Ammo or a 401(k)?
Category : Retirement
Recently I had a conversation with a friend about the availability and prices of ammunition. We jokingly said we’d be better off investing in ammunition than a traditional 401(k). That conversation stuck with me and prompted me to dig a little deeper.
The most recent bull stock market has been tremendous! Everyone with money in the market has seen their accounts grow; until this year of course. During this bull market the stock market has grown about 218% from its lows in 2008. Most people have seen their 401(k) accounts grow nicely since the market dive in 2007 and 2008. However, the stock market hasn’t seen new highs since May of 2015.
What about ammunition prices? Of course quality of ammo varies, so I looked at average prices. In 2007 you could buy .22 LR rounds for $0.05 and 9 mm rounds for $0.16. These prices were up slightly from low prices in 2005. The reasons why prices of ammunition climbed so high is the topic for another day. However, after 2007 the prices for ammo skyrocketed! Ammo prices reached highs in 2014 (one year before the stock market highs). In 2014, 9 mm rounds were going for $0.30. That’s a nearly 100% increase! .22 LR rounds were selling for $0.20! That’s a 300% increase! Now in 2016, ammo prices are a little cheaper. .22 LR rounds are only $0.09 and 9 mm rounds can be picked up for only $0.22.
As you can see, some ammo prices increased more than others. Likewise, most people who had money in a 401(k) owned different mutual funds. Some funds performed better than others. Just like most investments, prices climb and fall.
If you had picked up thousands of rounds of ammo in 2007 and sold it in 2014 you may have outperformed your 401(k). However, most people who bought ammo probably used it for target practice, or they are still hoarding it for the apocalypse. Money invested in ammo from 2012 would’ve been a bad investment. Likewise, the stock market has already peaked. Any money being invested into a 401(k) since 2015, without an employer match, is likely being invested into a losing market.
Based on these two investment options, you could’ve made money in either investment. How much you make, or keep, really depends on when you get into, or out of each investment. As long as you’re timing each investment perfectly, you’ll be fine. That’s probably not likely. Another option is investing in ammo for enjoyable target practice. It may be fun, but it won’t help your lifestyle during your retirement years.
On the other hand, in the event of an apocalypse, ammo may be easier to access than funds in a 401(k); not to mention that ammo may be easier to trade for food and water! What are the chances of that really happening, right?