timhope

50% Returns, No Risk?

Correct me if I'm wrong, but you're completely missing the concept of compounding interest. If you contribute $10,000 and the company matches an additional $5,000, then yes, at the end of year one you have $15,000 and a 50% return on your money. If you do that again in year two, you'd end up with $30,000 on a $20,000 contribution - still 50% more than you put in but spread out over two years. Doing this for thirty years, you'd end up contributing $300,000 with a total match of $150,000 for a grand total of $450k. Not a very good return over a 30 year period. This simple example assumes no interest on you money market account. But even if you earned 2% a year - this would still only come to $621k in 30 years. I hope you do not actually advise this strategy to your clients.