A 401k, no matter what you call it, is in fact a liability.

As I was writing this, the stock market dropped 998 points in a 20 minute period.  There was then a 650 point recovery which took all of just over an hour to make.  Early reports state that the sell off was due to a bad trade made by a trader of a prominent trading desk.  Who's to know for sure.  What we do know is that these type of reactions can kill an investment in minutes, with no warning or defense to speak of.

If the market crashes, your investment goes with it.  I would love to see you react to the market in a timely manner and pull out your 401k investment before a drastic market down turn.  Good luck.  At least with real estate, you can see the signs and react in weeks, months, or even years before a market goes south.

Imagine for a moment that you make $4,000.00 a month gross income.  A nice amount by most standards.  But you have $300.00 of that going towards your wonderful 401k, so this actually makes your take home pay $3700.00.

You may argue that you are putting in 3% or some other number toward it, and your company is matching it!  To this I say, until you cash out, it is all virtual money.  It is not yours until you retire -  if taxes, new law, or a crashed market do not eat it up first.

If you are not making a profit on your investment, it is not an investment.  Plain and simple.  Even though your company may match your 401k with 1, 3, or even 5%, until your sell your interest in the stocks, you have not made a single dime!

In some cases, people need access to their savings.   With a 401k, you are held to heavy scrutiny and regulation on how long you can borrow.  If you borrow money from your 401k, it must be paid back, otherwise you will be penalized and possibly have to take a withdrawal penalty which includes paying taxes on the amount you withdrew and a penalty fee in the range of 10%, just for borrowing your own money.

For example, if you borrowed $50,000.00 and did not pay it back in the allotted time designated by the 401k provider, you would not only be assessed a $5,000.00 penalty, but would also have to pay the taxes on the amount you pulled out for that year.  Also, you can not contribute to your 401k while you have borrowed from it, so if you take 3 years to pay off the 401k loan, you spend those years unable to add to your 401k contribution.  

I also  do not like to be told where and how much money I can invest.  With a 401k, you are forced to invest in the sectors and/or portfolios that are available to you and not necessarily in the ones you want.  That would be like telling me, “Ya, you can buy houses – but only where we say you can buy and only condos or mobile homes.”

Last of my gripes for now - Wheres the dividends?  There is no cash return until you reach retirement age.  Basically stating - you contribute to a fund that you may or may not ever see, use or have access to.  At least with houses, you can sell them for a profit, cash flow the rents, receive tax deductions throughout the amortization of the loan, and they appreciate just as fast as stocks do, or better!