I had asked Vortech to discuss these options with his Personnel office. They will have all manor of info for him as well as someone that he could speak with directly to answer questions of this nature.
Now ---- Here's a better/bigger question EVERYONE should be asking themselves.
What investments can I make -- and what style of investor am I -- and how much EFFORT am I willing to put in NOW -- in order to retire "decently" later.
That's a far more fundamental question!
Regardless of your available options ---- and the minuscule tax differences (before or after tax contributions).... what really counts is where you can put your money to work NOW... and have it double and triple or more over the years.
My personal belief #1 --- Mutual Fund "investing" (the forget it style of investing) will prove to be sadly disappointing in total return. This style of investing is fine --- until you get to where you have 50 or 100 grand..... and even then I wouldn't recommend it.... because you're just not taking responsibility for how you intend to live down the road.
My personal belief #2 --- BONDS are no place for ANYONE to be invested in for a retirement account unless you have a couple million bucks! Then MAYBE you could have half a million in super safe bonds. But ask yourself something.... are BONDS really more safe than say --- Exxon or Home Depot or Wal Mart or some other big cap company?
Now -- if BOND interest rates (we're talking Tax free munis here) get to be 10% ---- I'd be a buyer... BUT NOBODY SHOULD BE IN TAX FREE ANYTHING IN A RETIREMENT ACCOUNT that is already tax free (ROTH) or tax deferred (IRA/401). Why would you accept a FAR FAR lower rate of return -- to garner tax free status -- on something that is either tax free or tax deferred in the first place? And the difference in compounded growth over 20 or 30 years is just unbelievable!
Here's just one real quick google search I came up with!
Over the long term, stocks do better. Since 1926, large stocks have returned an average of 9.8% per year; long-term government bonds have returned between 5% and 6%, according to investment researcher Ibbotson Associates.
Do the math on 100K -- at 9.8% compounded over 20 years vs 6% (the higher number even!) and see what you have to retire on....
Note the difference between 5% and 8% is DOUBLE!! Multiply these numbers by ten to get the amount on 100k!!! and it's astounding!
Initial
Amount Years Compounding Return
$10,000 25 5% 3 $33,860
$10,000 25 8% 6.85 $68,500
$10,000 25 10% 10.8 $108,350
$10,000 25 12% 17.00 $170,000
$10,000 25 15% 32.92 $329,200
$10,000 25 18% 62.67 $626,700
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