Because America doesn't want you to save...

[tzor]

It's not that I can't be assed to do research on 401k. It's that I have to understand what my research means.

Step 1: Pick good funds for your 401K (Really your company should be doing that for you.)

Step 2: Select a general blance and level based on your current age and planned age of retirement (weight higher risk at younger ages and move to stable funds as you near retirement).

Step 3: Asset allocate: Often if possible (some plans charge you, if not do it quarterly). Asset allocation or rebalancing your portfolio is the same as saying "buy low and sell high" because those funds that do well (sell high) get moved to those funds that don't do well over the same period (buy low). In general things go up and down but in the long run everything goes up.

That's it. Oh and save save save

[Doom]

(1) is hard, although great in principle. My employer lets/makes me invest through Valic, which gives me a choice between dozens of crappy, stupid, horrible funds and other atrocious investments. The money I've been forced to invest with them has earned around a 0% rate of return over the last dozen years. A couple of years ago, my representative called me, thrilled, when I was up...so few of his 'clients' had actually managed to make anything off their ridiculously bad selection.

(2) This is such a nice theory. I recommend instead investing in stuff you, personally, know to be good, rather than take something someone says is 'higher risk, because you're young'. The current market risks are vastly underestimated, and your broker is only passing on the crap his back office or sales office tells him to pass on. Once I realized how the system worked when I was a broker, I started doing the exact opposite of whatever my back office told me to do (i.e., shorting instead of buying, buying instead of selling, etc)...I did real well for the three months it took them to figure out what I was doing, but now that I know how the game is played on the other end of the phone, well, I'm not recommending trusting other people to invest your money for you.

(3) Everything goes up in the long run is a nice theory, but tell that to Enron, Lehman Brothers, etc. The Dow Jones is incredibly misleading, it sure looks it's going up over time. But those stocks get switched out. Stocks that perform poorly, get removed, and replaced with stocks that do well...this is exacerbated when institutional investors scramble to buy the new DJ stock (not to mention unload the old stock). If you're educated and knowledgeable enough to shuffle your portfolio around on a regular basis (and you're allowed to do it), you'd know it's much easier to say it than do it.

Tzor's advice is certainly ok enough...I'm just recommending be conservative, and make your own investments, picking things that you personally know to be good and are close to home if at all possible.

[Count Arioch the 28th]

When I had 401k, I picked high government bonds. Which means when the economy went kablooey a while back, I didn't lose out too much.

[tzor]

(3) Everything goes up in the long run is a nice theory, but tell that to Enron, Lehman Brothers, etc. The Dow Jones is incredibly misleading, it sure looks it's going up over time. But those stocks get switched out. Stocks that perform poorly, get removed, and replaced with stocks that do well...this is exacerbated when institutional investors scramble to buy the new DJ stock (not to mention unload the old stock). If you're educated and knowledgeable enough to shuffle your portfolio around on a regular basis (and you're allowed to do it), you'd know it's much easier to say it than do it.

Individual stocks do come and go, and balancing a portfolio of stocks (as opposed to funds of groups of stocks) is more complex because you need to weigh the companies to see how much you can weigh those companies in your portfolio. You can do your own research, or you can use a service (like the Motley Fool, not that I am recommending those two guys) and plan accordingly. A retirement account should be fund based so that someone else can do that work for you. Then you can asset allocate based on various funds. Diversification is the key. One stock may fail miserably, one may succeed massively. Some companies fall never to rise again; others fall and rise again and that fall is the biggest buying opportunity you will ever find. I made a killing on the "fall" of Reuters stock because that was when I invested. (When 2008 came I did it again, and the dividens are very nice.) But in general you need groups of stocks and large scale diversification.

[Ganbare Gincun]

The stock market is a means for rich people to take money away from poor people, nothing more.

So what can the non-rich do to actually have some money saved up whenever they retire? Is throwing your money into a 401k just as good as throwing it into a hole? Or is retiring even an option in American anymore?

[Username17]

The stock market is a means for rich people to take money away from poor people, nothing more.

So what can the non-rich do to actually have some money saved up whenever they retire? Is throwing your money into a 401k just as good as throwing it into a hole? Or is retiring even an option in American anymore?

The basic problems with 401(k) plans were known Ten Years Ago. Basically the 401(k) is a profit sharing plan where the employer's contribution is based on how much profit the company claims to b making today, and the amount of money you actually get to retire on is based on a completely arcane formula based on how much money the wallstreet banksters decide the market is worth today.

Obviously, like playing a giant game of 3-card monte there will have to be some winners to keep people playing. But essentially it's like putting your savings into lottery tickets or numbers rackets.

In the United States, corporations sold the people a load of hooey about how if they put money into the magical stock market instead of traditional defined payment pension plans, that their money would see double digit earnings forever. And because of the higher rate of return, it was totally OK that the corporations were going to be paying less money into the nest egg, right? Well, the stock market doesn't go up forever, and the corps putting less money into your nest egg means that your retirement plan is just plain fucking smaller.

-Username17

[tzor]

Frank, your analysis of the 401K is bullshit. The employer contributions to the 401K is gravy, nothing more and nothing less. Most 401K plans are not run by the company but by a professional fund management company. I've been in a 401K plan without employer contributions and I love it. I love it only because you get almost $15K tax free into those funds where the IRA account is only $5K.

As a result I have real funds. It's not a "pension" by any means, nor is it a game a 3 card monte, since you can literally move that around to another company entirely. (My old Reuters 401K plan got moved to a Met Life plan that has a guarenteed minimum.)

Frank, the "work for the company until you die or retire" model is dead. Even when it worked it fucking sucked; why the hell do you think the liberal progressives invented social security in the first place? Becasue the disposable income of retired people was squat shit.

Please get off of the capitalism must die bandwagon. If that fails then so does the "traditional defined payment pension plans" fail. In fact, everything fails. The fact is that major corporations have been fucking traditional pension plans for decades; the entire motor industry collapsed because of all the benefits promised to the retirees that could not be kept. In the next decade, a significant number of states in the United States will have to decide whether or not to fuck the pension holders or to go belly up. (Especially when you have people who fuck the system making 300% in overtime on the last year to guarentee them the gravy train for their 50+ year retirement.)



See, it goes UP over the long term.

[Doom]

Ok, no. Again. I said this already, can't believe you're actually showing that incredibly misleading chart.

The DJIA chart you have there doesn't take into account that companies go OFF the list, to be replaced with companies that go on.

Here are the original 12 DJIA companies:

American Cotton Oil
American Sugar
American Tobacco
Chicago Gas
Distilling and Cattle Feeding
General Electric
Laclede Gas
National Lead
Tennessee Coal & Iron
North American
U.S. Leather
U.S. Rubber

(Note: it was increased later on). 11 out of 12 are gone, now, and this is how DJ works. So, yeah, the chart is going up, but only because stocks that go down get taken out, to be replaced with stocks going up. It's not "everything goes up eventually" (making investing easy), it's "something is going up at some point" (making investing hard).

GE is still around, even still on the DJ, but the rest? Heck, I don't even know if GE is good over the course of 110 years (probably, but you have to put it in context, and account for inflation)...the other 11 certainly didn't.


If you want to compare 1928 to 2007, you can look here.

Look at those amazing companies from 1928...Bethlehem Steel, Chrysler, Goodrich, Union Carbide. Still around, perhaps, but removed because they weren't performing well.

How the *hell* can you look at the DJIA chart over 100 years and think it represents anything meaningful? For the record, I'm pro-capitalism...but that chart is still rubbish.

[Doom]

So what can the non-rich do to actually have some money saved up whenever they retire? Is throwing your money into a 401k just as good as throwing it into a hole? Or is retiring even an option in American anymore?

My father started with practically nothing, and I think it can be fairly said he made it to the upper middle class. His success mainly came from identifying horrible government policies, and investing to capitalize on it.

Namely, he realized that the creation of massive government housing loan programs would lead to great increases in the prices of real estate, and invested accordingly...and learning on his own how to make just about every conceivable repair. My parents also saved and were frugal--a running joke in my family was when my mother, who was a real estate agent, sold a house, we would celebrate by going out to eat at McDonalds.

And, truth be told, the joke was funny because there was a grain of truth to it.

I hope to follow in his footsteps, although I've barely a shadow of his ability to make money, I concede.

Definitely reconsider the notion of 'retirement'; my father never did, at least in a real sense...and I certainly don't plan to. Why would you want to do that?

[mean_liar]

Pensions can be negotiated down after you've retired. That's a tremendous load of shit. Not only that, but they rely on funding that's traditionally been raided for budget shortfalls elsewhere: Google "unfunded pension" and you'll get a raft of results basically stating that all that money those pension'd folk thought they were getting, they aren't getting. Those promises made to pay out guaranteed benefits don't exist: they're fucked, one way or another.

So, does the American retirement exist? Yes, it does, but barely. You just need to be able to work until you're 70 or so (government workers traditionally have their pensions and retirement kick in at 60 or younger), and be willing to live within your means and just give whatever you can to your 401k until it hurts. It means that your life is on the threadbare side of things, but it at least means that you can retire. Even then my guess without numbers is that you'd only be able to retire if you're making $40k or so a year for most of your career.

[Ganbare Gincun]

Definitely reconsider the notion of 'retirement'; my father never did, at least in a real sense...and I certainly don't plan to. Why would you want to do that?

Most Americans are working like dogs at jobs that they loathe for wages that haven't risen since the 1980s. The middle class is fast becoming the underclass, and things aren't going to be getting any better in our lifetime. Most Americans don't have the "option" of being frugal like your Daddy did to save an extra buck or two for investment later on - they have to be frugal if they want to make ends meet and enjoy indulgences such as "shoes" and "food". Some of us have to have real jobs to keep this country running; we can't all play at being real estate barons.

[Doom]

My goodness, that's quite the collection of tired rhetoric you have there.

Most Americans piss away most of their money on beer, cigarettes, and lottery tickets. Most Americans don't take proper care of their vehicles, and take out loans to buy the next one....and treat their bodies little better, bemoaning their bad luck when their health fails. Most Americans call a plumber and pay him a few hundred bucks rather than figure out how to turn off the hot water heater. Bottom line: lots of people do lots of bad things for themselves. What are *you* going to do for *you*? That's what you seemed to be asking about, after all.

Yes, things are bad, and lots of folks, rather than saving a little when they can, just keep chucking away opportunity after opportunity to live any differently.

So, are you here to bemoan how bad stuff is, or were you legitimately asking what the non-rich (like yourself) can do to save for the ill-advised retirement?

[Count Arioch the 28th]

Wow, it's someone telling poor people that they choose to be poor and that they could make simple, obvious changes that only someone on the internet that has never met us could point out. That never happens!

Dear Doom:

Eat all the dicks.

Sincerely,

Arioch.

[EDIT] p.s.: I will only read responses from Doom when he is done eating all the dicks. If anyone wants to jump in on his side, they will have to assist Doom in the eating of all the dicks before I will read them.

[Doom]

Fair enough...wasn't talking to poor people, thought I was talking to *you*. This kinda reminds me of a gf I had a couple of years ago. Always complaining about how she never had money. Didn't even have money to put gas in her car, so I rode with her to the gas station to fill up (although I had to brush the receipt from Starbucks off her car seat, from the coffee she'd driven to Starbucks to purchase that same day). Mother of 3 children, pushing 40, not stupid at all.

I asked her to start selling my old Magic cards and crap on e-bay, just a couple of hundred dollars a month, and to keep the profits...over time, she'd have a rep and then maybe I could sell the really expensive ones, we could get a little business going, even. She'd sold a few things on e-bay for her kids, had a camera and everything, and said it was easy.

"I can't get ahead on $200 a month!" So, no dice, and my cards sit in the closet to rot.

A year later, her car breaks down, needs $1,000 of repairs. Huge big stress for her. She's about to put it on her credit card and pay it off over years at 18% interest. I pay the bill instead, but she wasn't happy about it.

"If I had a good paying job like you I'd have $1000 laying around to fix my car."

Just a different point of view, lots of people around here think this way, and I can see how in some sense she's right.

Anyway, I guess I misunderstood you when you asked about what someone could do to save. My bad. Times are tough, you're screwed, nothing you can do.

[Count Arioch the 28th]

Fair-

Sorry, you still have dicks to eat. Better get started.

[Username17]

Ok, no. Again. I said this already, can't believe you're actually showing that incredibly misleading chart.

The DJIA chart you have there doesn't take into account that companies go OFF the list, to be replaced with companies that go on.

Even if you pretended that the chart represented the average of all the stocks (instead of just the average of the good ones in any era), just look at the end of the chart. It's been roughly stagnant since 1999. As in, if you've been pumping money into DJA stocks you haven't seen a net growth in value since Clinton was president. Meanwhile, every dollar you've socked away has to be a dollar and eight cents just to have the same buying power.

People make money fiddling with the stock market. The people don't.

-Username17

[Juton]

Anecdotes work both ways. A friend of mine got their B.A. 2 years ago but the only job they've been able to find in their town is at a big-box hardware store. After a year or so of that, they've gone back to school to get a second degree. Before you get all smug about him choosing the wrong major, his field (something to do with archiving) need university educated workers when he went into it, but by the time he got out all those positions seemed like they where filled.

I see this story repeated again and again, if you didn't learn a trade or get into academia you're working a shitty minimum wage job. I heard an old roommate who just got his masters is working three part time jobs to support his new born.

Entrepreneurship is great and all, but in those stories they always seem to gloss over the fact that most entrepreneurs fail. Even people who work hard can fail, or succeed in such a minor degree it's a Pyrrhic victory. I'd really like it if everyone stopped associating being poor with being lazy, I'd really like it but I'm not going to hold my breathe.

[Ganbare Gincun]

Wow, it's someone telling poor people that they choose to be poor and that they could make simple, obvious changes that only someone on the internet that has never met us could point out. That never happens!

Yeah, I kind of figured he was a fucktard whenever he came on like Glenn Beck spouting off about buying precious metals as a legitimate investment strategy, but his whole entitled Teatard Republican bullshit spiel pretty much convinced me that he belongs in the Fox News Rubber Room along with tzor. Maybe when he pulls the silver spoon out of his ass, I'll consider taking him off ignore.

[Count Arioch the 28th]

My GF's mother owns a jewelry store. According to her, Silver is a better investment because it's far less volatile than gold. Also, gold is tricky sometimes. Gold is extremely valuable right now, but not even people that buy gold will touch the stuff because it's too expensive. When gold is at its peak, you can't sell it (seems like a punch line to me).

Also, I'm not sure if gold will have any value if our currency becomes worthless. Seems a dirt farmer with a plow would be the wealthiest person around if that happened. Gold is pretty, but last time I checked was inedible.

[Ganbare Gincun]

So, are you here to bemoan how bad stuff is, or were you legitimately asking what the non-rich (like yourself) can do to save for the ill-advised retirement?

I actually come from an upper middle class family and I do fairly well for myself, thank you very much. However, many of my friends aren't as fortunate as I am. They have college degrees, are underemployed, and have to work their asses off just to make ends meet. And the friends that I *do* have that are making bank just end up seeing that devoured by the costs of health care in this country. But unlike yourself, I am not a raging sociopath with an unmerited sense of entitlement and self-importance; I am actually concerned for those - friend and stranger alike - that have not been given the same opportunities that I have. I don't see poverty as a personal or moral failing, and I'm not stupid enough to advocate that "saving more" is going to fix all of your economic problems whenever you either 1) can't find a job or 2) can't find one that doesn't pay enough money to make ends meet.

And honestly, if you're anything like the Young Republicans that I used to run with, you're just ballin' off of Mommy and Daddy's money anyway. It's pretty easy to talk about self-reliance when someone else is cutting the checks for you.

So yeah, I hope you enjoy every juicy bite of those dicks you have to eat. Give Glenn Beck my regards in-between mouthfuls.

[Maxus]

Also, I'm not sure if gold will have any value if our currency becomes worthless. Seems a dirt farmer with a plow would be the wealthiest person around if that happened. Gold is pretty, but last time I checked was inedible.

And not -much- use in practical value. Although I suppose you could make good plumbing with it, since it doesn't tarnish...Nice conductor, though.

Also, if society collapses and all, doesn't that mean all those contracts to hand over gold are void?

[tzor]

The DJIA chart you have there doesn't take into account that companies go OFF the list, to be replaced with companies that go on.

The problem with the DJIA is not that companies go on and off the list. (That is the good thing, my argument is for a diverse portfolio of stocks that do get pushed in and out as they grow and die, which is why if you don't have the time and the big bucks you probably should use a fund and let someone else do that swapping.) The problem is that the changes in the DJIA reflect not the ability to minimize risk and maximize potential growth companies, but to blance a spectrum of stock types across the board. Ideally you should use a broader market index and most places (like the Motley Fool) use the S&P as a better indicator to compare performance to.

[tzor]

Gold is pretty, but last time I checked was inedible.

You can eat gold, it just doesn't do anything for you nutrition wise. The French flatten gold leaf even thinner and place it on top of a cake. Then again, that's just some strange French thing.

Forget gold, I'm looking for Gold-Pressed Latinum. It's currently valueless but in a few generations it will be priceless!

P.S. Anyone know how to do a search on the new IE pages anymore? The search menun has vanished. This is a total piece of crap.

[Doom]

I don't think you can eat paper money, either. Certainly, being self-reliant enough to farm is a good idea in case of 'total disaster', but I'm not at that stage, unlike the Count, there, who seems to know alot more about Glenn Beck and Fox news than I do (I watch neither, and only know the former as a name, hopefully the Count can tell us more).

Saving might not fix problems, but it *is* a start, and about the only start from nothing I can think of.

It's funny that you think I was born with a silver spoon or lived a charmed life. I was married to a drug addict, had to pay 12,000 for worthless rehab (insurance didn't cover it)...and that's not to meniton the cost of drugs. Also had to pay for her surgery on a cyst (insurance wouldn't pay, since she had a different kind of cyst elsewhere on her body 10 months earlier, tried for a year to get a break, was eventually threatened with violence if I continued...State insurance can do that). Good thing I had a job or two to supplement graduate school.

Had a son, buried him...I'll have to check my records to see if there was a bill or two, there.

Had cancer, three months of hell that still sometimes has me waking up screaming...insurance paid for that, at least (switched to private insurer, learned my lesson about State insurance), and still have issues with the chemo.

No checks from Mom or Dad on any of that, they saw no need, even if I'd asked. Overall, I know I've still been pretty lucky, but I think I've had a bad break or two, myself.

So, yeah, I've paid some dues. And when a student at another university is willing to pay me $30 an hour for tutoring, I go and do it. It's only a few hours a month. Can't get ahead on an extra $100 a month, but somehow, it seems to help.

I've never had a new car in my life (got my first car at 24), and I never have been a young Republican. I was a democrat when I was young, but never paid any attention to politics until I was in my 30s, and lost interest a few years ago when it became clear how things were going to play out.

Lots of entrepeneurs fail, absolutely. But most people that succeeded, actually tried to succeed, is the point.

[Count Arioch the 28th]

And people that fail also try to succeed. I only know 1 person that is not trying to succeed. However, he seems really good at getting women to take care of him, so whatevs.

My point is that "trying" is not enough. You need connections, timing, and a whole lot of luck in addition. Most people that try will fail.