I think casualtrucker7 has a point here—that exit fee is basically just there in case you ever decide to switch funds. You can't actually pull money out of the system before age 50, unless maybe you're granted early retirement by NOAA or, I guess, if someone passes away and the savings go to their heirs.
It doesn't really matter if it's JPMorgan Chase or anyone else—they've all been around the block. I looked at the averages since they started, and honestly, money market funds aren't exactly high-profit plays in the long run. They tend to look decent during a recession, sure, but they aren't where you stash cash for the long haul. They're more for "parking" extra liquidity—money you want accessible enough to grab whenever, then toss back in when you're done.
The point is, if you held your money in a fund like that for, say, five years, you’d probably walk away with less than if you’d just put it in a standard CD at a bank. That said, I'll give you this: as far as "on-demand savings" goes, they're top-tier.
Larry Rivera2 says: ...returns are about 8 percent...
If money market fund returns were actually sitting at 8%, that’s just a short-term spike—it isn't the norm. Usually, those returns hover somewhere much lower, though last year was an outlier. If it stayed that high consistently, banks would be dumping massive amounts of capital into these funds without a second thought...
Just look at this one example from JP Morgan Chase
Money Market Fund
1 month* 7.99% 3 months* 8.46% 6 months* 8.54% Year-to-date return 7.50% Last 365 days return 9.02% Average annual return since inception 6.64% (since 1999)
Euro Money Market Fund
1 month* 4.97% 3 months* 5.23% 6 months* 5.12% Year-to-date return 4.10% Last 365 days return 5.51% Average annual return since inception 4.44% (since 2002)
William Phillips said:Can someone help me understand why there's so much pushback against life insurance? I just don't see the downside. Am I missing something that everyone else is seeing?
In principle, life insurance is fine if you view it as actual insurance rather than a savings plan—which is how most people try to pitch it. There are a few drawbacks that make it a risky product. For starters, the interest rates on the cash value side are pretty low (maybe 2-3%), so you'd have to index those contracts just to stay ahead of inflation. Plus, during those first couple of years, depending on the term, there’s basically zero cash surrender value if you decide to cancel. You also have to be extremely consistent with your premiums, otherwise, you could lose your coverage entirely.
Daniel Perez13 said:I guess you already answered your own question. As casualtrucker7 pointed out, a withdrawal counts as income. If I get a tax break today but it becomes taxable income tomorrow, then yeah, I'll probably be paying tax on that income down the road.
Maybe casualtrucker7 gets it, but maybe pomoć1 doesn't quite grasp that using a deduction now means getting a refund now and paying later—tomorrow or the day after. Basically, the government lets you skip the deduction if you decide it's not worth it.
To me, getting a tax refund of $X twenty years from now just means paying that same $X back later (minus interest), whereas as an entrepreneur, I could have invested that money and turned it into ($X + N) by then. You didn't mention that—though you probably could have—but I think we both get what I mean.
I agree—that formula seems solid. Take whatever you earn and put 10% into savings, set aside 10% for gifts for the people you care about, and then spend the remaining 80% wisely (and hopefully happily).
As for that initial 10%, maybe spread it out—anything from low-risk investments to going all-in on high risk.
We’re heading down the same path through the woods—but let's look at both sides of things. I’ll push the optimistic view, you can stick to your more skeptical take, and I guess we'll eventually meet up, if not sooner, then at the end of the road.
Who’s guaranteeing it? Nobody—just like nobody can give you a hard guarantee on returns with any other fund out there. I guess that's just how it works. There are no guarantees in life—not even that we’ll still be around tomorrow—so I guess we just keep hoping for the next day.
But you’ve got those perks and benefits—let me list a few of them—there are about ten: Conservative investing offers a few perks—gives you that sense of security, I guess. Then there’s the oversight from Hanfe ensuring everything stays strictly by the book—and don't forget those 25% government incentives. Plus, you get insurance on your savings up to... $133 Fourth—your heirs actually inherit the funds in the account. Fifth—you can't have your account seized in the third tier if you owe money to, say, big banks like JPMorgan Chase. Sixth—you’re entitled to pension payouts even if you aren't currently employed. Seventh—there's no requirement to make regular deposits while you're in the saving phase. Eighth—you can start those lifetime pension payouts early—maybe as young as 50. Ninth—you get to take advantage of tax breaks up to $12,000 annually. Tenth...
Go ahead—compare that kind of savings to investing in any mutual fund and then come back to me asking about guarantees. I guess we can go down that road if you really want to.
Everything seems fine, I guess, but when the government is cutting you a 25% annual tax incentive, it honestly makes sense to save through this kind of third-pillar setup. My logic—and maybe I’m overthinking this—is that if you trigger your retirement at 50 while you're still actually capable of doing things and opt for life-long payouts: say you start at 40 and set aside $133 monthly, then draw $133 in monthly benefits for the rest of your life (check out the projection tables over at ), well, I'd love for someone to tell me why that wouldn't be worth it. With a bit of luck and a long life—say reaching 85 or 90—you could come out ahead three or four times over.
Everything you said holds up, but since we’re weighing the pros and cons of this kind of saving, we should probably mention the whole point of the third pillar. It’s designed to work alongside the first two to build a solid retirement foundation. This model has been working globally for decades—it's basically your own private reserve for when you're no longer earning a paycheck. The idea isn't to dip into it at 50, but rather to wait until you're 60 or 65, and instead of pulling it out over five years, you take it as a lifelong payout. That’s where it actually makes sense.
One more thing—that third-pillar income is treated just like any other non-independent income, like a regular salary. It can even serve as collateral for loans, which gives people who might otherwise struggle—like those between jobs or stay-at-home parents—a much better shot at accessing standard banking products.
Robert Hernandez11 said:There’s truth to that... though it really depends on what you're aiming for. For me, the goal was buying a house—so I used a housing savings plan, kept some money in CDs, and for the last year and a half, I've been putting money into a money market fund... basically following that old "don't put all your eggs in one basket" rule. Taking out life insurance was easily my dumbest move. I signed up for a policy that runs until I'm 60🙄, paying $255 a year, and honestly, God knows why I did it...🙄 Now I'm looking into changing both the premium and the term, though I'm not even sure if they'll let me switch things up.🤷 And as for those private retirement accounts? Total disaster, we already know that.☕
Taking it easy regarding the third pillar—here’s a look at last year's returns for all the funds (via HR Portfolio):
Charles Schwab — 8.70 Stock market index fluctuations—Profit 11.89% Vanguard S&P 500 Index Fund performance data—4.30. Vanguard S&P 500 Index Fund performance data—looks like it hit 14.72. Vanguard S&P 500 Index Fund performance data—looks like 8.19. Vanguard S&P 500 Index Fund performance data—looks like it hit 5.45. I guess that's where we're at.
If you factor in that 25% tax credit for this kind of savings—aside from the 2008 crash when everything was tanking—it’s probably one of the best ways to save. The only real catch is that you can't touch the money until you hit 50, and even then, you only get 30% in cash—the rest stays locked away for retirement. I guess if you've already got a 401(k) set up, you made the right call.
That 7% interest rate includes all the fees—and since the subsidies are legally scheduled to kick in next year, we’ve seen them come through reliably for the last decade. I guess it’s fair to wonder how long they'll actually stay active, but honestly, everything feels a bit uncertain these days anyway.
If we're talking about savings that actually compete with traditional banking while staying safe—it’s probably those housing savings accounts. They tend to pull in around 7% annually, which seems pretty solid for now, and they're one of the few ways to lock in a fixed-rate mortgage later on. As for government incentives, I’d suggest maxing out those $1667 per person every year if you can. The only real downside is the five-year wait if you're just saving for the sake of saving.
wiredddriver9, just thought I'd pass along some info since you're looking at getting a treadmill:
I spent quite a while hunting for something decent in the States—good quality without being overpriced—and finally stumbled upon this one at Job Corps (located in Chicago, phone is 555-0199), check them out at www.jobcorps.com.
It’s a LifeGear model, comes with a warranty and they handle their own service. Price is around $1333, and you can actually use an American Express card to pay it off over 12 months interest-free if that helps.
The machine is solid enough—tracks everything from speed and mileage to calories and heart rate. Top speed hits 9.9 miles mph, there are 3 incline levels (manual adjustment, though), and the user weight limit is about 285 lbs.
It runs smooth and quiet, which is nice, plus it folds up when you're done. I'm pretty happy with it, I guess.
Antman, I’m with you on the general approach—but how do we actually navigate the legal side of things with the big financial firms, given the Federal Insurance Office guidelines? They’re going to be looking for licenses soon, and standard independent contractor agreements or service contracts just don't hold up legally in this industry.
The federal inspectors gave us a hard time about using contractors, which is funny because I guess hundreds of thousands of people in the US work under those exact types of external contracts.
What would an agency actually need to look like to represent a firm properly? Should it follow a framework similar to Vanguard or BlackRock, or something else entirely? Does anyone here have any insight on this?
Gerald Thomas11, you should probably flesh out that idea you mentioned... there’s some logic to it—that's essentially how insurance brokerages got their start, I guess.
I haven't come across any objective Financial Planning Associates either, so maybe we should look into what kind of hurdles exist for operating that way and what they might be.
And are there agencies or firms like that outside of the US?
I’m with you on that last point—that’s how we should be handling this. We shouldn't take everything personally like neonrider7 does; I guess instead of letting ego get in the way, people end up dismissing roles like being an "advisor" just because someone from Fidelity thinks it's beneath them.
Frankie, could you double-check if that promo fee discount isn't actually 50%? I'm thinking maybe it's not quite 100%—let me know what your people end up saying.