Why does everyone blindly trust the 401k and feel it's the best investment? The more I think about it the more it seems like a bad idea. Btw, I am not a US citizen and don't have anything (contd...)

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Make sure you check out the fees of the funds he's recommended to you. They can be really terrible. Vanguard is known for having pretty low fees, so I'd double check. They're usually structured as front-end load (a flat percent taken when you first invest, the worst time), back-end load (a flat percent taken when you sell out from the fund), and/or a set percentage of your fund value every year. If you're not able to tell, ask your relative to explain the fees for each fund so you know what you're paying. 401k funds can have high fees too, but usually that only applies for smaller companies with fewer employees who invest in the plan. A company like Deloitte should have some pretty low fees.

At this time, no, I don't worry about 401k rules changing. It's such a major part of everyone's saving plan now, that changing it would be hugely damaging to any politician that touches it. It's been in effect since 1978 and it's been a cornerstone of retirement planning since the '80s, so literally everyone who has worked since then would be effected. Since it's not a system that's fundamentally broken or getting a lot of attention, and so many other things are, I don't think it's a real risk.

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You can choose pretty much any Vanguard mutual fund. Your financial advisor doesn't like that he can't get fees from it.

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It's the employer match that incentivizes contributions. Not that any big 4 are that rich in that regard 😓

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They're not going to steal your 401k, if that's what you're asking, any more than any other bank can/will. If they make a change you don't like you can get out. Not sure what the fear is. Tax advantaged makes for a real difference though. Roth vs traditional is a tax strategy question, but both offer advantages over a full-tax account

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😂 D1

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Because 99% of people who try to micromanage their money underperform the market. Also, if you really need it there are plenty of ways to get at it.

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My financial adviser didn't like the Deloitte 401K. Told me to get the match (1.5% yay🙄) and has the rest going into a Roth IRA, 529, and an array of mutual funds

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The fact it's pre tax is a big plus

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Hmmm... forced savings and tax deferred seems like it would trump some perceived benefit of an actively managed fund. Most actively managed funds underperform the market in the long term.

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Market collapse would affect all investments, not just 401ks. They are not immune - see 2009-2011.

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You'd rather trust the government to protect your retirement income? No thank you.

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Do you not have the option to select what it's invested in? S&P 500 is a good bet.

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@D1 lol

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So what doesn't he like about vanguard?

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If you don't already have money in a Traditional IRA, you can contribute to an IRA and convert to a Roth even if you're over the income limit. It's called a back door Roth IRA.

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A 401k isn't in itself an investment.

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Run some simple Excel numbers: if you assume you save $10k pre-tax, 25% tax rate, 10% returns, after 10 years you have $120k post-tax in either a Roth or traditional account, or $106k if you saved it outside of a retirement account. Tough to make up that difference picking a better mutual fund, especially when Vanguard is an industry leader in many respects.

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Stretch it out to 30 years: $1.23M vs 775k

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401k isn't an investment. It is an account

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You know your 401k assets aren't on deposit with the government, right?

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