4k vs 401(k)
Please note that this would classified as a high-risk strategy.
We are not licensed financial advisors.
We are only retail traders striving to outperform the market averages provided by financial institutions.
The demonstration aims to illustrate how an investor could potentially turn $4,000 into a retirement account compared to investing $4,000 annually into a 401(k) for 5 years.
Below is an example of a risk-based allocation strategy using an initial $4,000 starting balance. The investor would begin with a $4,000 contribution and allow the gains to compound over the years. Starting in Year 1, the investor would risk 25% per trade of the starting balance at the beginning of the year. This would allow for approximately four consecutive losses before depleting the initial balance. Each year, the risk tolerance would decrease by 5%, tapering to 10% of the account balance starting in year 4.
This demonstration will be updated monthly and will show the number of contracts used to purchase based on the risk tolerance of each year.
Results compared to our alerts for the first 5 years.
(The results are based upon an average 10% return in the S&P500)
**Please be advised: We are not automated traders. We consider many factors before making trades.
Returns listed can be affected by Dollar-Cost Averaging (DCA), slippage, differences in brokerage fees, individual tax bases, and formulas used for calculations, all of which can have an impact on the overall P/L listed. The spreadsheet is based on the average contract price of each entry and exit applied to the risk basis for each year.
The guides are strictly examples.
Traders should always perform due diligence before following any trade.
We hope this demonstration will aid investors in taking control in your own financial future.