So, I’ve been reading a really fantastic personal finance book lately. I don’t usually read personal finance books, because, I don’t know, I feel like I get enough finance every day with the literally 100’s of blogs I subscribe too.
Anyway, I got this book from a publisher for free. I’m not sure if it’s been released yet, so I won’t reveal it yet, but it really spoke to me. Especially the entrepreneur part of me. Which is a big part of me, even though I have a half time job now.
It basically disses (that’s a word, right?) 401K’s the most of any financial instrument. And for me at least, I completely agree.
Why would I put money into the hands of someone else? So I can someday “retire” and THEN start enjoying life? Forget that.
I don’t get a match or anything in the 401K offered, and so I declined. Good move I think.
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You do know you can choose how your money in a 401k gets invested right? Also 401k plans having employer matching which is free money and they are also very tax efficient. You can contribute to them pre-tax (traditional 401k) or contribute to them at a lower tax rate (assuming you are young) as opposed to the tax-rate you will retire at (probably higher) – this is a 401k ROTH. Anyway….
I wouldn't do it either if it wasn't for an employer match. I put in enough to max out the match, and then invest the rest of the money how I choose. While I do have choices in my 401k they are very limited.
You are kidding, right? The tax advantages of investing your money pre-tax need to be a big consideration. Many custodians allow you to invest in any instrument. If you have concluded "spend now, worry later", then you are part of the growing national disaster. If you are just confused, I forgive you, and ask you to reconsider.
Good point … investing is not about letting someone else do the work.
However, I would probably go for the plan if the employer matched – it's free money.
Tax advantages! Tax advantages! Tax advantages!
Forgoing contributing to a 401(k) in order to be an "entrepreneur" is only wise if your profits as an "entrepreneur" significantly outperform the broader markets over time. And by significantly I mean not just beat them, but beat them soundly enough to overcome the tax advantages you're forgoing by not investing that money in a 401(k) account.
In the long run, most self-proclaimed "entrepreneurs" would be a lot better off parking money in a 401(k), in an index fund.
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