 think tech away civil engagement lives here I've been testing I'm glad to be with you guys for all the people that are tuning in that I catch the playback over the podcast YouTube don't forget to hit that like the strive comment and share button and as always I don't have a lot of time and I definitely you guys and girls have a lot of time so we're going to jump straight into it so today's video our podcast and having you catching it's a playback all the people that's catching this live through a think tech Hawaii calm today's video is going to be about if you see the description box we're going to talk about roster arrays versus traditional roster arrays but first I'm going to get into what we're going to talk about the first thing being is the reason the first thing is we're going to talk about what are off what are traditional arrays what a full one case four one three four two whatever case whatever certified plan you may have that's been offered to your employer what are they what are the advantages and disadvantages of each now the reason why I say this the reason why I bring up this topic is I get a lot of people that write me and say hey you know my job is often there for 1k I got a roster array what should I do it I have a traditional or whatever the case may be we must keep in mind that even though we live in one of the richest countries in the world more than 50% of the Americans don't invest why is that the biggest reason that we don't know most of us don't know if you was like me like myself when I got my first real job they offer for 1k is I was 18 years old United States military and all they said was hey you want a full 1k and this is our full 1k plan and I didn't know what a full 1k was I've never heard of a full 1k I never heard of retirement plan but it's a hey this is for your retirement I'm like well I thought if I worked here for 20 years that would be my retirement they're like no there's a place you can put money and invested put it to the side I knew nothing about it but it sound good so I signed up put a little bit of my money there and that was it and along the way people will say hey you put money your full 1k I'll say yes and they'll be like great little did I know I did that for about six or seven years you know putting larger the amounts of money compared to my pay you know I've spent large amounts of money there to you know thinking I'm doing the right thing little did I know I didn't know that inside the full 1k there were options that there was a traditional that there was a rock that there was these different types of funds what did these funds mean you know I had no grasp of it so this whole time I essentially was putting my money into a savings account and didn't even know it didn't even realize a savings account is great when 2008 happens we have an economical downturn but it's not so great when we're in a economical boom or economical uptake right like we have been for the last eight years so I'm making this episode so we're going to talk about that we're going to talk about what are they all these other great things like that so stay tuned so the first thing being a 401k plan a 401k plan is a retirement plan remember the days of hey you go work at Ford you worked there for 30 years the stories of your grandpa or your great-grandfather hey I work at Ford I worked there for like 30 40 years and now I have a pension I work for the city or the state great thing I was a school teacher between 30 40 years and now I get a pension but now this generation and the future generation those days were kind of slimming away now people are jumping from job to job they're working somewhere for five years they're working somewhere for six years they're working somewhere for seven years all of the stuff like that so one of the way for the government I can't remember the senator's name who's a senator and his last name was Ross or something like that it's had Ross in it so he created the 401k the Roth IRA plan to other he created a rock but the 401k K plan was built by the government to be a retirement vehicle to help people build to give them tax advantages to be able to invest to be able to retire now what's the advantage of a 401k over a regular you know going on here starting to eat trade account to your marriage trade account having a broker well the case may be one of the big differences is the tax advantages the tax advantages that you have inside of your 401k plan is pretty much like a tax a quote tax shelter or depending on what type you have it can it can differentiate so now inside of a 401k plan you have two tax options a Roth IRA or traditional Ross or traditional IRA now the difference is a Roth IRA means you pay your taxes now you pay the tax so for prime example if you made $400 a month you pay your 10% in taxes let's say if it was $40 you pay it now you invest the rest right versus with a traditional Roth IRA you don't pay the taxes now you pay the taxes later so when you get ready to pull out on your 401k users about 59 and a half or whatever the case when you can take out on the tax rate and what's the thing the the early deduction the early the early panel the early penalization I'm having a little tone to it today but it's pretty much the charge you 10% if you pull out before you 59 and a half and the thing about this you know the animal 10% penalty plus taxes or whatever the thing about it was good about a 401k is inside of it now we already spoke you got a 401k you got the Rockwell rate and then you have a traditional traditional is pre-tax you know you're not paying any tax on until later and the Rockwell rate you're paying taxes on it now now which one you should choose that's up to you I'll let me give you the advantages and disadvantages of both before I break down even further into that with a Rockwell rate if you pay your taxes now let's say if you only make $30,000 a year let's say if you're a military guy or you know you are you have a regular your secretary you only make $20,000 a year and you're paying taxes and that tax bracket then let's say when you turn 40 you jump into a higher tax bracket by the time you turn 59 and a half or 60 you may be making $150,000 a year and we don't know what taxes will be in the future and let's say if you're not a higher tax bracket you don't have to worry about paying taxes at your 59 and a half tax bracket because you paid it along the way when you was in those lower tax brackets because most of us when in our 20s or 30s or 40s we usually have kids we usually have dependents but most time when we're in 59 or 60 in retirement years our kids are long gone or at least they're not on our taxes anymore so with that being said that's one of the ways that some people may look at it as an advantage to say hey I pay taxes now in a low tax bracket then when I get older you know I'm in a now that I'm you know 59 I'm making more money I'm in a higher tax bracket and we don't know what taxes will be in the future but hey I got away with paying taxes in the lower tax bracket instead of now I'm making $150,000 a year $200 whatever you're making millions of dollars in case may be I don't have to pay taxes on that tax bracket with this particular money because I don't have to pay at that income level because I paid it along the way so that's one of the pros of that now the difference the one of the cons to that is something that the traditional office by you paying the government those tax dollars you could be leaving that money inside of your account and gaining compounded interest also of the government's dollars for example let's say if I got paid $400 and instead of paying the government 40 bucks in taxes I keep the 40 bucks put it inside of my account let that grow compounded interest if you listen to my last week podcast you know the top two elements of investing is compound interest and time so with retirement you're waiting maybe 10 20 30 40 years so that's time where's the compounding interest as your account is compounded the more money that you have that's turning over is compounded compound it's like the snowball you know snowball start hitting it's bigger and bigger and bigger as it gets down to here so the more snow that you put in it at the beginning the bigger the ball becomes at the end right so instead of paying the government taxes you know along the way you are keeping that those tax dollars there and let that snowball get bigger and bigger and bigger that's one of the disadvantages of the rock our way that you won't have because you're paying taxes up front so those are top two things you know these are quick things I'm giving you between a rock our way and things like that now the next one is traditional one of the big advantage traditional has is one you're not paying the tax only now the money that you contribute to it you get to write that off against your taxes against your income which lowers your tax exposure so it is a tax vehicle and also what I just spoke spoke about instead of paying your money to a government you leave it inside of your traditional rock our way and you're making your you're making a compound interest along with those pre-tax dollars that haven't been taxed yet the disadvantages now that you got to be snowballed at the end when it's time to pull out the government is going to say hey I remember you let me have my piece out of this right so that's one of the things between a rock and a traditional I'm going to break it down even further okay where's a rock someone wrote me a couple weeks ago say hey I got a rock our way I'm investing with it I got one through E trade I got one through a broker I got a you know is that a good thing I put this much money in it and I say okay great you put money into your rock our way but where's that money going and people say you know yes it's invested into what the rock our is just a shield it's just mean the 401k is just a shield what's inside of it now according to federal law every company must offer you an aggressive plan a concerted plan and a moderate plan conservative means that hey I want to be conservative with my money or whatever the case may be moderate is hey I kind of want to take a little risk and aggressive means I want to be want to be aggressive most people they're going to depend on depending on your age if you were 19 20s and 30s that people want to be more aggressive you know even kind of winning your 40s they're going to say we're young be aggressive take all the risk just like we do in life and then as you get older you you take you become conservative right so you don't want to you know when you when you're older it's projected that you'll be using that money and you don't want to say hell not that we're in trade wars the stock market crash not at the stock market is crashed and you know that's not a good deal if you need your money but that's a pretty good deal for if you're young and invested like me for example if the stock market was to crash tomorrow that's great for me and that's great for the people that listen and stuff that's great for investors right but not so great if you are my dad's age or just 72 years old and you live and I'll be retirement you don't have time for that right you already got enough of the issue so those are the two that's one of the good things about what I wanted good things but that's one of the things about people say hey what's what are you investing in being aggressive moderate and what are the case may be mostly case most of the time yes you're going to get these target funds if you haven't watched my YouTube channel go back and watch one of my most popular or the most popular video that I uploaded I probably I probably made 500 videos over the last probably more than that but at least on YouTube I upload over 500 videos over the last five years and the number one video is Andy sorry when he sat down with Warren Buffett and he said now one you know Andy sorry it's the chief editor Yahoo finance you have seen him here on Think Tech Hawaii you seen you see him on the investor show he was one of the first guests that came on to the show too but when he sat down with Buffett he asked Buffett and it's recorded he asked Buffett hey what do you think of these target day funds do you think they add value and one of the greatest investors of our time said no I don't think they add value why don't he think they add value you don't think they add value because he explained that hey you know I could have turned a hundred and fourteen dollars to four hundred thousand dollars by investment to the SMP 500 and pretty much what he stated is that the target funds are usually oh target 2040 target 2030 target 2016 target 2050 and what these things are for is they say hey you know what I don't know what I want to invest in so I plan on retiring in 2050 and what this target date this target date does is it's up it sets up your retirement to be aggressive when it's 20 it's 2018 right now but as he gets closer to that target date it's going to become more conservative that's all it really does right now it's very aggressive then it's going to become very conservative how aggressive is it it's you know it depends it depends on the company that's providing it I've seen some that I that was considered aggressive that wasn't too aggressive in my eyes that I think that was very aggressive right and aggressive means pretty much the more money they put in stock simple way how much money they put in the stocks versus how much money they put into bonds how much money they put into CDE and savings account because we gotta think about it let's walk through that the most safest investment right now is your checking account you know you're not going to make anything not going to lose anything above that is your savings account above that is your CDE not not your CDE but your money market above that is your CDE above that you know you have that's when you get into an investment world with you know neutropons well bonds before that bonds do you have your neutropons and you have stocks and things like that that's in the investment world but of course you have other things like real estate you have other branches option and stuff like that but just general consensus is that stocks is considered to be the most riskiest and the more you pick up stocks the more risky you become a prime example look at Jeremy Letcher Jeremy Letcher was one of the first was was one of the original in the Dow Jones and as of a couple months ago it's now gone this was a staple in the stock market you know over a hundred and something a hundred and ten years that it spent on the Dow Jones and you know now it's going away because of his bad performance and got replaced by Walgreens so when you pick the individual company you make your investment portfolio a little bit more a little bit more riskier because I don't have a crystal ball and if you do have a crystal ball especially when it comes to investing please send it to me so I can take a look at a couple things myself but that's the size and form inside of your rock star rate please take a look at it and the thing is we well I notion mr. Bucket and what he was saying about the S&P 500 is look inside of your portfolio and see what matches the S&P 500 and that itself you haven't you know you have the possibility to be able to invest into the American economy because we get the target date funds you get the mr. aggressive and all those stuff like that one of the simplest and easiest ways to invest is to invest into the benchmark of finance you know over the last 100 years it has done but how much I think the average is 10% without countable inflation so that's a nice compounding way simple way to start investing hey what is the broad-based index of stocks especially if you're 19 or 20 years old so when you go to your employer and your employer says hey we have a 401k plan we have a what you call it plan and you start to put money inside of it start to see where your money is going inside of your portfolio hey you know where's it going it's great that I'm investing into it but you look a little bit deeper inside of it because people say hey I have a 401k and okay great what are you investing in I don't know I do I contribute this much that's great that you contribute because when come down to investing it's good if you're doing it but it's always good it's always great and there's always better so it's always good great better even if you know Lori and at least the fact that you're investing hey you're doing something but you could make it good or you can make it better look inside of that particular 401k sit down sit down a professional was a professional sit down with people in a financial industry maybe a credited financial counselor a certified financial planner and an investment advisor representative people with the three little agency behind their names right not saying that other people you know who don't have those credentials can't do it but at least we had a three little agency behind your name your government to act with under your government and you are monitored by a certain body like the SEC or FENRA you know they're watching you know you have certain guidelines and things like that it's like the driver's life just because you got a driver's license don't mean you can drive but it does mean you know the rules of the road or you should you have a basic understanding of the rules of the road so by having those credentials you have a rule of the road and that by you have a driver's license the cops can pull you over and give you a speeding ticket because because you have demonstrated you know the rules of the road and that you know better every doctor is not good just because they have a license but they are governed by someone so those are people you should start out with but if you got a 401k or if you have a Roth IRA you know you have tax advantages you can open up a Roth even if you don't have a job hey I don't have a job but I want to get these tax advantages you can go to a E trade or TD Ameritrade a Scott trade or whatever and start your Roth IRA and once you are inside of that Roth IRA you can you know you can contribute money and you can people buy houses with Roth IRA but you only can contribute $5,500 is the minimum if you're under the age of 55 if you're over 55 I'll send you go with a $6,500 you know for a ketchup you can it's like a little ketchup calls there but you can have a Roth IRA you can have a you can have one at your job and a private one but in that private one you only can put so much money in it but the one at your job you if you're in a qualified a qualified retirement plan you can put up to $18,000 into your retirement plan but if you know if you're not in a qualified plan you go to start one or if you are you're independent yourself employed you can start up a set IRA those are good for you to set up a set IRA and all those are the good things all right those are good ways for you to start investing and those are ways inside of your 401k you know the Roth there is you know the traditional is but notice when you put money in those ask where is my money being invested you know the Roth IRA is just a house but what's in it are you invested into an aggressive fund a moderate fund please look at that I wish someone would have told me I would have been way more aggressive than that I am now you know some places have who the C funds in the F fund a gene fund whatever the names may be get the one that closely models the SMP 500 if you look at anything else I was taking a class and they said hey how do you know you say I'm gonna buy a mutual fund or any type of an investment vehicle I said how would you know that investment is doing good or bad they said well you know if it gets a good return great right but if I told you I got you 15% last year would you think that was great most people said yeah I would think that was awesome so okay but what if I told you to stop market had gotten 20% last year now that 15% doesn't look great the SMP 500 is the benchmark so we look at any investment compare it to the SMP 500 how has this mutual fund the stock is whatever I'm doing compared to the SMP 500 over the last at least the last 10 years and even when you compare it doesn't mean hey whoa it's they really beat the SMP 500 doesn't mean it's going to do it for the next 10 years because I'm investing the review mirror always look clear the windshield but the windshield is always falling so just because oh wow this mutual fund beat the SMP 500 over the last two years will it do it for the next 10 years so always compare to that and if something is not beating the SMP 500 you should invest into the SMP 500 right for a prime example if my portfolio returns 5% this year but the SMP 500 did 10% I think I mean I underperformed and the SMP 500 did 10% but my portfolio did 20 that mean you know I'll perform the SMP 500 more than 90 something percent of professional investors won't perform the SMP 500 but I hope that gives you more clarity on all your Roth IRA we discovered a what wasn't even a 401k I can't even think of the other one's 424-23 Bravo or whatever this one school teachers get what a certified plan what's the difference between them what's different or traditional and around some pros and cons ways to look inside of it ways to get some help and all of the good stuff like that but with that being said it is my time again to get out of here and I see you guys later but as always don't forget to hit the like subscribe the share button the bell icon to get uploads for YouTube follow us on Instagram Facebook here on think tech Hawaii and all of the great stuff like that you look on listen to the podcast thank you for tuning in but until the next video podcast cartoon book or whatever it's crazy you see me do around the world please be safe I'm out and thank you