donk
8th February 2013, 16:55
While searching around for my posts on the one thingthat I feel comfortable challenging “COMMON KNOWLEDGE” about, I wondered what to with this information. I have posted about my industry before, trying to highlight the not-so-apparent realities of it, and was looking to “bump” in light of Bill’s recent thread. Then I started a post to there, and realized that may not be as effective as starting a new one.
This thread is an attempt to dispel dangerous “common knowledge”.
I hope for it to be a depository of the information that you have personally experienced that you found practical &/or helpful...especially if it is contrary to what everyone "knows".
My initial thoughts were on 401(k)/403(b) plans (my job of the last dozen or so years), which I will share in a minute, but I wanted to put something else out there—so that this is not just a thread of posts about your expertise, your industry, etc…but everyday real life important things. Especially ones that dispel myths that are taken for fact in our society, or stuff people don’t normally think about (until they have to)…so here goes:
MYTH: a concussed person should not be allowed to sleep.
In my personal experience, despite what I was programmed to believe, I found that people generally don’t die if they sleep too long within the first 12 hrs after. I found in my research, that at least some believe that it is total myth that it is dangerous, and in fact sleep is the best thing that a concussed person can do.
Perhaps the rumor came from the fact that they are often difficult to wake, perhaps it is true that you are more likely to die in the situation, I’m not a doctor, I just know that three cases in my personal experience, I stressed the **** out worrying about it, until this last time I did homework, my own research put me at ease…hopefully this will if you find yourself in a similar situation, but again, I am not a doctor, nor do I want or expect anyone to believe a word I say—see for yourself.
OK…what I really wanted to school y'all about: your 401(k) or 403(b):
OK class, who here expects to RETIRE? Ok, good, I see two hands…one of you is financially responsible 59.25 year old (retirement age is 59.5), the other is a delusional young buck outa school that is not real familiar with economics, politics, the IRS or thermodynamics. The rest of you, you’re ahead of the game…that’s why you are on Avalon, very good.
Who knows what 401(k) (or 403(b)) is? A retirement plan?...well, kinda…anyone else? Yes, very good!!...It’s a line of IRS tax code. So what does that imply? Well, I’ll leave that to your imagination—I don’t wanna get all conspiracy theorist on you, but for some reason, I am always reminded of the confiscation of gold (the metal) back in the day, and how difficult it must have been to for the gov to take…but I digress. Also remember: the IRS is a quasi-governmental organization—do you really think ANYTHING they have “encoded” is there to “benefit” (pun intended—these things are technically “employee benefits”) YOU?? …I don’t think so either…
What is a 401(k) made of? (FYI, 403(b) is for all intents and purposes a 401(k) for those employed at a non-profit org—think hospitals, gov, etc, so I mean both what I say about 401k applies to 403b) Mutual Funds purchased with YOUR hard earned dollars. Except they’re NOT your dollars anymore, they are the PLAN’S (yessir, they are in fact entities—nourished by the sweat of your brow, we bring them to life here ) If you need or [god-forbid] want your money before you are 59.5 years old, you pay a small (enormous) penalty. And taxes. If the plan LETS you make a distribution.
How do you take a distribution? Great question! It totally depends on the plan, but the intention of the creations of these entities in the first imagined the following as ways to take the plans’ precious lifeblood, so most allow for:
1. EXTERE HARDSHIP—like well documented medical or financial devestation. Losing your life or your house
2. Buying a house – out of the frying pan, into another frying pan?
3. Termination of employment – you can cashout when you the plan’s sponsor is no longer your employer
So you can get back 90% of your money, minus taxes (it’s counted as income for the tax year of the dist, so factor that in), jumping through hoops, if you can prove it to the recordkeepers’ satisfaction.
Meanwhile, the sponsor, the recordkeeper, the fund company, the advisor, the lawyers, the trustee, the custodian, and any vendors that do anything all get their “haircuts”. Plus you gotta beat inflation. So you better hope you have some good options, and you are good at gambling…I mean…investing in the market. And that you don’t go up a tax bracket.
Sooo the point of all this? Most people (even in my job, even and especially ME) don’t think about any of this. A LOT these days, don’t even know or remember they have a plan account (thanks congress for auto-enrollment, the plans now have the power to make participation a “negative-consent” situation, where you are signed up unless you opt out from the gate).
Most that do know they have one assume that it’s true that the market is cyclical. And that somehow this means that the options that they have chosen not only will come back around, but they will have done better than all I addressed AT THE TIME THEY WANT TO RETIRE. (except those that wanted to retire around 2006, or 2008, when the plans lost average of 60-80% of their ASSets). After all, all you need to do is diversify right (aka spread out the risk to the 8-12 options most plans have…what could go wrong? To those that assume the “market is cyclical”, I ask: Is PIMCO Total Return Fund cyclical? INVESCO Real estate Fund, Vanguard Lifestyle year 2035, Fidelity Small Cap Growth…are these all cyclical? And are they gonna be at their peak around the day you turn 59.5?? And even if they are…wouldn’t you rather just own those shares in an account where you can take the cash whenever you feel like selling the shares? Oh, you are saving for retirement. Good luck with that.
Anywhooo…what can be done? Your assets are locked down, the plan OWNS them, too late to do anything about it?? Well…here is where I offer MY experience, not to be mistaken for ADVICE in any way. The first thing I did, before I ever needed loot (aka had kids) was put everything in the Stable Value Fund (SVF…or Guaranteed Invested Contract – GIC), all plans have to have a “risk free” investment, which is pretty much like a CD you would purchase at a commercial bank (so why not take the loot you’d “save” in your plan and just get a CD, if you’re into the whole investment thing, eh?). It pays sh!tty interest, but it pays. As long as these pieces of paper are worth what the masters of the universe make up for “values”, then these things are as safe as you can you hope for (though even “money market” investments have failed/defaulted in the past decade, but again, I digress). I was laughed at in the early twenty-aughts while everyone was “making bank” with huge returns, until about aught-six when Bear Stearns got eat-ed. No one has really been laughing since then.
But then of course, I found that I believed that my money would worth to me HERE & NOW, than it would ever be in some dumb plan, even in the GIC. That’s where the (hopefully available in your plan) option of taking a loan comes in. This has become ridiculously easy, considering. I took my first loan when I had documentation my wife had extreme medical issues probably 8 years ago, and every time I paid it back, it got easier to take the new one…now (I just got one within the last couple months) you just go online, they don’t even ask why….cuz after all, WTF SHOULDN’T you be able to borrow YOUR OWN MONEY, at interest, of course. The interest goes back into your account, so to me it seems stupid not to take it…I’m pretty sure you can even continue to contribute if you are so inclined, and they never allow you to take more than would leave a reserve in your account to cover taxes and penalties in case of default…so I really see no risk—unless you plan on killing it in the market with your totally awesome Mutual Fund options your plan offers…so the only risk is possible returns on your supposedly long-term investment options.
Anyway, that’s a lot for now, sorry it is so long. I left myself no time to edit for now. Please post publicly anything I said you find confusing or downright wrong, all of my beliefs (I don’t KNOW anything) are negotiable, this is what my experience has been. In summary for people like me that don’t always read long posts:
1. Let a concussed person sleep.
2. 401(k) & 403(b) are lines of tax code, which created entities that own your earnings under the auspices of “retirement fund”…it is wise to think about what “retirement” and “investment” really mean, and the rules that have been made for them
3. Anything you defer to your employer sponsored retirement plan is subject to taxes (a/o the day of the distribution) and usually penalty…though it may be a good idea to borrow that loot from “yourself”.
I didn’t want for this to be a thread of posts as long this one…I just got to rambling as it is more rewarding to spend my energy sharing with you all than giving to my slave-owning overlords. I’d love to see what Avalon has to offer amongst the many diverse "family members" here. Love to all, I gotta to attend to some **** here at the cracker factory….
For those that can't read my incessant (STILL not completely edited/proofread) blathering....highlights in RED
This thread is an attempt to dispel dangerous “common knowledge”.
I hope for it to be a depository of the information that you have personally experienced that you found practical &/or helpful...especially if it is contrary to what everyone "knows".
My initial thoughts were on 401(k)/403(b) plans (my job of the last dozen or so years), which I will share in a minute, but I wanted to put something else out there—so that this is not just a thread of posts about your expertise, your industry, etc…but everyday real life important things. Especially ones that dispel myths that are taken for fact in our society, or stuff people don’t normally think about (until they have to)…so here goes:
MYTH: a concussed person should not be allowed to sleep.
In my personal experience, despite what I was programmed to believe, I found that people generally don’t die if they sleep too long within the first 12 hrs after. I found in my research, that at least some believe that it is total myth that it is dangerous, and in fact sleep is the best thing that a concussed person can do.
Perhaps the rumor came from the fact that they are often difficult to wake, perhaps it is true that you are more likely to die in the situation, I’m not a doctor, I just know that three cases in my personal experience, I stressed the **** out worrying about it, until this last time I did homework, my own research put me at ease…hopefully this will if you find yourself in a similar situation, but again, I am not a doctor, nor do I want or expect anyone to believe a word I say—see for yourself.
OK…what I really wanted to school y'all about: your 401(k) or 403(b):
OK class, who here expects to RETIRE? Ok, good, I see two hands…one of you is financially responsible 59.25 year old (retirement age is 59.5), the other is a delusional young buck outa school that is not real familiar with economics, politics, the IRS or thermodynamics. The rest of you, you’re ahead of the game…that’s why you are on Avalon, very good.
Who knows what 401(k) (or 403(b)) is? A retirement plan?...well, kinda…anyone else? Yes, very good!!...It’s a line of IRS tax code. So what does that imply? Well, I’ll leave that to your imagination—I don’t wanna get all conspiracy theorist on you, but for some reason, I am always reminded of the confiscation of gold (the metal) back in the day, and how difficult it must have been to for the gov to take…but I digress. Also remember: the IRS is a quasi-governmental organization—do you really think ANYTHING they have “encoded” is there to “benefit” (pun intended—these things are technically “employee benefits”) YOU?? …I don’t think so either…
What is a 401(k) made of? (FYI, 403(b) is for all intents and purposes a 401(k) for those employed at a non-profit org—think hospitals, gov, etc, so I mean both what I say about 401k applies to 403b) Mutual Funds purchased with YOUR hard earned dollars. Except they’re NOT your dollars anymore, they are the PLAN’S (yessir, they are in fact entities—nourished by the sweat of your brow, we bring them to life here ) If you need or [god-forbid] want your money before you are 59.5 years old, you pay a small (enormous) penalty. And taxes. If the plan LETS you make a distribution.
How do you take a distribution? Great question! It totally depends on the plan, but the intention of the creations of these entities in the first imagined the following as ways to take the plans’ precious lifeblood, so most allow for:
1. EXTERE HARDSHIP—like well documented medical or financial devestation. Losing your life or your house
2. Buying a house – out of the frying pan, into another frying pan?
3. Termination of employment – you can cashout when you the plan’s sponsor is no longer your employer
So you can get back 90% of your money, minus taxes (it’s counted as income for the tax year of the dist, so factor that in), jumping through hoops, if you can prove it to the recordkeepers’ satisfaction.
Meanwhile, the sponsor, the recordkeeper, the fund company, the advisor, the lawyers, the trustee, the custodian, and any vendors that do anything all get their “haircuts”. Plus you gotta beat inflation. So you better hope you have some good options, and you are good at gambling…I mean…investing in the market. And that you don’t go up a tax bracket.
Sooo the point of all this? Most people (even in my job, even and especially ME) don’t think about any of this. A LOT these days, don’t even know or remember they have a plan account (thanks congress for auto-enrollment, the plans now have the power to make participation a “negative-consent” situation, where you are signed up unless you opt out from the gate).
Most that do know they have one assume that it’s true that the market is cyclical. And that somehow this means that the options that they have chosen not only will come back around, but they will have done better than all I addressed AT THE TIME THEY WANT TO RETIRE. (except those that wanted to retire around 2006, or 2008, when the plans lost average of 60-80% of their ASSets). After all, all you need to do is diversify right (aka spread out the risk to the 8-12 options most plans have…what could go wrong? To those that assume the “market is cyclical”, I ask: Is PIMCO Total Return Fund cyclical? INVESCO Real estate Fund, Vanguard Lifestyle year 2035, Fidelity Small Cap Growth…are these all cyclical? And are they gonna be at their peak around the day you turn 59.5?? And even if they are…wouldn’t you rather just own those shares in an account where you can take the cash whenever you feel like selling the shares? Oh, you are saving for retirement. Good luck with that.
Anywhooo…what can be done? Your assets are locked down, the plan OWNS them, too late to do anything about it?? Well…here is where I offer MY experience, not to be mistaken for ADVICE in any way. The first thing I did, before I ever needed loot (aka had kids) was put everything in the Stable Value Fund (SVF…or Guaranteed Invested Contract – GIC), all plans have to have a “risk free” investment, which is pretty much like a CD you would purchase at a commercial bank (so why not take the loot you’d “save” in your plan and just get a CD, if you’re into the whole investment thing, eh?). It pays sh!tty interest, but it pays. As long as these pieces of paper are worth what the masters of the universe make up for “values”, then these things are as safe as you can you hope for (though even “money market” investments have failed/defaulted in the past decade, but again, I digress). I was laughed at in the early twenty-aughts while everyone was “making bank” with huge returns, until about aught-six when Bear Stearns got eat-ed. No one has really been laughing since then.
But then of course, I found that I believed that my money would worth to me HERE & NOW, than it would ever be in some dumb plan, even in the GIC. That’s where the (hopefully available in your plan) option of taking a loan comes in. This has become ridiculously easy, considering. I took my first loan when I had documentation my wife had extreme medical issues probably 8 years ago, and every time I paid it back, it got easier to take the new one…now (I just got one within the last couple months) you just go online, they don’t even ask why….cuz after all, WTF SHOULDN’T you be able to borrow YOUR OWN MONEY, at interest, of course. The interest goes back into your account, so to me it seems stupid not to take it…I’m pretty sure you can even continue to contribute if you are so inclined, and they never allow you to take more than would leave a reserve in your account to cover taxes and penalties in case of default…so I really see no risk—unless you plan on killing it in the market with your totally awesome Mutual Fund options your plan offers…so the only risk is possible returns on your supposedly long-term investment options.
Anyway, that’s a lot for now, sorry it is so long. I left myself no time to edit for now. Please post publicly anything I said you find confusing or downright wrong, all of my beliefs (I don’t KNOW anything) are negotiable, this is what my experience has been. In summary for people like me that don’t always read long posts:
1. Let a concussed person sleep.
2. 401(k) & 403(b) are lines of tax code, which created entities that own your earnings under the auspices of “retirement fund”…it is wise to think about what “retirement” and “investment” really mean, and the rules that have been made for them
3. Anything you defer to your employer sponsored retirement plan is subject to taxes (a/o the day of the distribution) and usually penalty…though it may be a good idea to borrow that loot from “yourself”.
I didn’t want for this to be a thread of posts as long this one…I just got to rambling as it is more rewarding to spend my energy sharing with you all than giving to my slave-owning overlords. I’d love to see what Avalon has to offer amongst the many diverse "family members" here. Love to all, I gotta to attend to some **** here at the cracker factory….
For those that can't read my incessant (STILL not completely edited/proofread) blathering....highlights in RED