Foundations of Financial 3

Eszter Haseli 

The Retirement Gamble

COLLAPSE

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This is the price of the free-spirited American capitalism with little or no regulation and oversight on anything. Systems like retirement, education and health care are fundamentally broken here. Though you pay more tax in Europe, you can enjoy a simple, cheap and universal retirement system where you don`t have to worry about running out of money. Retirement is mandatory, every company is obliged to contribute to its employees` retirement funds. As a retiree you will get a monthly payment just like you get your salary for the rest of your life regardless how long you live. The amount you get depends on your salary and the years you worked. In my opinion average people who have no experience in finance the European system is easier and less stressful. My takeaway from that documentary is that here in the US you have to keep an eye on your retirement plan and either invest in low-cost index funds and bonds or find a fiduciary to manage your retirement plan.

Divya Petchiappan 

Week 5

COLLAPSE

One thing that I found a bit shocking was that there are so many hidden fees when trying to maintain a 401(k) and how much the fee percentage affected the amount remaining in the end in the 401(k), that you could end up paying more fees than saving. I feel like some of the interviewed people did not take their investments seriously, they mentioned that they did not look too closely at the fees or do much research about their investments. Some of the companies are just taking advantage of people rather than helping them, they charged exorbitant amounts of fees and buried it so deeply under different names such that people do not actually realize that they are making a loss and the company does not have their customers best interest at heart. This documentary focuses mainly on the negatives of 401(k), they should have also interviewed some people who were successful in having a good 401(k) to explain what their plan entailed and maybe compare the things that they did that were different from the others that had a bad 401(k). The questions I had when I watched the video are – What is considered to be a good 401k? What else can a person do to increase the amount of money in their savings other than working for as long as they are able to? Is there another alternative for 401(k)?

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