Comments on: The definition of insanity …

By: Adrian

Adrian — Wed, 04 Feb 2009 21:15:16 +0000

@ Dave M – … and, you put most of your additional cash into your mortgage; sound Making Money 101 strategies … well done!

Now, how’s that all working out for you? When do you retire and how much do you expect to have in your little ‘nest egg’ when you do ? How will that compare to your then-current salary?

By: Dave M

Dave M — Wed, 04 Feb 2009 17:52:03 +0000

Adrian:

No offense, but I think you’re giving bad advice here with regard to 401K plans. For many people, it’s the only way they can save up a little money for retirement.

For me personally, I contribute just enough to get the full employer match, and I choose index funds with very low fees.

Example: I’ve been with my current company for about a year and a half. In that time, I’ve contributed right around $10K out of my pocket, and THEY have contributed $6K. That’s $6000 dollars, or $333+ per month, of FREE money I would have left laying on the table if I followed your advice.

Further, I invest all the fund in an S%P 500 Equity Index fund that has a total expense ratio of .05%. Doesn’t sound like high fees to me!

Granted, my account is getting hammered right now due to the overall market conditions – just like everyone else. But, share prices are low, and I’m continuing to invest out of every paycheck just like always.

Dave

By: The definition of insanity (link)

The definition of insanity (link) — Wed, 04 Feb 2009 14:11:26 +0000

[...] (link) A good, thought provoking post from 7 Million in 7 Years, one of the best financial blogs. The definition of insanity « How to Make 7 Million in 7 Yearsâ¢ [...]

By: Diane

Diane — Tue, 27 Jan 2009 15:47:01 +0000

Has anyone ever heard of a reverse mortgage being used in conjunction with retirement communities? I think that is how the retirement facilities are setting up to help folks make the transition thru grace, but by virtually “selling” their home (and its entire equity) to the facility. Any one know about these?

By: Mark

Mark — Tue, 27 Jan 2009 03:25:58 +0000

@anonymous – I think insurance should be an option to cover such cases. Maybe an insurance agent who is not out to make too much money out of you can advise.

By: anonymous

anonymous — Tue, 27 Jan 2009 02:12:24 +0000

One answer is that in the US, many people can have their entire net worth wiped out by a medical emergency. I am employed, fully insured, and worry about this.

By: Adrian

Adrian — Tue, 27 Jan 2009 01:47:05 +0000

@ MoneyMonk – Great question, BUT a 401k is not an ‘investment’ – lousy or otherwise … it’s a government subsidized (via taxation advantages) savings program. It’s HOW you invest your saved funds – tax-advantaged or otherwise – that will determine your success.

My suggestion: first decide IF you need to become a “millionaire” – and, by when – then use this post to help you determine where and how to invest:

http://7million7years.com/2008/09/30/its-the-gradient-of-the-curve/

By: Moneymonk

Moneymonk — Tue, 27 Jan 2009 00:21:47 +0000

Where do you suggest an average joe (not a millionaire) to keep his or her nest egg if 401k are lousy investments