Should You Invest in Your Crappy 401(k) Plan?

We don't have very much experience with 401k's, but Lauren's work just set one up. I was amazed how horrible our options were. Most funds had a front end load of 5% and the manager wanted 1% of our wealth per year for his "advice." Unfortunately, despite the lack of options 401(k)'s are usually worth it. Between a company match and tax advantages you'll probably recover a lot of those fees. It's just a shame we have to pick the lesser of two evils. Links: Should You Avoid Your Company's 401k (Jim Collins) - http://goo.gl/SOiCRI How to Campaign for a Better Plan - https://goo.gl/JnJZF7 Funds Can't Beat the Market - http://goo.gl/QdplTr Jack Bogle on Fees - https://goo.gl/FVz03k Sign up for monthly income, expenses, and net worth reports! http://newsletter.mikeandlauren.com Help us make these videos: https://www.patreon.com/mikeandlauren Twitter - https://twitter.com/mikeandlauren Instagram - https://instagram.com/lauren_moyer/ Facebook - https://www.facebook.com/mikeandlaurentv Check out our blog: http://www.mikeandlauren.com

Comments

1. Sounds like a commercial for Vanguard. I prefer investing in real estate over any 401K. I get paid every month. It's about cash flow.
2. I really need to look into this! Thanks for the great video! I just got a great job. I'll be making 200k this year. So I need to be smart with this. I was simply going to max out my 401k contribution. I am going to research index funds from Vancouver. Thanks!!
3. Do not ever pay into 401k. If you want to save for when you are old then put YOUR money in a safe and not in the bank. The banks and 401 k will robb you of at least 1/2 your money in hidden cost so you are better off taking the full amount from your Safe. Not to count if the stock market crashes or you have to take it out before you retire for emergency. You only get 60 days to pay it back when you borrow and I don't know anyone that can make up there loss that quick so save your money and when you need to borrow a little you can without being charged anything. It is a big money making scam for the rotheschild family.
4. 3:30 "Serious tax implications" to convert your 401(k) to an IRA. With a direct 401(k) custodian rollover to IRA custodian there is NO tax implication. No need to hire an accountant.
   
   You fudge with some of numbers and percentages regarding sales loads and expense ratio and manager fees. That's just sloppy work.
5. Can you talk about 403 b plans for teachers? What teachers should be looking out for.
6. When I see couples that wouldn't match in real life, I conclude right away that they are selling some crap while shitting on another crap. Wasted few minutes of my life.
7. People are all too quick to point out "the IRS doesn't tax the income you deposit into your 401k." While this is true, the part they fail to realize is your 401k WILL BE TAXED the moment you collect it upon retirement, (which, of course, is when you need it the most.)
   
   Worse yet, there are withdrawal fees, commission fees, etc... those pile up more than you think.
   
   Probably the biggest risk we all take is the assumption (and it IS an assumption!) that the stock market will be doing well when we turn 60.
8. What if the 401k invests in the vanguard funds?
9. how do become a 401k manager???????? $400 a month for 1 phone call a year to read the highest percentage??? yea ill do that!
10. The word for the day is ...."fiduciary" and how it relates to financial companies........When the stock market crashes along with your 401k, does your 401k rise back up to the same $ amount as before, once the market goes back up and stabilizes?
11. Just FYI, Vanguard doesn't directly sponsor 401k plans. Also, most people's 401k plans aren't quite as crappy as Lauren's. Very few people pay up front sales loads. I had never even heard of that! I have 5 actively managed funds in my plan. The blended expense ratio between the 5 funds is about .70% with no sales loads. This also includes administrative fees. I know index fund die hards will think .70% is still too high, but I do have the option to pick index funds if I want...although they have annoying admin. fees on them that bring their expense ratios to about .26%. In any case, my plan is more reasonable than Lauren's and the one I have at my employer is typical of other plans of friends I've seen. It helps to work for the government or a larger company. They usually have better plans at lower cost.
12. Sorry guys, the Front end load commission is optional and up to the Advisor which they (almost) never do because yes it is scummy, we usually just settle for the trailing commission which comes out of the management fee. But still, the rest of it is not great.
13. Obviously, you are correct about no front loads and the high expense ratios for those.  However, an all-index portfolio will replicate the market not just on the upside but also the down (less the ER).  Why would you want to own every company?  Why would you want a cap-weighted index?  So the discussion becomes more complex.   Generally, though, your focus on low-cost investing is correct.
14. Vanguard is great.
15. While I don't get a match working for the state government, but I get a S&P tracker no load and 0.04% tracking fee. Small cap, and bond trackers are similar. Yes there are some "managed" funds, but I stay as far away as I can.
16. I have never seen a 401K plan that charged sales loads. That is absolutely horrible. I would say that this plan really isn't worth it. Some of these funds would be ok without the sales charge.
17. Lauren's options were pretty bad. I've never seen one that bad before. I made a quick video explaining the two big reasons why someone SHOULD utilize their companies 401k. - https://www.youtube.com/watch?v=xKFMa17fSpA
    
    Keep the content coming guys!
18. I dont care, my company matches what I put in up to 3%. So i put in 5% and they add in their max of 3% so 8% of my bi-weekly check. I only dont like that I am unable to pull out hardship funds because their idea of a hardship is educational problems or getting kicked out of your house, nothing for legal fees or debts. Oh well.
19. I'm just now turning 20 I can't invest in my company's 401k for another year they match 8% is that good? Everyone at the office says its beyond good but I just want an outside opinion. I plan to be with the company for my entire life I love the job.