I had an...interesting discussion with a close friend.
He works a ~$25 per hour blue collar factory job, and absolutely refuses to invest a dime into retirement.
Warning: there is some really stupid shit coming up. I can't make sense of it, and you probably won't be able to, either. I'm just looking for a way to navigate it, explain it, and help him onto the "right path" because he's a friend. I'm trying to be optimistic.
My friend is insistent that 401(k)s are a scam. He believes that pensions were great because they were 100% guaranteed to pay out to employees. Yes, I know that they aren't, but I couldn't convince him otherwise.
Despite my best efforts at explaining the basics, he is insistent that 401(k) programs are awful because the company you work for can impose "all sorts of" fees and taxes whenever you withdraw money from the account. He insists that they will charge you when you add money, and they will charge you when take money out. They will keep charging you while you invest, and you'll end up with nothing. He believes that the person "managing your 401(k)" will take all of your money. Perhaps, the company you work for will take all of the money from your 401(k) if they choose to. Maybe the company you work for will file bankruptcy and take everyone's 401(k) with it. They can do that because they ultimately own all the money that you put into your 401(k).
He says that you can invest into a 401(k) for years and years, and then your account will be less than half of what you put into it. In his mind, the market can go up, and it can go down. When he retires, the market will be down, and he will have nothing.
He knows a guy that went to take money from his 401(k) when he retired, but there was nothing there because investing is like a casino; you might win or lose, but you'll lose. It's better to save cash.
I tried to explain rebalancing, but it wasn't effective. In his eyes, there is no reason to contribute to a 401(k); you're better off just saving cash and not spending money. That's the only way to a happy retirement in his eyes. Like you, I also have no idea what that means.
He is 100% adamant that if you die while you invest in a 401(k), the money is lost. I asked where he thinks it "goes", but he wasn't sure. "Wall street", "fund managers", "the company I work for"...one of those. I tried to explain the concept of beneficiaries to no avail. He insists that it gets taken by someone.
Additionally, it's stupid to invest in a 401(k) because he knows a guy that invested all his life and then was diagnosed with Multiple Sclerosis. The guy has to pay $5,000 every month for his medication, so it was pointless for him to save for his retirement because this guy he knows had to spend all his money on his medicine.
I could go on, but you get the point. I suspect that he obtains his information from rambling fringe Youtube videos such as this one:
https://www.youtube.com/watch?v=hxHF8l1xPC0
If you've made it this far...I applaud your constitution. I have a simple question. Is he a lost cause? How can I explain investing for retirement in the simplest, and I mean SIMPLEST possible terms? Does anyone know of some EXTREMELY basic Youtube videos that I can point him to in order to get these goofy ideas out of his thought processes?
Submitted October 15, 2017 at 05:09AM by dolemiteo24 http://ift.tt/2za44Ui
