Note: I don’t know how or why this rant didn’t go out when it should’ve, so here it is now.
Sally French of MarketWatch in a 2/1/18 article discusses the idea that:
In what many will see as the latest sign of investor euphoria — and of our society’s oversharing epidemic — sharing your 401(k) balance on social media seems to have become a thing.
OK…since bragging about your thing seems to have become a thing, let me first brag about my thing. Here’s our net worth as of the beginning of February.
With that out of the way, French continues her article by featuring a quote from my friend and fellow reddit.com/r/financialindependence moderator Subject_Beef from a thread he posted entitled, “This is what can happen if you contribute to your 401k and don’t touch it.”
I strived to become a 401(k) millionaire someday, and this week, thanks to years of consistent savings and a long bull market, that goal has come to fruition, at the ripe age of 45…
She follows with the screenshot Beef posted of his 401(k) balance and blend, offers a couple of similar instances of the Big Reveal, and finishes with what looks to me like a reasonable treatment of the state of retirement savings in the US.
But then comes the public comment section. What transpires on the surface of it seems like a decent debate over what it means to practice sound financial principles, but there are so many examples of financial illiteracy in the stream that…well…I caution you not to read ahead without your heart medicine handy.
Exsqueeze me? At no time will Subject_Beef owe the IRS a percentage of his balance. What he owes on 401(k) withdrawals , though, will depend on his taxable income at the time of withdrawal. And it’s totally possible to manage your taxable income to zero by minimizing expenses (and therefore withdrawals), engaging in loss harvesting, maximizing allowable deductions, etc. I do it every year. Haven’t paid federal income tax since I retired at age 36 in 2005.
This is exactly why you dollar-cost average. Instead of staying on the sidelines during 2000/2008, Beef kept buying…meaning he caught every bit of the subsequent recoveries and more than made up for his paper losses from the two implosions Douglas mentions. And that’s a practice worth bragging about.
Well, Jason…if you can call tops without indicators, why aren’t you a billionaire? The most sophisticated stock fund managers in the world underperform their markets 99% of the time, and they do it by trying to time their trading using the most sophisticated indicators in Christendom. If you’re seriously proposing using the Subject_Beef Index as the Sole Truth, have after it and write me with your results in six months. If I’m wrong about the approach, I’ll waterboard Sean Hannity for charity.
Also: anyone who believes The Big Reveal is the sign of a top ought to be shorting anything guys like Beef are buying. Right?
Not purely a financial point, but the ad hominem attack is a basic logical fallacy. Attack the argument, not the person.
This is a gross oversimplification of the reason for the current ten-year bull market. Low interest rates, high corporate profits, very little aberrant debt, favorable consumer confidence, pro-business tax cut legislation…and sidenote: this is one of the few times in an article’s comments section that I’ve seen Obama given credit for the bull market.
And I seem to be blaspheming a lot just now, but for the sake of our Lord and Savior, if you’re gonna attack “Millinials” at least have the dignity to spell the word correctly.
Well…OK. The craziness belabors itself, so I see no need to continue piling on. But I’ll sum up by repeating that I really do despair over the state of financial literacy in the USA. Kids need it but schools don’t teach it and parents just don’t get it. I don’t see this going any way except badly.