in Nov!

One wins I think the ride continues. The other one wins and corporate tax rates increase the market will drop. One wants to change tax advantage on 401K depending on your economic standing too.

 

[UpTheMiddlex3Punt]

I don't think Biden is going to touch 401k plans if he gets elected. It's too good of a deal for the government. They get to tax what would normally count as capital gains as ordinary income. They might try to go after Roth plans but even those have upper income limits for eligibility and the worst they could do is make people pay capital gains tax when they withdraw from it, which would essentially turn them into deferred capital gains plans.

The only thing I could see them doing that would not totally upset the apple cart is to mandate some minimum employer contribution that does not require matching. I've spent the overwhelming majority of my career at companies that contribute a significant percentage without requiring me to put anything in from my own paycheck. I laugh when I hear about the matching other companies require, especially when it's the half matching, e.g. we'll match 1% for every 2% you contribute up to 5%. Really? If I have a temporary hardship and need to keep my entire paycheck for some time they aren't going to put anything in? Ridiculous. It's not like it costs my employer any more to toss in 5% if I'm not contributing than if I am contributing.

 

[Apoplectic_Objurgator]

Not in all cash anymore? lol

not any longer, my learning from the political pandemic.....politicians will ensure shaky businesses will not fail and will prop up the market with cash

 

[turkish]

What is Biden’s capital gains tax policy?

ETA. It’s naive to think CG tax benefits couldn’t be rendered meaningless.

 

[johnson86-1]

I don't think Biden is going to touch 401k plans if he gets elected. It's too good of a deal for the government. They get to tax what would normally count as capital gains as ordinary income. They might try to go after Roth plans but even those have upper income limits for eligibility and the worst they could do is make people pay capital gains tax when they withdraw from it, which would essentially turn them into deferred capital gains plans.

They are taxing what would count as capital gains as ordinary income after not taxing it for years in most cases and in most cases, they will be taxing at a lower marginal tax rate because of retirees ability to manage their income. If taxes remain roughly the same, I could in theory keep my marginal tax rate at 15% in retirement. Still a perfectly fine deal for the government. THey probably should get rid of the roth option. Makes no sense to encourage people to pay their taxes now when we can borrow at basically zero cost and give up tax revenue on funds that have presumably grown at a good bit more than 0%, and also will likely be taken out when tax rates are higher.

The only thing I could see them doing that would not totally upset the apple cart is to mandate some minimum employer contribution that does not require matching. I've spent the overwhelming majority of my career at companies that contribute a significant percentage without requiring me to put anything in from my own paycheck. I laugh when I hear about the matching other companies require, especially when it's the half matching, e.g. we'll match 1% for every 2% you contribute up to 5%. Really? If I have a temporary hardship and need to keep my entire paycheck for some time they aren't going to put anything in? Ridiculous. It's not like it costs my employer any more to toss in 5% if I'm not contributing than if I am contributing.

They are doing that to encourage people to contribute so that their highly compensated employees can also contribute without them having to make the full safe harbor contribution. So yes, it does in a sense cost them more to just contribute money without requiring a match. There have been times when I couldn't contribute but 4% to my 401k, and I could only get to 4% because the match encouraged some of our employees to save. Probably would have been 2.5% or even less without the match.

Also probably some paternalism in trying to get employees to save also so they don't end up broke in retirement. When I worked at places that made the safe harbor contribution, employees were constantly trying to do hardship withdrawals. Even ones that were middle class. By requiring a match, not only does it encourage them to save, it also discourages loans and hardship withdrawals, because they lose the match while they are not paying or while they are paying back 401k loans.

 

[Seinfeld]

Yeah, I suppose my eye rolling from that statement comes from the fact that her inability to save never had anything to do with how much she made. It had to do with her ongoing belief that wine, trips, and partying with the girls was infinitely more important

 

[ChinaDogSunflower]

Way to take it to the extreme, Shrek.

Is it really so evil to ask for independent investigation? Because the whole "we investigated ourselves and determined we did nothing wrong" thing doesn't seem to be working.

Conservatives *hate* unions, except police unions it seems. Unions have A LOT of power. And they use that power to lobby, therein affecting policy directly.

I'll agree that there are different unions, but don't they *unify* the workers? Unions kind of do make them one entity, do they not?

 

[ChinaDogSunflower]

They aren't intentionally murdering, but they are asked to do far too much and not trained to handle it. They escalate far more than they are required to, often bc they are simply not being obeyed and they don't know any other way to handle it other than force.

It's not fair to the people working the force or the public they don't even owe a duty to protect (Warren v DC). Noncompliance is escalated to fatal situations in many unecessary instances.

I get the mentality that you should always obey authority, no matter what. But who determines and vets those that hold the authority? If there are only a few bad cops, the good ones should be denouncing them.

The authoritarian mentality that so many people think is par is mind boggling. The Founding Fathers would roll in their grave.
"Those that would give up liberty for temporary security deserve neither security nor Liberty." is a good one from Ben.



**Disclaimer: There are bad people that cannot be reasoned with or controlled and under certain circumstances, it is absolutely necessary to take them in DOA. But I think people dehumanize and lump far too many petty criminals in with murderers and the like, justifying the murder of a petty drug dealer, etc.