Customer Reviews

The Smartest 401 (k)* Book You'll Ever Read: Maximize Your Retirement Savings the Smart Way! (*Smartest 403(b) and 457(b), too!) (Library Edition)

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I bought the updated edition (Feb. 2010) from my local Costco store and read the entire book from cover to cover in two hours. (I have a background in investment, but currently unemployed.) I feel rather ambivalent about the author and the book.

On the one hand, I totally agree with his claim that the entire 401(k) system is corrupt, as is the entire investment management industry, and the U.S. government is a willing and active cohort in this scam to rob American employees of their retirement savings. My own 401(k) plans have seen paltry returns over the last 15 years, despite my effort at picking the "best" funds that were available to me. (No, I don't chase past year's performance.) Call me bitter, but from talking to my friends and former coworkers, this seems a commonplace experience, and this book explains why it's the case. The action chapters, esp. in part 3, are also decent, although as another reviewer has said, the entire action plan can be summarized in two sentences: diversify your portfolio, and only invest in low-cost index funds. The author does provide a list of funds to consider, although your plans may not offer them at all (see the "cheat sheet" in chap. 24 of the 2010 edition).

On the other hand, I'm not sure what the author's true motive in writing this book is. Is it really to help us worker bees to save for our (gloomy) retirement? As I was reading the book, I got the feeling that he was writing the book primary to sell the book, kind of doing what the mutual funds he criticizes are doing. For example, he cherry-picks on certain numbers, such as quoting historical returns without mentioning the significant inflationary effect of survivor bias (i.e., only companies that survive get included in calculating market returns).* He compares accumulative returns (using a 40-year horizon -- man, how many readers of this book have that many years to contribute to a 401(k) plan???) between a 2% expense ratio fund and a 0.3 expense ratio fund, but neglects to tell you that the difference is partially tempered by taxation. He does provide a bibliography, which is good, but who knows if he only picked the "research" that he agreed with and omitted anything that contradicts his belief?

The 2010 paperback edition also suffers from certain logic lapses, such as the first chapter about "Wan Ba Shi," as well as typos and grammatical errors.

One warning I should give is, the book's website appears to be mostly a marketing gimmick for his IFA products. I took the 25-question survey. At the end of the survey, I *HAD TO* give them my name, state, home *and* work phone numbers, and e-mail address, in order to see the survey results. The result page itself is titled "Investment policy statement" and contains numerous references to his IFA company and also contains a signature section for me to sign!!! Not a good thing, Mr. Solin, for someone who claims to be impartial and to expose a rigged system.

* He mentions the evil effect of survivorship bias in tabulating active manager returns, but nothing about it when it comes to calculating market returns.

Dan Solin's book, "The Smartest 401(k) Book You'll Ever Read", is a winner. His thesis is that investing should be simple, and he walks this talk by writing about investing in such a manner as to make it simple, fun, and easy to understand for the reader.

He offers far more than another book about how Wall Street and the insurance industry are ripping us off in our 401(k) and 403(b) retirement accounts. Though Mr. Solin does explain how our hard earned money is siphoned off by the "experts" that provide these plans, he also explains practical easy steps we can take to minimize the impact. These steps include:

* Using an IRA with better options.
* Rolling the 401(K) to the IRA when you leave an employer.
* Picking the "least bad" funds within a poor retirement plan.
* Choosing assets that fit with the rest of our nest egg.
* Joining the investment committee of our employer's plan.

Albert Einstein once said "if you can't explain it simply, you don't understand it well enough." Dan Solin gets it and explains it with brilliant simplicity!

If you want financial independence years earlier, "The Smartest 401(k) Book You'll Ever Read" is for you. It will give you sound and simple advice that's equally simple to implement.

For those who make their fortunes from providing these outrageously expensive plans, you'll hate this book. Read it anyway.

With tens of millions of Americans depending on the 401K, "The Smartest 401K Book You'll Ever Read" can help beginners or those who need to increase their knowledge of their 401K plans. With the 4-O-1 (with or without employer matching), the US worker today is on his/her own to understand, manage, and shift asset allocation as efficiently as possible. The 401 is littered with numerous problems that are a disadvantage to the worker. Part of this is because of the lack of Congressional laws. The investment industry is comprised of leeches that feed off of your investments throughout your 40+ years of work.

Author Dan Solin provides helpful and necessary information for those who are currently in a 401, who will be, and also those who'll be switching jobs. After leaving an employer there are a multitude of options of where to put your 401K money. Solin does note the latent gimmicks and tricks that take your hard-earned money in hidden fees.

Ten of millions of Americans are now relying on Defined Contribution Plans (401Ks) as Defined Benefit Pension plans (Pensions) are now nearly extinct. How much of your 401K will go toward your medical and pharmaceutical drug costs when you're old? Will the old rule of withdrawing 4% of your principle without eating into the principle be enough for you to live off of? Tax-deferred means - deferred - not tax free. Will Congress change the rules on taxes, again and again, as they so often have? What will the average rate of return per annum be? What will the average rate of inflation be? We must make a variety assumptions and calculations.

Solin's advice and info is critical because those with 401Ks are statistically putting all of their eggs into 1 Financial Market Basket. This, is 1 basket contrary to what is often advocated: "diversify." You're in mutual funds with an allocation of stock, bonds, and money markets, and yes you can diversify, but within your limited plan provided to your by your employer and fiduciary. Solin wisely promotes rolling over 401K retirement money in IRAs for more control and more choices. And this, can only be done, when an employee leaves a company. Is the solution to resign from a company - quit your job say, every 5 years, just to roll over your 401K? Obviously, not. (The Roth 401K was enacted in January, 2006.)

In addition to the 401K, non tax-deferred Index Funds provide the freedom of withdraw and movement with out penalty, limitations, age restrictions, and index funds also have low tax rates as there is less churning. In addition to this book by Solin, "The Great 401K Hoax" is worthy of a read. "The Smartest 401K Book You'll Ever Read" is an informative and important book by Dan Solin. Heavily recommended.

The book gave very good advise for long term investing, and ways to reduce the fees charged by various investment companies. I gave each of my three children (young adults) a copy of the book so they can start securing their retirement funds.

I really enjoyed Solin's little Smartest Investment book, so I decided to check out his 401K book also.

Solin is a DFA advisor so he promotes DFA index funds. He cites some papers which show that investing in DFA funds gives higher returns than using Vanguard Index funds. He forgets to mention that DFA advisors usually charge a 1% ER, so the return of DFA funds must be incrementally higher by 1% over the return of Vanguard index funds invested by the do-it-yourselfer.

Solin correctly rails that 403B's are terrible investment plans for teachers. He cites the case where the NEA was sued for collecting $50M in fees from investment providers.

Solin also points out that the Supreme Court said it was ok for Congress to retroactively change the tax laws for 10 years! This could be the justification Congress needs to begin taxing your IRA's, 401K's, and Roth IRA's not only on the current date, but 10 years retroactively! Very interesting food for thought.

Solin also correctly advocates that 401K funds should have to divulge actual expenses incurred versus hiding them so the investor can't find them.

One thing that Solin did not provide was a rule of thumb for deciding whether to invest in a high cost 401K investment or use a low cost taxable investment. I have seen some rules-of-thumb saying that if the 401K investment has total expenses over about 2% ER, then skip the 401K and go to a low cost taxable investment in index mutual funds.

Other than recommending DFA funds over Vanguard funds, I don't disagree with any of the 401K advice Solin gives in his book. If a DFA advisor with the 1% fee is what you need to control your behavioral finance tendencies to sell low and buy high.......then the 1% fee is probably worth it.

All in all, a very educational and short read for 401K investors.

In this age of full disclosure, it can be noted that I am the author and publisher of the book INDEX MUTUAL FUNDS: HOW TO SIMPLIFY YOUR LIFE AND BEAT THE PROS. This book is an introduction to the concept of index funds is and is sold on Amazon. I am also a contributing author to the book THE BOGLEHEADS GUIDE TO RETIREMENT PLANNING available from Amazon with an estimated release date of October 2009. I have also written 21 short stories on investing which are also available on Amazon.

If you want practical ideas on long term passive investing, read some of the books below:

The Richest Man in Babylon
Bogle on Mutual Funds: New Perspectives for the Intelligent Investor
The Millionaire Next Door
The Four Pillars of Investing: Lessons for Building a Winning Portfolio
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition
The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life
The Bogleheads' Guide to Investing
Wealth: Grow It, Protect It, Spend It, and Share It
Retirement Income Redesigned: Master Plans for Distribution: An Adviser's Guide for Funding Boomers' Best Years

Book concentrates on how retirement advisers benefit themselves. It is probably all true. It is also a book that can be written about anyone who provides advice and services of any kind. Caveat emptor.

I have been financially advising investors for 30 yrs. Consistently, at least 90% of the time, the worst performing investment people own are their 401-K's and IRA plans!! This book does an outstanding job at exposing 401-K plans as having high costs and poor performance, which our firm agrees with. I do not agree however, that Index Funds, ETF's or passive managed funds are the best investment solution or options just because they are inexpensive to own. That by its self does not increase your odds at making more $ on your 401-K. I do agree that the majority of actively managed funds can and do have terrible performance records.
However, I have found the top 5-10% of these actively managed funds are very well managed. They offer low fees and they have outperformed his recommendations 98% of the time. I own a RIA firm, and this book recommends to work with RIA's not Broker's or Insurance agents. He is right on with that advice! There are good actively managed funds out their! You just need an honest RIA Fiduciary to help you find them. [...]

What an eye-opener this book is! I checked the fees and sales charges associated with my 403b plan and discovered that 75% of the funds charge in excess of 1% management fee PLUS a sales load of up to 5.25%. I intentionally compared the funds performance with their related indices and discovered that none beat the underlying index!!! So why pay for these ??? Thankfully our plan offers 3 index funds (large, mid, small).
Thank you, Mr. Solin, for the easy-to-read informative book.

This book was SO easy to read. I learned a lot in a short amount of time. If there is one thing that I learned, it was the power of low cost index funds. I don't believe in accepting everything without getting alternate opinions on good investment methods so I have been trying to read this Gary Eldred book and it has been a little boring. This book really spoiled me. The chapters are short, the methods concise, and the proofs overwhelming.

A good short book review of how the 401K was set up for the benefit of the Employer and the Financial Industry. If a 401K helps the employee and enhances employee retirement it is only by accident. BUT, it gives points to help the employee limit the damage and actually realize more retirement income if the employee will do a little work to understand their plan to limit their money being taken my unnecessary expenses (greed) of the financial industry.