What is a 401k: Robert T. Kiyosaki Answers

Is 401k Plan Good for Retirement? - Robert T. Kiyosaki Thoughts. Awhile ago, we talked about what is a 401k all about. Now, let us find out if a 401k plan is good for retirement. I would like to share what Robert T. Kiyosaki said about 401k plans. We all dream to have a great retirement experiences. We are well-motivated to keep some portion of our hard-earned money to prepare for our retirement. Everyone deserved to retire rich and comfortable. To secure our retirement funds, many of us take advantage of 401k plan. But, this page will let you think twice if you will pull out your 401k contributions and invest the funds in an investment vehicle that can help us grow our money overtime.

While I am reading the book of Robert T. Kiyosaki, Cash Flow Quadrant: Guide to Financial Freedom. I decided to share to you his point of view about 401k. His statements are as follows;

“I say the 401(k) may possibly be the worst way to invest for retirement for the following reasons…”

“A typical 401 (k) plan takes 80 percent of the profits. The investor may receive 20 percent, if they are lucky. The investor puts put 100 percent of the money and takes 100 percent of the risk. The 401 (k) plan puts up 0 percent of the money and takes 0 percent of the risk. The 401 (k) company makes money, even if you lose money.”

Another interesting point of views from Mr. Kiyosaki related to 401k plans. In his book, he stated that “The 401(k) is for people who are planning to be poor when they retire.”

For him, a 401k plan are too expensive, too risky, too tax-inefficient, and unfair to the investor.

Citations and References: Robert T. Kiyosaki, Author, Rich Dad’s Cash Flow Quadrant: Guide to Financial Freedom, 2012 Plata Publishing, Scottsdale, Arizona, USA. page 127-128 ISBN: 978-1-61268-006-4

What do you think about his Robert T. Kiyosaki’s point of view? Do you prefer to contribute to 401k plans rather than investing your hard-earned money directly in the stock market. It’s your turn, answer this question, is 401k plan a good investment for retirement? Thanks for sharing your opinions!

What is a 401k?

Learn what is a 401k plan all about. I have compiled the different point of views of the financial experts regarding 401k plan. There are so many books that can teach everyone what is a 401k all about. Today, let's discuss 401k plan, its meaning and definition and some advice from financial experts like Suze Orman and Robert T. Kiyosaki.

401k Meaning and Definition. According to the book of The Wall Street Journal: Lifetime Guide to Money, "A 401k plan is an employer-sponsored retirement-savings plan funded by employees with contributions that are deducted from pretax pay. Employers frequently add matching contributions up to a set limit. Employees are responsible for managing the money themselves, allocating the funds among a selection of stock, bonds, and cash investment funds. Investment gains are not taxed until the money is withdrawn."

Reference: C. Frederick Wiegold, Author, The Wall Street Journal Lifetime Guide to Money: Everything You Need to Know About Managing Your Finances for Every Stage of Life, 1997 Hyperion, 114 Fifth Avenue, New York, New York 10011, p. 495
401k Plan Photo By: Tax Credits Under CC 2.0
This simply means a 401k is a automatic investment. Wherein there is an auto deduction from an employee’s salary. And this deduction will automatically invest in stocks, bonds or cash depending of the employee’s choices.

Now, let us ask Suze Orman, the author of The Money Book for the Young, Fabulous and Broke. Suze Orman defined 401k plan as “a retirement savings account offered by employers. You invest in your 401k through automatic pretax withdrawals from your paycheck. You get a nice tax break on your contributions, and your money grows for years tax-deferred.”

Suze Orman 401k Plan Advice. In her book entitled “The Money Book for the Young, Fabulous and Broke”, the following statement was written;

“Always contribute to a 401k so you can get the maximum company match; but if you have limited income, you might then switch to paying off your credit card debt, saving for a down payment on a home, or funding Roth IRA for the rest of the year. A Roth offers a better tax deal than a 401k when you get around to making withdrawals”.

Citations and References: Suze Orman, Author, The Money Book for the Young, Fabulous & Broke, 2005 Riverhead Books, New York USA, page 371

Stay tuned to What is a 401k blog and we will share the thought of Mr. Robert T. Kiyosaki about 401k plan, he asked his readers in his book Cash Flow Quadrant, is 401k plan a good investment or worth retirement funds? Thank you for spending your precious time reading this 401k blog.