Is there a better feeling than unloading the washer and finding money laying at the bottom? Don’t lie…you’re smiling right now just thinking about it.
Whether it’s $5, $10, $20, it doesn’t really matter. It brings the same amount of joy…because you didn’t expect it. You didn’t know it was missing.
What if we lived in a crazy world where after every load of laundry we knew there would be $5 waiting for us at the bottom of every load…amazing, right?
Now…in this magical laundry world, what if you suddenly discovered that while you find $5 after each of your loads, your friend finds $10…he uses the same type of detergent, the same type of washer, but he lives on a different street, so, therefore, you find less money than him…how do you feel now? Different, right? I mean…on the one hand, you’re still finding money you didn’t have before…but on the other hand, now you know that it’s possible to find more money.
As crazy as it sounds. welcome to the world of employer retirement plans! This is how 401(k)’s, 403(b)’s, and other retirement plans work. Not all plans are created equal, despite seeming to be.
I was reminded of this fact, recently, while reviewing 401(k) accounts for a client. Husband and wife work for two different employers. Both save into their respective employer’s 401(k) plan. Both have the exact same investment options available to them…but the investments in Wife’s 401(k) actually cost about 7.5 times more than the very same investment in Husband’s 401(k).
You would hardly notice this difference in their account balances after one month or even one year of saving…but thanks to compounding interest, 30 years down the road that cost discrepancy adds up to a $100,000+ difference in account balances at retirement…for using the exact…same…investment.
Does that mean the wife shouldn’t save into her 401(k)? Not necessarily. Cost is only part of the equation and should never be the leading factor when making investment decisions. It should only be considered as part of the bigger picture along with other factors like risk, diversification, taxation, and employer matching.
Cost can’t always be controlled, but when it can, it should be because there’s money to be found.
Here’s what caught my eye this week:
LIFE: 5 Reasons Why Non-Digital Time Management Is More Productive (Tim Maurer)
I’m not a great multi-tasker by any stretch of the imagination, and that is never more apparent than in my time management. I’ve tried and tried over the last year and a half to find a digital time management system that works for me…but I always revert back to pen and paper, in some form. I ordered a Bullet Journal to give the non-digital time management style a try starting in January. Fingers crossed.