[thematt]

Saying that real estate and stock markets are "done" is ridiculous. I don't know where you got the 2-3% return expectation from, but outperforming professional investors need not be the goal. Independent (retail) investors can generate sufficient market returns to live a very comfortable retirement without having to be disappointed that they're not the next Warren Buffett.

To your point, investing in human capital (yourself) is valuable -- but it's not enough. The problem is it doesn't scale. If your biggest asset is yourself, your biggest income is going to be from each additional hour you work. If you invest in other assets (real estate, companies, whatever) you can generate passive income without having to work.

I agree with your controversial statement about 401K's, not just from the future tax prediction standpoint, but also from the perspective of limiting your investment options.

[pja]

If you look at reasonable returns back in the days when we weren't busy pulling forward demand with ever rising debt / GDP ratios, 2-3% over inflation is pretty much the best you can reasonably expect if you can't afford to lose your capital.

What's "done" is the days when real (post-inflation) returns of 7-8% were achievable from passive stock market investments. Any retirement plan based on those assumptions is probably underfunded.

[goblin89]

IMO passive income can be dangerous in that it may negatively affect your motivation to invest time in yourself. The trick is actually using that income for self-investment in the first place. Self-investment is essential, while passive income isn't (I think that's among the points of grandparent).