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Ken McElroy Show
Financial Insider Explains Why the Wealthy Don’t Use 401ks
Nov 19, 2024
The podcast explores the limitations of 401(k) plans, particularly for middle-class families, revealing hidden fees and inadequate returns. It contrasts these with alternatives like self-directed IRAs and real estate investments, emphasizing cash flow and leverage benefits. Listeners learn about the stark reality of retirement savings and the impact of inflation. The discussion also touches on smart investment strategies for new investors, as well as the intricacies of 1031 exchanges and partner dynamics, providing valuable insights for those looking to thrive financially.
47:46
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Quick takeaways
- 401(k) plans, though popular, have significant limitations due to high fees and complex investments that can erode returns, making wealthy individuals seek better alternatives.
- Investing in real estate is presented as a more advantageous strategy than relying on 401(k)s, as it offers benefits like cash flow, appreciation, and protection against inflation.
Deep dives
The Limitations of 401(k) Plans
401(k) plans are presented as the go-to retirement savings vehicle for many, yet they come with significant limitations that often leave individuals financially vulnerable. These plans were originally designed to supplement pensions and not serve as a primary retirement fund, which poses challenges for the squeezed middle class who may find it hard to contribute. Many people lack awareness of where their money is actually invested, as financial advisors often obfuscate this information with complex mutual funds and high fees that eat into returns. It's suggested that most wealthy individuals avoid 401(k) plans entirely, indicating that there may be better options available for those looking to enhance their financial future.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode