401 K Vs Bullion What Do You Think

So lets say I do 10,000 a year into a 401K (which is aggressive and I don't know if many people can do that and probably not me), and get 5% return after 30 years (reasonable)? No I have 740,821.32 dollars. However 310,000 of that was my money. So I about 2.5x profit. Well that's great and all but chances are that after 30 years everything costs more than 2.5x what it cost 30 years prior. So I don't know if it's really like a money making adventure.

Well you are not going to withdrawal all that money at once and put it in a bank account... My dad retired a few years ago and when he get his 401k money he took it up to Edward Jones and opened an account and his FA put it into Stocks and Mutual Funds and my dad gets a check once a month and it is all interests money that he has earned from it... He hasn't touched his Principle money yet (that I'm aware of or maybe a little)...

Typically you should invest enough in your 401k to at least get the company match. If your 401k is with Fidelity, you have lots of good choices. You could build a simple portfolio made up of index funds and do well - for example, something like this is a good balance of growth from the stocks and income to smooth out the bumps from bonds:

40% Spartan Total Stock Index
20% Spartan Internstional Stock Index
40% Spartan Total Bond Index

I would max out your 401k before tax and/or use a Roth IRA (after investing at least enough to get your company match) before I would use after tax 401k. Tax deferral is very desirable.

I have heard that if your company matches your 401k contributions, you should first contribute up to the match. Then contribute to a roth ira. Once you reach the ira contribution limits, you can then contribute more to your 401k if you would like.



I think the problem with the analysis is that you are comparing what you think the prices will be in 30 years(greater than 2.5x) to today's prices but the $310,000 total contribution is made yearly over a period of time. The comparison would make more sense if the returns of each contribution were compared to inflation over the same time period. So the returns of this year's contribution is compared to inflation over the next 30 years, next year's will be compared to inflation over 29 years beginning next year, and so so. As long as the return is greater than the inflation rate, the purchasing power of each contribution over time will increase.



Stocks and bonds are expensive relative to historical standards and the interest rate on cash is about 0. So it tough to say which one is really the gamble. If inflation is greater than 0, you will be losing purchasing power by holding cash. Stocks and bonds typically return more which would better preserve or possibly increase your purchasing power but the risk of large losses of your initial investment is much greater.

You're going out of topic, I think everyone have different answer to this one. IMO! I would pay off my house sooner then later, but everyone has their opinions.

Just curious greenprint, have you spoke with a Financial Advisor yet...

Generally speaking, bullion is a wealth preservation tool - that is, it helps hedge against inflation. If your money is in USD and the rate of inflation (which in my opinion is substantially higher than the government leads us to believe) is 4%, your 100,000 savings is worth 96,000 in a year. (in terms of what it will buy) So while acquiring bullion will PRESERVE wealth, it is not considered a growth strategy, whereas the stock market is. As a young person, the assumption is that you don't have wealth yet, you need to acquire and grow it - so you'll focus mostly on the market, less on bullion.

That being said, I wouldn't put my money in a 401K account at all. Unless there was a greater than 2 percent match by the employer. I say this because due to the fees that are charged for managed funds, you can do just as well on your own. If you look at the 12b fees on most managed funds, they are substantial and by some estimates cost you as much as 250,000 over an investor lifetime. A quarter million bucks is a lot to give someone to "manage" your money. A much better approach is to open an E-trade or Ameritrade account (I'm not a financial planner or a rep for either of these firms) and just buy an index fund. Index funds just mimic the movement of the market (Dow, Nasdaq) and cost very little.

This way, you save a fortune in fees (and because your young, you make more in interest over the long term)

Then, over time you can build your precious metals collection with money that's left over. But as has been noted here - metals are volatile and not for the faint of heart. But the key is diversity. I agree with everyone who's told you to do both, diversify. I disagree (respectfully) with everyone who has pointed you toward just the market or just precious metals. Just a 401K is not a good plan, nor is just precious metals. Do both...and and other things...diversify. Good luck.

Almost all FA's will tell you never to have more than 10 to 15% of your money in Precious Metals... So what about the other 85 to 90%?...

The problem with PM's is that no one knows what the price will be in 30 to 40 years and lets say Silver is at $20/ounce in 30 years then you really didn't gain much of anything and your probably going to lose when you try to sell as no PM buyer is going to give you $20/ounce for it...