I have enjoyed the new podcast, and have learned a lot about syndications. I consider myself more of a center fielder - i have both my 401(k) and stock investments, and i have 22 doors as well as 2 syndication investments.
I was shocked to hear this latest podcast. I strongly wonder how Chris Miles can call himself a "financial advisor" without knowing these facts, as these are very basic for even non-CFP advisors.
Blatantly false items -
- they mis-represent the 4% rule completely. First, the expectation is not to use the 4% automatically every year. It states that if you withdraw about 4%, about 96% of the time, you won't run out of money in 30 years, based on history. Each year, you withdraw 4% PLUS inflation, so it will ALWAYS increase the amount you withdraw (unless you have a deflationary environment which is exceedingly rare). Second, it is a general guideline to suggest when you are able to consider retiring. As was quickly and briefly said, the withdrawal rate is roughly 4% but really depends on sequence of returns risks - if you have an up market, you can withdraw more, as happens most of the time. If you have a down market, you may have to drop to 3% or so. If you are an early retiree and need more than 30 years, you should consider 3.3-3.5%. In more than half the cases, people would have ended up with more money than when they started, so you probably want to spend that.
- they state the minimum age to withdraw from your 401(k) was increased from 70 to 72. This is blatantly false. The REQUIRED minimum age of distribution did indeed go form 70 to 72, but this is for people who have SO MUCH MONEY that the government needs you to start withdrawing. You can start for any reason at age 59, but you can even start withdrawing in your 20s by filing the SEPP form.
My opinions -
- I am not a big fan of non-term life insurance. I have owned in the past, and it cost me money. The only scenario that has made sense for me is tax savings if you are going to have an estate tax problem - which would require you to have about $13 million dollars before becoming an issue.
- If Chris' father truly invested so little money in the stock market that after a lifetime of saving, he would run out in 5-6 years, he WOULD NOT have made enough money on the real estate side of things to sustain himself much longer. I truly would have loved actual numbers, savings and rates of returns here, as opposed to just saying it and assuming we should take Chris' word for granted. If Chris' father retired in 2005, and worked for 30 years, and saved just $500 per month, he would have $1.4 million dollars in 2005 as stock market averaged 11% between 1975 and 2005. This would be about $2.2 million today, or what would be about $88,000 (PLUS INFLATION) for 30 years. To run out in 5 years would require an annual spend of about $500,000 per year. So I am guessing that he either invested in the wrong things (i.e. individual stocks) or he did not save enough money.
- if you don't know any 401(k) millionaires, I would suggest that you aren't looking in the right places, I know plenty. Fidelity released yesterday alone that the number of millionaires jumped by 10% to half a million - and that's just the Fidelity brokerage. There are real estate millionaires, and there are 401(k) millionaires - there are both. To say "does anyone know anyone that became a millionaire in the stock market?" was a really unusual question, because I think the far majority of people would answer yes to this. I wonder if it's because Chris just surrounds himself with only real estate people, and that's why he doesn't know this.
I would strongly caution anyone taking what they say at face value - I wonder what Scott Trench and Mindy Jensen, who both I think do a really good job of presenting a balanced point of view, would think.
To Jim and Chris, I really hope you read this feedback and listen again to the podcast and the things that were said. It just seemed so heavily biased and one-sided that it sounded like a sales pitch for a syndication you were selling (I have been a long enough listener to know it wasn't). Please strongly consider doing more research before making statements such as these, as while this information is for educational purposes, you do have an audience that is listening to you. There is a place for stocks, just like real estate, and there are pros and cons to both.
