The 401(k) and IRA are as traditional to Americans as apple pie. We’ve grown up with it. It’s reliable. It’s just what you do: Get a job, invest in a 401(k) and retire happy, right? Wrong. The traditional 401(k) and IRA model could be destroying your retirement plans and you don’t even know it.
A 401(k) only works as a retirement savings plan when it’s efficient, which it too easily is not. Many come with huge (often hidden) fees and expense ratios attached. Imagine if for every $10,000 you invested in your 401(k) $4,000 was lost to fees. This isn’t imaginary — some target-date funds (TDFs) have extremely large fees.
Beyond that, your returns depend on the day, month, year, political climate, rumors on Twitter and Facebook and so on. It’s not a comfortable feeling knowing your retirement depends on someone else’s actions and words. Here is a real scenario: A co-worker was set for retirement in 2008. When the crash happened, she lost 40% of her 401(k). If she had $500,000 in her retirement account, that would be a loss of $200,000 in retirement savings because of factors largely beyond her control.
But is there an alternative way to invest your money that gives you more opportunity for greater returns? Absolutely — real estate. In fact, I believe so much in turnkey property investments as a passive investment vehicle that I co-founded a company that helps Americans access them. If we compare the two options side by side, you may be shocked to realize how much you’re losing by letting other people take control of your retirement investments in a 401(k).
Let’s explore a scenario where you have $70,000 in your retirement account invested in mutual funds. After you…