Comments on: Beware the Trojan Horse — 401(k)’s & IRA’s — Learn Now or Pay Later http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/?utm_source=rss&utm_medium=rss&utm_campaign=beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later Real Estate Investing Through Purposeful Planning Mon, 14 May 2012 17:45:27 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: BawldGuy http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1442 BawldGuy Sun, 01 Aug 2010 16:44:05 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1442 Welcome Dave -- In my 40+ years I've not met the couple who religiously separated the tax savings from anything giving them tax shelter, and invested it. Of course, if they did, they'd do demonstrably better. But here's what makes the point moot. The real gift I gave the couple in the post was not even one year of loss. 3-4 decades of stock market investing and not one down cycle? Really? Not gonna happen. The reality is that when we have a losing year, we're transferred to the 'investing for retirement' treadmill. We 'run' on it 'till we've spent enough time, usually 1-3 years or so, just catching up to where we were. This couple was burdened with that reality. How many people do we all know who're now still working due to the last Wall Street downturn? That's a huge problem with 401Ks/IRAs. You simply CAN'T afford to have losing years. The folks still working instead of enjoying their retirement, never, for the most part, knew this could happen to them. Am I makin' sense? Welcome Dave — In my 40+ years I’ve not met the couple who religiously separated the tax savings from anything giving them tax shelter, and invested it. Of course, if they did, they’d do demonstrably better. But here’s what makes the point moot.

The real gift I gave the couple in the post was not even one year of loss. 3-4 decades of stock market investing and not one down cycle? Really? Not gonna happen. The reality is that when we have a losing year, we’re transferred to the ‘investing for retirement’ treadmill. We ‘run’ on it ’till we’ve spent enough time, usually 1-3 years or so, just catching up to where we were. This couple was burdened with that reality.

How many people do we all know who’re now still working due to the last
Wall Street downturn? That’s a huge problem with 401Ks/IRAs. You simply CAN’T afford to have losing years. The folks still working instead of enjoying their retirement, never, for the most part, knew this could happen to them.

Am I makin’ sense?

]]> By: Dave http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1441 Dave Sun, 01 Aug 2010 15:20:58 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1441 I totally agree with the big picture here. But unless I'm missing something (totally possible!) it seems to me that the most accurate representation of this story would have mentioned the compounded gain on the deferred taxes. The $3,000 per year would also have been growing at 8.5% for 40 years. That comes out to about a million bucks gained on the deferred tax, and only 1/3 of that will be paid back as taxes. -Dave in SF [novice and budding real estate investor :-)] I totally agree with the big picture here. But unless I’m missing something (totally possible!) it seems to me that the most accurate representation of this story would have mentioned the compounded gain on the deferred taxes. The $3,000 per year would also have been growing at 8.5% for 40 years. That comes out to about a million bucks gained on the deferred tax, and only 1/3 of that will be paid back as taxes.

-Dave in SF
[novice and budding real estate investor :-) ]

]]> By: BawldGuy http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1440 BawldGuy Thu, 11 Dec 2008 05:05:53 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1440 Thanks Jon -- much appreciated. Thanks Jon — much appreciated.

]]> By: Jon Boyd http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1439 Jon Boyd Thu, 11 Dec 2008 04:56:23 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1439 I've read a lot of investing articles and I was really caught off-guard by the "tax-naked" too. Good writing. Jon Boyd Ann Arbor real estate buyer's agent The Home Buyer's Agent of Ann Arbor I’ve read a lot of investing articles and I was really caught off-guard by the “tax-naked” too.

Good writing.

Jon Boyd
Ann Arbor real estate buyer’s agent
The Home Buyer’s Agent of Ann Arbor

]]> By: BawldGuy http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1438 BawldGuy Sun, 06 Apr 2008 17:04:08 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1438 Scott -- You're correct. One of it's insufficiencies is the dollar limitation per year's contribution. So many taxpayers are able to put in up to 10 times as much, but are prohibited. Also, in some of the tax free insurance vehicles, the freedom is relatively unlimited when it comes to either need or planning. Roth isn't a Trojan Horse. Scott — You’re correct. One of it’s insufficiencies is the dollar limitation per year’s contribution.

So many taxpayers are able to put in up to 10 times as much, but are prohibited. Also, in some of the tax free insurance vehicles, the freedom is relatively unlimited when it comes to either need or planning.

Roth isn’t a Trojan Horse.

]]> By: Scott Geisinger http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1437 Scott Geisinger Sun, 06 Apr 2008 14:56:55 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1437 Jeff this is an extremely well written article with a powerful truth. It is important to note however that the ROTH IRA gives the tax benefit on the earnings from investments and while the investor is taxed on the income they invest they are not taxed on it while drawing down during retirement . So the ROTH which allows investment now of up to $5,000 per individual or $10k per married couple is not a Trojan Horse but the real deal though admittedly insufficient. Jeff this is an extremely well written article with a powerful truth. It is important to note however that the ROTH IRA gives the tax benefit on the earnings from investments and while the investor is taxed on the income they invest they are not taxed on it while drawing down during retirement . So the ROTH which allows investment now of up to $5,000 per individual or $10k per married couple is not a Trojan Horse but the real deal though admittedly insufficient.

]]> By: Cher http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1436 Cher Sat, 20 Oct 2007 00:46:49 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1436 Hey, Jeff, Not a bad idea...hee hee. I've got time on my hands since those property managers of yours are not needing too much supervision lately. Hey, Jeff, Not a bad idea…hee hee. I’ve got time on my hands since those property managers of yours are not needing too much supervision lately.

]]> By: Chris Lengquist http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1435 Chris Lengquist Fri, 19 Oct 2007 15:07:19 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1435 A nice article. I give it two thumbs up. A nice article. I give it two thumbs up.

]]> By: BawldGuy http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1434 BawldGuy Fri, 19 Oct 2007 05:00:43 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1434 One of these days, Cher, I'm gonna offer you a job. :) One of these days, Cher, I’m gonna offer you a job. :)

]]> By: Cher http://bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1433 Cher Fri, 19 Oct 2007 04:50:36 +0000 http://www.bawldguy.com/beware-the-trojan-horse-401ks-iras-learn-now-or-pay-later/#comment-1433 I agree with Robert( and Bawldguy also encourages people to use their equity for investments). The initial thought of a bigger mortgage was difficult as I was so driven to have a free and clear mortgage. The trick is to give up the "feel good" of the moment for much more security in the future. A tall order, and many Americans have trouble with letting go of instant gratification, but it can be done with courage and holding a vision of a properous future. I agree with Robert( and Bawldguy also encourages people to use their equity for investments). The initial thought of a bigger mortgage was difficult as I was so driven to have a free and clear mortgage. The trick is to give up the “feel good” of the moment for much more security in the future. A tall order, and many Americans have trouble with letting go of instant gratification, but it can be done with courage and holding a vision of a properous future.

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