I’m Not Sure I Should Max Out My 401k Anymore

Here’s why, and here’s what the rich do

I’ve remained a firm believer that you should max out your ROTH IRA. And depending on your income, you should max out your ROTH 401k.

But should you?

I’ve started to question the stock market more and more. Investing much of our resources into the stock market could fall into the “betting all of your money on one sick horse” analogy I often mention in my articles.

The stock market has been proven to return 6–12% on average, but when you measure this against inflation, you’re not doing yourself any favors.

Inflation is on the rise, and it is only getting started. As the Federal Reserve continually allows for the printing money, guess whose paying the cost? We are—the taxpayers.

As long as the government can garner taxes from our earnings and everything else taxed in this country, there is really no incentive to stop printing money — especially since it adds balm and bandaids to all of the US’s economic woes.

Here’s Why I’m Reconsidering My 401k Strategy:

1 — Stock market crashes continue occurring. What if a stock market crash happens right when I retire? Yes, there’s hedging and transitioning investments into safer assets, but not everyone knows about these strategies.

What happens to the money of everyone who believes the 401k is the safest bet for their investments?

2 — The US Federal Reserve permits the continuation of printing money, which means inflation continues to blast through the roof.

The U.S. Federal Reserve controls the money supply in the United States, and while it doesn’t actually print currency bills itself, it does determine how many bills are printed by the Treasury Department each year. (Source: Investopedia)

And American citizens are the ones who are paying the price, not the government.

3 — I want to beat increasing inflation drastically; I don’t want to barely beat or not win at all against competing inflation costs.

The stock market might not be as skilled at beating inflation as we think. If you want to learn the actual inflation rate, check out this article: If people knew the actual inflation rate, it would implode the entire system.

4 — Other investments can provide higher returns (e.g., private equity, real estate, and emerging tech companies (e.g., crypto).

5 — The upside to investing in the stock market is lower than more aggressive investment opportunities.

It’s time to focus on diversification even more.

The Rich Get Richer Because…

The rich get richer not because they invest in the stock market but because they know how to leverage debt, pay fewer taxes, increase their passive income and cash flow, and don’t invest all of their resources into the stock market. Learn more about how the rich operate in the following readings:

• Why The Rich Keep Getting Richer
• The Rich Focus On Creating Assets, Not Liabilities
• The Rich Aren’t Smarter; They Simply Prefer Not To Be Ignorant
• Why Millionaires Drop Out of The Stock Market And Into The Private Sector

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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.