76.8% Return on 401K

[RSKY]

Wife and daughter got their quarterly papers for their 401Ks last week. Both made a return of 76.8%. I had split both their investments between two funds. They are both Kentucky teachers. I couldn't believe it so I went back and looked at their charts and sure enough the market, and their funds, dropped quite a bit last April. The real rate of return if the market hadn't dropped so much last year would have been closer to 40-50%. That is still fantastic.

I have a prepared speech that I give to all young-uns about this wonderful, great, program. Talk to your kids and if a fund is available at their workplace that has any type of matching they can guarantee themselves an early, very comfortable retirement by investing. Even if no matching funds are available they can lessen their tax burden and save for their future.

Unless the government changes the laws. Getting close to politics here so I will end my post.

RSKY

 

[Richard]

No doubt that's a great rate of return.....however, is that the current annual rate? Annualized over the last 3,5 years? Since inception?

There's more layers of the onion to peel back.

That said, I agree with you 100% (I help teachers/State Employees in TN with their pensions & 401K's)

Even better if they have a Roth 401K option. (my opinion) Many do and don't realize it.

 

[5030]

I suspect the 'boom' will go 'bust' and soon. My retirement plan is really climbing but I'm not holding my breath as to longevity.

 

[MossRoad]

401K's are a great tool for investing. Especially if your employer does matching.

Mine is currently doing 50 cents on every dollar I put in up to 6% of my income.

So for every buck I put in, they give me half a buck. That's 50% interest right there. Plus it's making a decent return in the funds that I've chosen.

Granted, I'll have to pay taxes on it as I pull it out. I'm OK with that.

A ROTH 401K would be even better, but I don't have that option.

We do have ROTH IRA's that we converted from conventional IRA's as soon as we were able. Those are pretty nice too. No matching, but still a great investment tool. You can do a lot with that money with no penalty.

 

[Hay Dude]

I suspect the 'boom' will go 'bust' and soon. My retirement plan is really climbing but I'm not holding my breath as to longevity.

If you can borrow the banks money at 3-4% to purchase a new machine that makes money, keeping your own money to invest and making 10-50% gains, "payment books" look pretty good.

 

[MoKelly]

Back in “the day”, big companies provided BOTH defined benefit pension plans and 401-k’s with matches.

No longer.

Glad I worked back in the day.

MoKelly

 

[MoKelly]

In 2020, the S&P 500 increased 18%.

My son has a 401-k and his employer matches 66.666% (2/3rds).

So, money he got in 2019 was-

$10,000 contributed

$6666 company match

$16666 contributed by end of 2019

18% S&P return in 2020 equal $3000

$19666 at end of 2020

Not bad for his initial $10000 contribution.

MoKelly

 

[NorTracNY]

Back in “the day”, big companies provided BOTH defined benefit pension plans and 401-k’s with matches.

No longer.

Glad I worked back in the day.

MoKelly

There are still a few left. I'm fortunate to work for one. The sad part is that they reduced their 401K funds so there are only 3 funds in it. bond/US/international. They claim that it was done because the employees were too dumb to figure out which funds to invest in and they stayed out of investing because of it. It upset a lot of employees and a lot of money was transferred out of the company's 401K into personal IRAs.

 

[LD1]

You can make alot of money or loose alot of money in the market. Its all in how you invest....and not really something for beginners.

401k's are mostly mutual funds. So if only investing in a few....you automatically have diversity. Where the stellar performers balance out the less than stellar performers.....and usually averages to a nice return.

EVERYONE should contribute to a 401k IF the company has a match. And you should contribute enough of your own money to get the full match....(usually 6%). Thats free money. Take all of it you can get.

Good Idea to split between both traditional and roth as well. Have to pay taxes on both.......its just a matter of "when". Roth contributions come out of your "net". Meaning you have already paid taxes on the money you put in there. Traditional are pre-tax. Meaning you havent paid tax on it yet. SO you can choose to pay tax before you invest.....or when you withdraw. The gamble as it has always been......what is the tax rate now. And do you think it will be higher or lower than when you want to withdraw. If you think taxes will be lower when you want to withdraw....go with a traditional. IF you think taxes are going to go up.....pay them now while they are low and go with roth. Most people I know do both....

 

[Hay Dude]

You can make alot of money or loose alot of money in the market. Its all in how you invest....and not really something for beginners.

401k's are mostly mutual funds. So if only investing in a few....you automatically have diversity. Where the stellar performers balance out the less than stellar performers.....and usually averages to a nice return.

EVERYONE should contribute to a 401k IF the company has a match. And you should contribute enough of your own money to get the full match....(usually 6%). Thats free money. Take all of it you can get.

Good Idea to split between both traditional and roth as well. Have to pay taxes on both.......its just a matter of "when". Roth contributions come out of your "net". Meaning you have already paid taxes on the money you put in there. Traditional are pre-tax. Meaning you havent paid tax on it yet. SO you can choose to pay tax before you invest.....or when you withdraw. The gamble as it has always been......what is the tax rate now. And do you think it will be higher or lower than when you want to withdraw. If you think taxes will be lower when you want to withdraw....go with a traditional. IF you think taxes are going to go up.....pay them now while they are low and go with roth. Most people I know do both....

I think I will go with the Roth lol