The Democrat Thread

[iamshack]

So it's a good idea because you have the prerequisite knowledge and income that most don't have to make the most of investment opportunities? I'm not sure that's a good social policy.

Perhaps it could be something that you have the option to opt-in or out of?

[Balta1701]

It does not take some crazy amount of change to have a society that both rewards smart investors and savers AND protects those with only adequate competency or those that lack the means.

Worth thinking about though...the replacement of pensions with 401K's is a legitimately crazy amount of change.

[StrangeSox]

Perhaps it could be something that you have the option to opt-in or out of?

No, that'd result in an underfunded, unreliable system.

[iamshack]

You are literally involved in a trading market everyday, right? Doesn't that give you a decent advantage in understanding the risks and information associated with investment that a vast majority of people don't have?

I am involved in a commodities market, yes.

 

I suppose due to repetitive experience that might give me some advantages in understanding how some financial markets work, but to be honest with you, most of what made me a good trader was common sense...

[Balta1701]

I am involved in a commodities market, yes.

 

I suppose due to repetitive experience that might give me some advantages in understanding how some financial markets work, but to be honest with you, most of what made me a good trader was common sense...

My application of common sense is different than yours is though. My version of it involves knowing to ask questions like "Hey, this is a slope, is there a fault nearby that I should ask about?" when buying a house. Yeah, it seems like common sense...but if it isn't pointed out to you that you need to ask that...you're not going to realize you just built a $1 million dollar home 500 feet away from the San Andreas. (Citing a specific house in CA, btw).

[StrangeSox]

Yeah, but I think we can assume, based on your success and background, that you're a pretty intelligent guy. Certainly above-average. What about the majority who isn't as smart or doesn't have innate investing and risk-management understanding?

[iamshack]

So why does my income need to go to subsidizing your 401K plan?

Your income hasn't subsidized my 401k plan.

[StrangeSox]

401(k)'s and IRA's are tax-advantaged plans.

[iamshack]

A few minutes a week? I've spent easily the equivalent of that trying to figure out the gobblygook I receive from my retirement plans and I still feel completely incompetent afterwards.

Seriously? You cannot figure out the funds in your plan based on the holdings and the historical returns and the daily price trends and all the reports from the financial websites?

 

I think you're trying to equate investing to science, and you just cannot do that.

[iamshack]

401(k)'s and IRA's are tax-advantaged plans.

I understand that...but all kinds of s*** is...why does my income have to subsidize the roads Balta uses, the food he eats, the schools his offspring might go to in the future?

 

I mean come on, that is a ridiculous statement.

[iamshack]

Yeah, but I think we can assume, based on your success and background, that you're a pretty intelligent guy. Certainly above-average. What about the majority who isn't as smart or doesn't have innate investing and risk-management understanding?

Well I suppose the world is rapidly evolving into a place where the people that are the most intelligent, with access to the most education and information certainly have an advantage. Those people will tend to fare the best.

 

And if the electrical grid ever gets taken out like in Revolution, I will be f***ed.

[Balta1701]

I understand that...but all kinds of s*** is...why does my income have to subsidize the roads Balta uses, the food he eats, the schools his offspring might go to in the future?

 

I mean come on, that is a ridiculous statement.

But it is the exact same point you made about a guaranteed income retirement plan like social security.

[StrangeSox]

No, it really isn't. He's asking why we should make tax expenditures to subsidize 401k's and IRA's instead of just providing better SS benefits with that same money.

[iamshack]

No, it really isn't. He's asking why we should make tax expenditures to subsidize 401k's and IRA's instead of just providing better SS benefits with that same money.

Well, apparently neither of you can choose a mutual fund, but you have all the answers to every societal ill.

 

I don't f***ing know...probably because the government wants to simultaneously allow individuals to have control over more of their own money while providing incentives for them to save more of it?

[StrangeSox]

So if I really, truly can't pick a mutual fund because I suck at it, should I be forced to have a s*** retirement or to pay exorbitant fees for someone else to hopefully do a better job at picking?

 

I'm still not seeing any good reason for that to be the system beyond "well-off people can make some more money." It's not a net benefit for a majority of people.

 

 

[iamshack]

So if I really, truly can't pick a mutual fund because I suck at it, should I be forced to have a s*** retirement or to pay exorbitant fees for someone else to hopefully do a better job at picking?

 

I'm still not seeing any good reason for that to be the system beyond "well-off people can make some more money." It's not a net benefit for a majority of people.

Well if you want to use that reasoning, we should eliminate all kinds of personal freedoms for the sake of the greater good.

 

 

[Balta1701]

Well if you want to use that reasoning, we should eliminate all kinds of personal freedoms for the sake of the greater good.

Or, we could just recognize that switching to a 401K system has produced a lot of hardship for a lot of people and adjust our safety net somewhat in response.

[iamshack]

Or, we could just recognize that switching to a 401K system has produced a lot of hardship for a lot of people and adjust our safety net somewhat in response.

So we're expected to believe that you know all of the 401k systems flaws, and that those flaws are greater than any of it's advantages, and yet, you can't even pick a mutual fund out of your own plan?

Edited February 6, 2013 by iamshack

[Jenksismyhero]

So if I really, truly can't pick a mutual fund because I suck at it, should I be forced to have a s*** retirement or to pay exorbitant fees for someone else to hopefully do a better job at picking?

 

I'm still not seeing any good reason for that to be the system beyond "well-off people can make some more money." It's not a net benefit for a majority of people.

 

Not true:

 

21% of workers covered by 401(k) plans choose not to participate. (Source: Center for Retirement Research)

 

Meaning 80% do, and each one of those people get MORE out of doing so because they get free money from their company for participating, on top of any gains their investments make.

[Balta1701]

So we're expected to believe that you know all of the 401k systems flaws, and that those flaws are greater than any of it's advantages, and yet, you can't even pick a mutual fund out of your own plan?

There's a difference between picking them and having any confidence in one's choices.

[Jenksismyhero]

Of course it is. But there are two issues that feed off of that:

 

1) How do you get people to think long term? How do you get people motivated to seek out investment vehicles when it's 30 years down the road (especially if not employer sponsored)? I have long advocated personal finance classes as a high school and college pre-req.

 

2) What about people that just don't make enough to put money aside for retirement? SS and Balta are correct that at $50k with a family of 4, even if you are saving for retirement, you aren't saving enough. At some point, those people will be out of the workforce, either due to being too expensive or due to health issues.

 

I'm 100% behind idea #1.

 

As to #2, how about you start by not having 4 kids? This goes back to the personal finance skills and responsibility point I was making. 10000 years ago if you couldn't provide enough food for your family, you either didn't do it, or you died. You didn't look to your neighbors and say "hey boss, I had 2 more kids than I could feed. Can you and everyone else pitch in so my kids can eat?"

[Balta1701]

I'm 100% behind idea #1.

 

As to #2, how about you start by not having 4 kids? This goes back to the personal finance skills and responsibility point I was making. 10000 years ago if you couldn't provide enough food for your family, you either didn't do it, or you died. You didn't look to your neighbors and say "hey boss, I had 2 more kids than I could feed. Can you and everyone else pitch in so my kids can eat?"

He said "a family of 4", not "4 kids".

 

But I'm sure "only the rich should have more than 1 kid" is a great policy.

[Jenksismyhero]

There's a difference between picking them and having any confidence in one's choices.

 

So pick the Vanguard S&P 500 index fund, pay like .2% in fees and enjoy a steady growth that matches the market. There's no rocket science involved. It takes some reading and research. Just like it takes some reading and research into buying a car, buying a home, having a kid etc. - things that will probably end up costing the same or more over the course of your lifetime than potential losses on your investments.

Edited February 6, 2013 by Jenksismybitch

[StrangeSox]

Not true:

 

 

 

Meaning 80% do, and each one of those people get MORE out of doing so because they get free money from their company for participating, on top of any gains their investments make.

Wages would arguably higher if this retirement benefit were not there, not every place matches, many have long vesting periods and that still doesn't show a net gain over time compared to an alternative higher payroll tax (or eliminating the cap) and increased SS benefits.

[Jenksismyhero]

He said "a family of 4", not "4 kids".

 

But I'm sure "only the rich should have more than 1 kid" is a great policy.

 

He did, my mistake. My point remains. Last I checked the ability to have a kid isn't a right. If you can't adequately provide for one, you shouldn't have one. That's one of the basic problems we have in this country that gets ignored because "don't worry, the Great Provider will help you if you can't!"