Money Stuff: The Podcast Full of Mirth: 401(k), Clubs, TSLA
95 snips
May 16, 2025 Matt and Katie explore the strategy of leveraging 401(k) funds for better returns, weighing the risks involved. They dive into the trend of adding private credit to retirement accounts and the fierce competition in elite finance clubs. The discussion shifts to Elon Musk's complex compensation structure at Tesla, especially after a recent court ruling. Balancing shareholder fairness with corporate governance also makes an appearance, showcasing the challenges faced in today's financial landscape.
AI Snips
Chapters
Transcript
Episode notes
Leveraging 401(k) for Returns
- Leveraging a 401(k) can improve long-term returns by borrowing against your portfolio early in your career.
- This approach smooths returns but requires careful management of loan interest and asset allocation.
Basic Capital's 401(k) Leverage Model
- Basic Capital's 401(k) leverage involves borrowing 80% of your portfolio with a five-year term loan, avoiding margin calls.
- Most of the borrowed money must be invested in fixed income, mainly private credit, to cover interest costs.
Private Credit in 401(k)s Rising
- There is a growing trend to include private credit and private assets in 401(k)s due to their long-term horizon.
- Despite higher fees, private credit offers potential returns that some prefer over public equity for diversification.