I have a few friends that are quite well off, even at a relatively young age. This is in large part because they have good jobs, invest wisely, and basically live life as American and the modern would says they should with regards to money. When they retire they will be set for life. I, on the other hand, have stopped living life as society expects me; at least with respect to traditional jobs and investments. Sometimes I do wonder whether I’m on the right track or woefully mistaken. I often ponder, “Should I go back to the way everyone expects me to live? What happens if I’m completely wrong?”
The question is essentially a simple one: where does one think we will be in 10, 20, or 30 years from now? Will society and life be as it has been or will life be drastically different? Sadly, I’m betting on drastically different. That said, I thought it would be interesting to compare my strategy, a life-savings in preparedness items, versus a life-savings in a 401K. Let me clarify. It’s not like I spend all of my money on preps, just as much as I can! So, here’s my list…
|Pros to 401K/IRA
||Pros to Preps
|Cons to 401K/IRA
||Cons to Preps
The most obvious benefit of investing in an retirement plan, especially early on, is the compounding that occurs from good investments. If you did well and continue to contribute then you should expect a descent amount of money awaiting you upon retirement, money that can be used to live off of for the rest of your life. If you’re wrong, however, your 401k or other retirement vehicles may not be what you planned on and you could be in trouble. The major downside to investments is that you cannot access your funds (without penalty) for many years down the road.
The major benefit to preps, on the other hand, is that they can be used now and will probably be used throughout your life if you do things right. The major drawback to preps is that money spent on preps cannot be compounded in investments such as stocks that could appreciate significantly over decades and be worth many times what your money is now.
Of course, none of the aforementioned points take into account the effect that inflation has on the value of money and preps. In most cases, the value of money will be less (perhaps much less) decades from now whereas the value of food purchased now, for example, may be worth much more. I’m no mathematician, but I can understand that simple fact.
As much as I prefer to believe that I am right in my actions–who doesn’t–there are obvious pros and cons to both strategies. And, like I pointed out in the beginning, the question is simply where do you expect us, as a society, to be years or decades from now? If you truly believe that life will generally be as it was then you should probably follow the 401K route; if not, then follow the preps route. Maybe the best strategy overall is to do both if you can afford to. For those of us that can’t then it’s a call you will have to make.