How to Beat Your 401k | 156

MORI 156 | 401k

Have you ever heard someone, or said yourself, that you get a 100% return on your money because of a match?

Is it REALLY 100%?

And what’s the stock market actually returning anyways?

Is there something better than your 401k?

All of these questions are answered by our host and Cash Flow Expert, Chris Miles, where he explains what the REAL return is on your 401k, and what options you could do that create better cash flow TODAY!

Tune in now!

Chris Miles Bio

Chris Miles, the “Cash Flow Expert,” is a leading authority on how to quickly free up and create cash flow for thousands of his clients, entrepreneurs, and others internationally! He’s an author, speaker, and radio host that has been featured in US News, CNN Money, Bankrate, Entrepreneur on Fire, and has spoken to thousands getting them fast financial results.

Listen to the podcast here

How to Beat Your 401k

I’m excited about this episode and to be with you. Be sure to check out our website, If you’ve got questions as well, either send us a question through there or you can send me a question at and say, “Chris, I got a question for you.” Especially, if it’s an episode or if you have an idea for that or you’re saying, “How do I apply this stuff in my own life?” Let me know.

In this episode, I want to be able to welcome our sponsors as well, American Homeowner Preservation. As I’ve mentioned before, if you want to be able to help and people be able to stay in their homes or be able to get out from under their homes, this is a great place where you can not only make a great social impact, but you can make great returns on your money too. You can do it with only a minimum of $100 and that’s it. If you want to be able to get great returns and make a great impact on people’s lives, go ahead and check out

In this episode, I wanted to talk about a question I constantly get from people all the time. These are people that work and barely make ends meet or they make hundreds of thousands of dollars a year. A lot of people keep asking me the question about their 401(k). They’re like, “Chris, with my 401(k), can I do something better than this? I’m getting a match. Why would I stop that match? It’s not dumb money.” You always hear that kind of thing. “Wouldn’t it be dumb not to take advantage of the match?”

I’m going to address that directly now. I want to talk about what that does. This first became apparent to me when I was a financial advisor and I was a couple of years in. I remember hearing a training about the rate of returns. Everybody keeps saying their matches aren’t and I remember the first time I tried to describe it to somebody, I bombed it. The guy questioned my math and told me I was full of crap.

Here’s the actual math. When I say math, I’m not trying to scare you away, but I want you to understand that what you think you’re getting, you’re not getting. What I hear from people a lot of times, even though this is becoming rarer, they’ll say, “I get a match up to 4% or 6% of my money. I’m getting a 100% rate of return on my money. Chris, how can anybody beat that?” Very easily, actually. Let me talk about that.

What you think you're getting, you're not actually getting. Click To Tweet

First and foremost, let’s talk about what the market’s returning. Let’s see what it’s doing because I pretty much assure you that whatever the market’s returning is going to be higher than probably the funds you’re in, in your 401(k). Maybe not in a single given year, but if you try to stay in a fund over time, you probably won’t stay up with the market because most mutual funds never even match the market.

I know many people are going more into S&P 500 funds, so that’s what I’m going to get you here. As of the time of this recording, I decided to go back and look at the real returns of the market, not the average. I’ll give you an example here. If you look at the last 25 years, going back to 1992, you’d say, “The market’s returned 569% total.” Now, if you’re trying to do averages, if you divide that by 25 years, that’s an average of 22.76% a year. That’s awesome. No, that’s not true. That is an average, but that’s not the average that even people will give you.

That’s an average if you’re using very simple math, but you have to remember that there’s compound interest involved. I used a calculator. I went to and said, “It did increase by 5.6911 times to be exact over 25 years. What would it take for $10,000 to become $56,911?” If you do the actual math on it, it becomes very different. The 25 years is 7.2%. That’s pretty typical for 25, 30 or 40 years of what we’ve seen. I guarantee that’s not a guarantee because times change. This includes the big bubble of the ’90s and the burst in the 2000s. It includes the big, huge run-up we’ve had lately too.

We’ve got numbers all over the place, but we’ve got ups and downs, 7.2% isn’t too far-fetched. When someone says, “Let’s look at 6% in the market.” With your mutual funds, that’s a pretty decent return if you can get that and that’s gross returns. That’s the return you get before fees, taxes and everything else. You factor in fees. Especially if you have a 401(k), you probably have decent fees, at least 1%. Six percent is a good number to be using because you do have fees coming out of your 401(k), whether you know it or not.

That’s the average for 25 years. What’s it been in the last ten years? It’s only been 4.65% because 2007 was hitting a high in the market. All of a sudden, it started tanking for a couple of years, 4.65% includes some pretty bad down years that we had for 2008 and 2009, especially but from 2009 on, it bounced back up. If you look at a five-year average, the actual return of the five years has been 13%. Even though we’ve seen in ten years around about 4.7%, the last five years have been 13%. That’s a lot. That’s a huge number.

MORI 156 | 401k
401k: When the market goes down, you don’t just lose your money. You’re losing double the money.

That’s way above the average of 7%. There’s part of the debate too of, “Even if I start putting money in my 401(k), would that be good?” Because even if you get a match, when the market goes down, you don’t only lose your money. You’re losing double the money. You’re not losing the money you got matched too. Now, everything’s amplified. The waves become bigger. You feel the down is much worse than you do when you feel the ups. The ups are great, especially when you have a match, but the downs stink too.

Let’s talk about that match because people will say, “That’s 100% return.” I want to give you some historical stuff. About 7% is the average over the last many years. We’ve had about 5% to 13%, depending if you’re looking at 10 years or 5 years. Five years have been very good to us only because they’ve all pretty much been up years. Even when somebody is like, “I’ve had 15% I’ve made this year. I’m doing awesome. Am I investing?”

No. You’re getting the basic market returns. You didn’t do anything about that. If you got 15% in the last year, that means your average for last year. You got to understand that 15% is not realistic year after year. It’s funny because sometimes people, when they look at returns, they’re almost like business owners. When a business owner has a good month or two months, they think that the rest of their year is going to look the same.

They forget that there are ups and downs sometimes. There’s ebb and flow. Sometimes things don’t always go the way you project them. The match though is the big thing because even if you didn’t get a return, you’re thinking, “100% match is awesome.” I want you to use an example. Let’s say that you’re putting $5,000 a year in your 401(k). Maybe you’re only doing enough to get the match. That means you’re getting $5,000 on top of it for a total of $10,000.

You’re right. In that first year, you double your money. That’s a 100% rate of return. Where the numbers start faltering and this is where people get thrown off, is after those first few months or first year or so, pretty soon, the numbers start going down because now you’re dealing with real compound interest numbers. When somebody tries to say, “I get 100% rate of return,” that’s not compounding.

The longer you have your money in that 401k, the less benefit it gives you. Click To Tweet

I’ll give you an example. If you have put in $5,000 and let’s say you got that 100% plus a 7% per year average. 107% rate of return because you got to market and you got your match. That $5,000 a year you’ve been putting in for the next 30 years, guess what that number becomes? It’s $29 trillion. If you’re getting a 107% rate of return each year because you’re getting the market plus your match, if you’re saying, “I get 100% return on my money,” let’s project that out for 30 years.

Does that mean you know people that have $29 trillion in their 401(k)s? Even Bill Gates is only worth about $80 billion. You’re saying, “I’m worth at least 40 times Bill Gates after 30 years. I’m doing a good job.” No. That never happens. Do you want to know what the real return is? Let’s say you were getting 7%. $5,000 at 7% after 30 years is $505,000 but if you get the match and say they double you 100% the whole time. By the way, people doubling your match is becoming less and less frequent.

Companies are backing that off more and more. Now, it’s becoming a 50% match or things like that. Let’s say it’s 100%. All the number does is double. If it’s $505,000, then it becomes $1,010,000. If you get 100% match, your money doubles, but it doesn’t 100% return. In fact, the longer you have it, the less the return grows. The less it becomes more of a return. Let’s say that same example. I’m throwing a lot of numbers out here, but I want you to follow along.

I know some of you guys that would be debating it are probably running numbers like this. If you run this and you do this again at, you can use an interest calculator and compound it and figure it out. If you’ve got 7%, as I said $505,000, 100% is $1,010,000. That actual return went from 7% to your own money. It’s 10.55%. You gain 3.5% with that return. It wasn’t 100% return. It wasn’t 107%. It was only an extra 3.5%, which is great because that pretty much pays your taxes.

You could pretty much be in a tax-free place getting those kinds of returns and you would probably match your 401(k) given a perfect market condition. Does that make sense? What it means is that the return is not that great. If you do that after 40 years, that 40 years only doubles. That average return not only becomes 9.5%. The longer you have your money in that 401(k), the less benefit it gives you. You only double. If you double within a matter of a couple of months, you can get that money.

MORI 156 | 401k
401k: You feel the downs much worse than you do when you feel the ups.

In fact, that’s what one client we had done. One client was lucky enough. He was one of the 1% of 401(k) plans where he could pull the money out, not as alone, while he was still working. He was able to do what’s called in-service distributions. The cool thing was when we figured it out and he was over 60, so it was cool. All he had to do was pay taxes, which you would normally pay if he didn’t take the 401(k).

All he had to do was leave $3,000 in there. I said, “Do you know what you can do? You can go put your match for a couple of paychecks, get your 100% match and then pull the money out.” Let’s say he puts in $500, he gets $1,000, that’s a $500 return. It’s 100% return in a month and then he pulls it out. He’s like, “That’s brilliant. I’m going to do that.” He would put the money in, get the match and then pull the money out.

In that case, that was free money. The money in your 401(k) doesn’t matter until you’re using it. If it’s in retirement or whenever it might be, that’s when it matters. The point I’m trying to make here is that it’s not the returns you think it is. It’s not 100%. If you’re lucky, you’re making 2.5% to 3.5% in that example. That number can fluctuate depending on how much you’re putting in. All it is doing is paying your taxes when you have to cash out your 401(k) down the road if you’re even getting that much.

It pays for your taxes. What do you do? You can do that tax-free. We’ve talked about vehicles like that. I’ve talked about life insurance. Life insurance may not return 7%. It might, but it might not. I wouldn’t count on it. What’s cool is that a dollar now is worth more than a dollar tomorrow. If you can access your money now, use it and create cashflow from it, that’s what’s important. Even if you’ve got that million dollars in 30 years, you pretty much get that 100% match for the next 30 years earning 7% and you’re putting $5,000 a year, you’ve made $1 million.

Here’s the thing. You’re not supposed to be pulling out much more than 3%. That’s only $30,000 a year. That’s not much, is it? Now, could you do $30,000 a year somewhere else or $2,500 a month? Yeah. For example, a couple of hundred grand in real estate could do that. I’ve had clients do that. I have one client making half that cashflow with about $84,000 put into real estate. That’s $84,000. He didn’t have to have $1 million to do that. He didn’t have to have $500,000 to do that. He did it with $84,000. He did with real estate.

It's time for you to invest in the number one investment—yourself. Click To Tweet

I’ve mentioned other things. These things are not guaranteed, just like the market’s not guaranteed, but can you make it better in other places? Yes. Unfortunately, your financial advisor will never offer it to you. That’s why it doesn’t work. You’re not going to have a mutual fund that’s going to do that. Even if they say, “This is creative. This is a managed fund. This means somebody does something with it.” Managed funds a lot of times don’t even perform nearly as well as the funds that are in the S&P and have lower fees.

Your 401(k), even with the match, if you’re looking at the example I gave you for 30 years, as long as you’re being at least a 10.5% rate of return, that’s if the market does something and that’s if you’re earning 7% after fees which are probably not likely, but you could. It’s possible, but not likely. If you’re at least 10%, there are plenty of places that do that. The cool thing is that 10% cash on cash. It means that you’re getting paid cashflow and not accumulating money, where you’re hoping and praying it works, but you’re getting cashflow now and that’s creating so much more.

You can do that in your business. Some of you guys are business owners. I’m shocked that sometimes you’ll have a side job. You’ll be stuffing your 401(k)s. It’s like, “Why would you stuff money in that, but not in your own business?” If you’re an investor, why wouldn’t you put it in your investments? The thing is, I mentioned this with Buck a few episodes ago. Buck and I were talking about the things that millionaires do. They laugh at mutual funds. They think 401(k)s and IRAs are dumb. This is why. It’s because that match doesn’t do much.

I had somebody comment asking about the match. Here’s your answer. The match doesn’t do as much as you think it does. It’s the golden handcuffs. The thing is, if you die before you ever get that money, that’s a negative 100% rate of return because you don’t enjoy it. You didn’t get any benefit from that. It’s only an expense. If you think about it, a 401(k) is only an expense until you’re finally able to cash it out.

It’s only this number on a piece of paper until you’re using it. I would rather make money now and create cashflow now that shows up. That’s the key. That’s what I want to leave you guys with. I want you to ponder on this and consider that maybe everything you’ve been taught is only a bunch of people in a financial company, which by the way, they’ve put billions of dollars into advertising.

MORI 156 | 401k
401k: The best thing to do is narrow down what you’re passionate about, get the education, get the training, and then figure out what’s going to be the best investment for you.

They have billions and trillions of dollars that they manage and they want more of it. They want you to put the money with them. They’re the same people that tell you it takes money to make money. Those same people will say, “Leave it in there for the long haul.” However long that is, while they go and they make money with your money anyways. They’re making better returns. It’s time for you to become an investor.

It’s time for you to invest in the number one investment in yourself. Get the knowledge, get the training and find out what’s going to work for you because there is no magic bullet investment. I’ll tell you though. I have people come and ask me all the time. When they say, “I’ve got a couple of hundred thousand or I’ve got several hundred or a hundred thousand dollars or tens of thousands, what can I do with this?”

It depends. Every person is different. Every person gets a better rate of return. Sometimes paying off your loans and your debt can be a better rate of return than even your 401(k) with a match. Also, you’re getting an immediate cashflow benefit. Some people ask about the case. Some people are in business. Sometimes it’s in real estate and other investments. I mentioned one that’s an investment that’s $100 minimum. There are all kinds of options out there. The hardest thing is there are all kinds of options.

The best thing to do is narrow it down by what you’re passionate about. Get the education, get the training and then figure out what’s going to be the best investment for you. If you’ve got questions about your own situation, as I said, email me at and let’s talk. There are lots of options out there, but I’m telling you that the world is so much bigger and better than the credit 401(k)s that you’d have to put in tens and thousands of dollars to be able to get something decent.

As I said, if you want to see more options and what’s possible, email me at In the meantime, you have a great and prosperous week. Know that there is hope and that there’s a bigger, better world than what you’ve been taught. Have a wonderful and prosperous week. We’ll see you.

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