Hello all!
I'm currently a student in my junior year of college, thinking about my future. I ran some numbers today and realized that saving today makes me a millionaire when I'm 65.
I just wanted to ask: why would someone prefer a 401(k) to an index fund, aside from employer matching?
I understand what each is: an index fund attempts to match the growth of the stock market; a 401(k) is typically a 60/40 split of savings/stocks. Index funds tend to earn more, with a decent rate of 8.5% in many years (reaching even 11% the past year) while 401(k) accounts accrue about 5% annually.
Really, I want to know why I'd invest in a 401(k) when an index fund gets me higher interest. Over my entire lifetime, is an index fund really going to be appreciably riskier than a 401(k), since this is a 45 year period and the stock market tends to be pretty well balanced, even if it crashes every few decades?
Thank in advance!
Submitted January 10, 2017 at 04:04AM by JohniiMagii http://ift.tt/2idDjc0
