Well, today should be a fun one. We're talking about how much money you should
put in your 401k if you're in your 20s. Listen up. I think you're going to love the
answer. So, today as we get started on this conversation about how much money
you should be putting in your 401k. I want to start by sharing with you why
people contribute to a 401k, why it even exists where it came from. And then I
want to actually get real with you and share the math of how much good it's
actually going to do you. As well as what are your alternatives. Do you have to
invest in a 401k? Or are there smarter things that you can do with your money?
So, why do people actually put money into a 401k in the first place? You know, there
are some reasons why people just love their 401k.
I mean imagine, you get out of college, you're shopping for the company that you
want to work for. And that company wants you to feel as comfortable as possible
and they want you to feel like they're investing in your future. So, beyond just
a paycheck, they're going to actually help set some money aside for you. Let me
actually show you what that looks like. Number one, they're going to promise you
this thing called a match. Which basically says up to a certain percent,
maybe 3, 4 or 5 percent every year. Whatever you put in, they're going to
put the same amount in. And what they're thinking is, "I could give this to you in
the form of a salary but you know what? For us, a 401k is a little bit like
golden handcuffs. Meaning, we're building it, we're contributing. We hope that you
don't want to go anywhere. We hope you see this perk as something that can
become something someday." So, the match is definitely a reason why a lot of people
will do this. A lot of people will do it because they love the idea of a forced
savings account. Bottom line is in our world today, there are very few people
that actually like to budget. Believe it or not. It's not fun, it's not exciting.
People want to spend their money. And so they don't always trust themselves to do
the right thing. So, that 401k feels like, "Hey, the money is
automatically being taken out. I'm not aware of it. I don't treat it like it's
my spendable income. I'm saving money." So, there's a good feeling. But I think
unfortunately, one of the third things that ends up happening is that people
are doing it because everyone else is. There's this social pressure. And it's
the social thing to do. And "Oh, your 401k howling you've been
here. What's that growing to? What's happening in the market?" These are some
of the reasons why I think people invest in their 401ks.
Just for a moment, ask me what I think about that. Ask me how you think I feel
about 401Ks. If you're new to the channel then this
is going to be news to you. If it's not you're like, "Yup, here it comes."
Waboom! I'm going to tell you right now that the biggest problem with the 401k
is that this is your last little bit of discretionary income. You're locking it
in a place that what happens if you try to touch this money? You get penalized.
Number two, you get immediately taxed. And so people say, "Oh, I'm afraid I shouldn't
touch my 401K. If I touch it, all these bad things are going to happen." They're
thinking, "I've been at my job now for 10 years. So, I've accumulated
$100,000. And I only make 60,000 a year. or 80,000 a
year. If I take that out, first there's going to be a 10% penalty. So,
10% on on a grand is $10,000 gets flushed away. And
what about the rest of the 90 grand? Well, this year my $80,000 of
income plus my $90,000. That's going to bump me into new tax bracket. If my
tax bracket has me paying $25,000 taxes, that's another
$23,000 that you can go ahead and kiss goodbye. So, people are
saying, "Wait a second. Why would ever want to take my 401 K money up? That's like
$33,000, it just gets flushed right out of the gate. Oh!
That hurts. It's painful." And as a result, to avoid the pain, people will stay in
their 401 K. Now, I want to share with you what goes down. When you're in your 20s,
you're putting money in your 401 K and you're feeling proud and you're forcing
savings. When your 30s you're distracted by life and relationships and Social
scene's and maybe kids. But by the time you get in your 40s and 50s, something
happens you start shifting. You start realizing, "Hey, I was in the summer of my
life and now it says I'm moving into the fall and I should start preparing for
that. What if I actually set aside and actually saved for my retirement?" And now
I'm going to share with you my friends the ugly reality of the 401 K. What sounded
kind of fun and exciting at first. Most people, let's just say for a moment that
you've saved $150,000 in your 401 K and
you've been contributing for 20 years. First of all, your 401 K at best
has we been earning you around 4% on your
money. Now, you know what the rule of 72 is. The rule of 72 basically says you can
take the number 72 and divide it by the interest rate of anything that you're
earning and it's gonna tell you how many years it's going to take to double your
money. If you take 72 and divide it by 4, it's going to take you 18 years to double
your money. What's the problem with that? First of all, if you double your money,
that's not enough money anyway to retire on.
You've got to double it and then double it and then double it and then double it
and then you might have enough. 18 freaking years!? I'm never going to get where
I want to go. But most of you treat your 401k like it's your parachute. It's what
you're going to use to protect yourself. Maybe you put some money in an IRA.
I hate these vehicles. I hate 401ks, I hate IRAs, I get irate about them.
Because when you're in your 20s, you think you're being smart. When you're 30s
you're distracted. When you're in your 40s and 50s you start to panic. When your
50s and 60s, you start saying "I'm doing the math. Why didn't someone tell me 30
years earlier I was going to be screwed if I did this thing!?" So, I get a little upset
about it because I'm like --Time. What are you really wasting as you're wasting
time. So, now I'm going to say something really renegade that a lot of you are
not going to enjoy hearing but I'm going to say it anyway. What should you do? "Well, if
you have a 401 K from a current employer, it's hard to get out. I know a
handful of people that have been able to do it. Most of the time though you can
only access a 401 K from previous employment. Let's just assume for a
moment that you have $100,000 sitting in a 401 K from a previous job. You got your
$100,000 and you're thinking, "Okay. I watched Kris's video. I
don't want my life to pass by and not take my money that I should be investing
and growing with." Because a 401 K is not investment. 4%? Are you kidding
me? Inflation is 3. You're going nowhere. You're doing nothing. It's just...
It's pure lameness. That it's like maximum. So, you're like, "I need to follow
Kris's advice. I need to get my hands on some of his double-digit returns on his
real estate that he's doing. Or find out how to do that myself." So, all of a sudden,
you're like, "I'm going to take the 100 grand out." Watch what happens here. You
can have a 10% penalty. Do you know what I call that? Not a penalty.
That's called a cost of business. Because you made the choice
to put it in there and there was always going to be a penalty to get it out before
that age. Then you're going to say, "Well Kris, what if I have to pay 20%
in taxes?" Listen carefully, you can't avoid the taxes. You don't want to either.
You're going to have to pay them no matter what. Which means that if there is a 30
percent flush, then you're only going to keep $70,000 of it. Remember that 20
thousand in taxes was always going to get paid. The 10% is the only
thing that you can roughly your feathers over and just chalk it up as a decision
that you made when you were younger and you didn't know any different. The bottom
line is that $70,000 can be used to go and buy 2 properties.
These 2 properties can start paying you a cash flow right away. You can
actually start making money. And if you're following my system and earning
20-25 percent annual ROI, not 4%, remember on that 4%
I said that it was going to take 18 years to double. Do you remember
that? Well guess what? If I take 75 and divided by 25, do you know what
I actually get for the rule of thumb 7 divided by 25%? Is
I actually get 2.88 years. Now question: If you were doubling
your money every three years, would that be better than 8 years? Heck, yes!
Is it worth the tax and penalty? You're going to make it up so quickly. So, yes. Get
your money out and actually get it productive in doing something. I would
love in this video to give you the solution.
But the reality is this video has almost come to an end. That's why I made another
one for you. In the next video, I talked about the economic collapse. The reality
is you have to control your financial destiny. You can't put it in the hands of
government. You can't put it in the hands of your boss. Please don't put it in a
401k or an IRA. When you say how much money should I contribute my 401k. When
I'm in my 20s or 30s. Well, in your 20s, the real answers in my opinion zero. But
in your 30s, you should actually put in zero. But when you're in your 40s or 50s,
that's when I would actually probably just consider putting in nothing. Like
don't ever put money in a stupid vehicle that actually can't get you where you
want to go. Makes absolutely no sense whatsoever.
So, this next video is going to talk about the economic collapse. It's talking
about what's shifting the economy and you need to understand that when there's
blood in the streets there's opportunity. The greatest wealth transfer in the
world is taking place right now. The baby boomers
are actually giving and sharing their wealth and there's opportunities for you
to grow and get somewhere like never before. The real estate opportunities are
boundless. Right now, my sector of single family in the next decade it's going to go
from 70% ownership to 54% ownership. Which means a shift in people
wanting rentals exactly what I can show you how to do. So, you're on the verge of
one of the best opportunities. But you need to understand the collapse that's
looming and what it's actually going to make. I mean and the 20 plus trillion
dollars worth of debt and how it's going to stack. But how you can profit through it.
Winter is coming my friend. And when it does, you have an opportunity to make a
great financial life for yourself. But you're going to need some seed capital. You
know, where that seed capital is going to come from? I believe it should come from
your 401k and your IRA. So, check out this next video and then at the end of that,
check out the description there's more information on how you can get in the
game of real estate and business and ultimately, control your own financial
future and create the life of your dreams. Catch you on that next video.