I'm not trying to pick an argument here, I'm but I'll admit I'm trying hard to understand how people over a long period think that 401ks are a bad idea and are so concerned about losing money in a 401k versus a self-managed account, even if they just banked on index funds/bonds/international diversified, and how they would do better if they just contributed to an after tax account that gave them
Aside from the raw performance (or lack there of ) of fund selections outside a 401k plan, how often would most people have the discipline to regularly contribute to an account? Also, even if you do select funds yourself in an after tax account that does a few percents better than your companies 401k plan, aren't you paying a pretty hefty amount in taxes from dividends/cap gains/distributions in an after tax-account?
Again, not trying to argue here. But if you are one of the people that chose to not participate in a 401k but rather invested in an after-tax account. could you post some data to allow me to see what your effective return really was over say a 10 year period?
I can post some of my own data here, as needed if someone(s) are willing to participate in this.
Roughly, I started working in 96, and have maxed out every year on 401k, and switched companies several times.While a few employers matched up to a small amount, most didn't match. Also, being that i switched so many times, I didn't get to keep most of the company's matching. In all cases, I still have the original 401k accounts from each employer, since above a certain amount you aren't required to rollout (at least my ex-employers). So as a reference point, I maxed out 401k contributions from 1996 to now. Using the maximum contribution tables below:
This is a total of $140.5k of contributions.The current value is $240k, including $20k that I'm taking out related to employer match. Ok, so I know the returns aren't that great over 11 years, but this includes the period of dot.bomb bust and the market corrections that are going on right now. And the only thing I did was to divide my contributions into the standard large cap/mid cap/small cap/bond and fixed income/international (index when possible), staying away from specialty funds like "tech funds", "gold/silver"(grrrr). (I did do some of these specialities in non-401k accounts, but I'm not counting them here). Oh, and occasionally rebalancing among the mixes (like right now, I'm slightly more heavy on the international than domestic).
Yes, I know some of you think these returns suck, but these 401k accounts for me are suppose to be more conservative in my portfolio.
Can someone who is over average financial capability who choose not to participate in a 401k plan for the past 10-11years but instead deposited that net taxed amount each year to either an after-tax account and/or IRA provide some insight into how you did? I'm mainly interested in the people who have average financial capabilities (not someone who trades for a living). Professional traders, please excuse yourself from posting. I understand if you are a financial guru and can make a living trading why you might be inclined to "do it yourself". But I would think that most people aren't "pro" (including me), and I'm mainly looking for the average person with reasonably financial intelligence to post some numbers going the other non-401k route.
Please be honest. I'm not trying to "eball" here. i really would like to get some information about the pros and cons of 401k in real world examples. If you don't feel comfortable using absolute numbers, feel free to post percentages (provided you are honest about them). Also ,if you could, provide a rough detail of your asset distribution (type of funds-don't need to be specific).
Again, I'm more curious about finding the true answer than being right or wrong here. If there is sufficient data to suggest the possibility of being better off outside of a 401k, I definitely would be open to it.
