Tag Archives: thoughtoftheweek

Thought of the Week

Something to think about over the weekend.

(Warning:  Lot’s of numbers.  May cause boredom).

Quasimodo asked me to figure out how much money he would have over 30 years if he maxed out his 401k every year until then.

It was a lot.

This is not an investment blog, so I’ll spare you as much as I can, but I want you to consider it IF YOU ARE FINANCIALLY READY!

Take care of the other crap first, but…

Let’s say you are able to max out your 401k every year.  It’s $18,000/yr for everyone.  But often times your company will match some of it.  The company match does not count toward your limit.

Anyway, assume you’re able to contribute $22,000/yr after the company match.

And assume you did it for 30 years.

I want everyone to see this.

Assuming a 6% rate of return on your investments, your total amount at the end of 30 years would be $1,739,280.

And ten cents.

In my current lifestyle, if I did not reinvest my dividends and just took out the lump sum, that would last me 28 years.

Yes, I know about taxes and inflation.

The good news is a 6% return on investment is reasonable AFTER taxes and inflation.

The real dollar amount would look something like $5,309,000.

And even with inflation…. it’s still 5 million dollars.  Who is complaining?

Anyway, you’re thinking that you can’t max out your 401k, so I can’t be talking to you.

I get it.  I don’t max out my 401k.  Maybe one day.  But not right now.

Let’s say you can only put in $11,500/yr for 30 years.

That looks more like $909,000.

In your pocket.

If you live off of $2000/mo in 30 years from now, that money will last for more than 37 years.

Assuming you don’t reinvest your dividends.

Which you should.

But what do I know…

Anyway, just think about it.  I’m not telling you what to do.

You don’t have to focus on a 401k.  There are tons of investment options.  Many of them equally beneficial.

But say No! to life insurance investments.

JUST SAY NO!

Don’t conform.