401(k)s are a sham: Duped by a DIY retirement dream, elderly face staggeringly low living standards

[progree]

109. Does Elizabeth Warren recommend we don't invest? Put it under a mattress? Or stick to CD's?

Sure, the fiscal and tax system is rigged in favor of the wealthy. And of course the corporations screw workers -- the ratio of profits to GDP has been going up while the ratio of wages to GDP has been going down for decades. I find it interesting that the top few percent also own the vast majority of the stock. To me that's a clue that equities might be a good idea. (and for me it has been, and has been for my parents.)

Another way its rigged in favor of equity investors is that capital gains and "qualified dividends" are taxed at a much lower rate than for "ordinary income" like wages and interest.

Elizabeth Warren is not breaking new ground here. Only a literal f'ing idiot thinks the game is *not* rigged to favor of equity investors.

For example, the plain vanilla S&P 500 index fund -- not some hot stock-picker fund, just one designed to match the S&P 500 index as closely as possible (which represents approximately 75% of U.S. stocks by market capitalization, the other 25% on average has done even better)

http://www.thestreet.com/quote/VFINX.html

Since inception 8/31/76: 11.03% average annualized total return, last update: 12/19/14

So in the 38.308 years between 8/31/76 and 12/19/14, the S&P 500 index fund has had a 11.03% average annualized return (this is after expenses)

Which means it grew by 1.1103^38.308 = 55.04 fold ("^" is exponentiation) (equivalent to a doubling every 6.62 years)

Meaning $1,000 invested in the fund back then would be worth $55,040 now (and again that is after expenses).

Unfortunately, I listened to the "smart" people and had most of my money in bonds for most of those years.

Oh, and about those expenses -- VFINX currently has an expense ratio of only 0.17%.