When someone says “401k loan” every expert’s knee-jerk reaction is, “Bad idea.” But is it?
On today’s roundtable (with featured guest J. David Stein from the Money For The Rest of Us podcast), we debate 401k loans. The math is better than you might think in favor of borrowing “from yourself.”
Shannon McLay (Train Your Way To Financial Fitness) is back in the guest host chair, and we tackle Cyber Money shopping, people lying about being a millionaire AND indexing.
We’ve arrived home at 2 AM after our Thanksgiving trip. Better show notes will materialize around noon CT.
SHOW NOTES
<> Open
<> MagnifyMoney.com – Why are you holding on to that rotten checking account, savings account or credit card?
<> Headlines
Turns out the millionaire we profiled a couple weeks ago really wasn’t (Yahoo! Finance)
For Cyber Monday Hotel Deals With an American Accent – (New York Times)
Just 28% of People Plan to Brave Crowds Black Friday – (NJBiz.com)
<> Roundtable
Our Guest Participant this week is J. David Stein – Check out his podcast: Money For The Rest of Us (iTunes or Stitcher)
Greg McFarlane
Paula Pant
<> The Best Stock Investment I Ever Made (CNNMoney)
The Gold Bug Psychology Must Be Neutered (Seeking Alpha)
<> Letters
Smart Beta and Tilting
Andrew Chanin & PureFunds have a new fund: HACK (cybersecurity ETF)
Retraction: You might not be able to use a payroll service in the manner we described two weeks ago
<> End Show/Movies
Birdman
We probably should have worked out that the 27 y.o. millionaire was not all it was made out to be.
Say he started investing when he was 16. Given the annualized S&P 500 returns since 2003 (9.037%), he would have needed to have invest $56,834 per year. This would have been pretty tough having never earning more than $50k.
Looking the other way round, if he earned $50k a year on average, and he managed an impressive (and fairly unrealistic if he pays taxes) 70% savings rate (saving $20k a year), his annualized return would need to have been 18% per year.
Given that he admits in the original article that he “got hit pretty hard in 2008”, it would have been pretty impressive to obtain these types of returns!
Big fan of Greg in this episode: “You’re an imbecile! Somebody who says that should have their assets seized and forfeited!”
Way to stand on the fence Greg…!