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Dear Participants,

I read with interest Step 4 in the retirement section
of the Motley Fool web site. I read with especial
interest how to determine whether or not you should
put money in a 401K or invest it elsewhere. According
to the calculations I should with ease invest in RayVts
SIG4 approach (on the DDA board.) Since my
company 401K is not matching and would grow at an
index fund rate of about 10.7%, and RayVts' approach
would gain me a 17.4% return I could retire six
years earlier.

But I began to think: let us assume that 1/2 of the
stocks in the DDA approach turn over each year, and
you must pay a 20% capital gains tax on the gains. Then
putting money in the 401K gives FAR superior returns.
Step 4 would seem to be a horrible suggestion. If I've
done my formulas correctly (see below) Excel shows
the difference to be between $100K and $700K of 1998

Does anyone else have the same findings? Or do you
think my calculations are flawed?

Mr. Jones


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