Did I say mandatory? I meant optional! You’re “free” to die in a cardboard box under a freeway as a market capitalist scarecrow warning to the other ants so they keep showing up to make us more!
Did I say mandatory? I meant optional! You’re “free” to die in a cardboard box under a freeway as a market capitalist scarecrow warning to the other ants so they keep showing up to make us more!
You seem to be using many different assumptions separately. In the first you assume you are maxing a Roth IRA (in my initial response I was also considering 401ks as many of them have Roth options nowadays). If you are maxing your Roth 401k and Roth IRA you are likely a high earner and therefore likely in a higher tax bracket than you will be in retirement. This means that kind of person will likely prefer traditional investments.
Your assumption there is someone maxing out their retirement options and in a relatively low tax bracket doesn’t seem like reality. So in your math example they wouldn’t be putting the extra in a taxable brokerage account but in the same tax advantaged account.
Quick edit: also I’m confused on the extra $400/year into taxable account. It should be $1,250 per year (25% of the 5,000) which would be closer to $600,000 before the capital gains tax.
You can’t max both, you have to choose between them.
The math doesn’t change if your contributions are smaller. This is a game of percentages.