This is another one of my more controversial episodes. I do NOT invest in my 401k, and I go into many reasons why I don’t, and why I instead invest in real estate investing. Now, a lot of you do invest in your 401k, which is why my advice is controversial. I am not suggesting that you stop investing in your 401k (even though I do not). Just be open to my opposing view points against putting your money in a 401k and instead finding another way to put that money to work. One of the things I mention is that you get so many tax write offs with real estate investing, that any “savings” for deferring taxes by putting money in your 401k are way inferior than that business building and/or real estate investing.
Keep an open mind, and if you do, you may see that using that money for real estate investing (hard assets that you can control) may be an option.
18 Comments
401K’s are for suckers. I learned the hard way. The last co. that I worked for 401k dropped 80% at the time we were laid off. And with what was left I had to pay penalties and major taxes to get what was supposed to be MY MONEY. Real Estate is tangible and you are in control, not some wall street crook. I saw some 401k’s drop from 1 million dollars down to around 150k and the people that put in over 30 years couldn’t retire and are now still struggling to make ends meet. Not me. Fool me once…
Me too. A lot of my coworkers are baby boomers. I am talking $80,000 loss. I mean, you’re not getting that back before you retire. We are on a downward economic decline, so 30% drops in equity don’t come back in 5, 8 or even 10 years. I did not lose that amount, but I did lose…then got laid off….yeah….just saying, you can’t depend on this vehicle as your path to retire in today’s changed economy.
Lisa! Please don’t take this the wrong way, but I’m in love! You are so
generous, and wise for sharing your time and experience…thank you thank
you! I wish we could have met before I moved from DC in June 2013. I
moved precisely because we could not do buy and hold in DC(we want to live
in 3+ flats and rent out the other units, etc). Anyway, can you please
share with us some of the books/blogs/websites you’ve read to improve your
financial education(I too am a Kiyosaki fan), specifically that informed
you about 2016 and the minimum distribution? I too am a science person and
have missed out on a proper business/financial education in college, and
I’m trying to make up for it now. I can’t thank you enough…I’ve just
found you today, and have watched almost all of your v-blogs, I’ve signed
up for the newsletter also…Thanks again!
Love the colour combo.
Pretty look!
I love your videos! im about to start investing and buying my own property
you have great effective strategies!
Well, I see your reasoning, but…
I do feel that a 401k has lots of benefits and it could be a nice part of
an investor’s portfolio. I’ve done well with mine and I’m glad I have it.
But yes, there are lots of rules and risks.
The stock market isn’t for everyone, nor is real estate…I try to invest
in both.
I think it comes down to what you are comfortable with, what you like, and
what you know.
I listen to investors like Jim Rogers, Warren Buffett, Robert Kiyosaki,
Magic Johnson. What works for them may not work for me, but I can learn
from them and I value their opinions, like I value yours.
Thanks.
You are a very brave, heroic, and strong woman. As I’m listening to you
tell your story, I can hear it in your voice, the struggle you’ve went
through; as you relive it to share with us, your viewers. Much
appreciated. It was a very deep, personal and emotional moment in your life
for you; I can sense that level of destitute you’ve been at. It humbled
you. And now you are reaping the rewards of the lessons learned; nice.
How much money (in dollar amount) did you have saved to repair your first
house (the condo); when you were laid off?
The reason I ask is I’m really trying to assess your situation compared to
what I’m going through.
And I’m sure you had some “mad money” stashed away for such an occasion as
unemployment; or as Robert Kiyosaki terms it, “Downsized”.
How much was the unemployment check that you had used to cover your rent of
the condo that you purchased?
And why do you refer to it as rent, when you purchased it?
And when you say you purchased it, you meant paid the complete $35,000
balance out of pocket, from savings, right? How much did you get out of the
401K, after penalties?
Okay so stock prices will be soring down in 2016; I got that.
But didn’t you say real estate will also become more affordable as well;
that we should be ready to see a lot more foreclosures everywhere?
So, if this is all true, then what is your financial plan for 2016?
Half in real estate and half into stocks?
What lawyer did you use for structuring the IRA LLC? And how much did it
cost?
That was a great move you did there; especially from a protection
standpoint.
I’ve studied up on Self-Directed IRA’s, and my plan is to open my first one
pre-taxed under my 72yo Grandmother’s name, with me being the
sole-facilitator. That way, I can create rental properties under its LLC
and the rental profit is tax free; provided I withdraw the annual minimum.
Look it up and check it out.
Then one under my mother, which she’ll be of age to withdraw in about 4
years. A major plus because, I can conjure up a bigger deal (say a
multi-family property) and don’t have to worry about turning profits until
4 years. The plan is not rock solid yet, but it’s a start.
This vid was monumental. Thanks again!
It seems pretty smart what you did to have your LLC be owned by your IRA.
So does all your net profit (after expenses, deductions, and payroll
(yourself)) go into your IRA, which if you own the one “share” in
existence, might exceed more than 5K in pre-tax gains? I really have to do
my research on that. Thanks for the insight.
Great idea on the IRA. Its a great move to have your retirement plan owned
by your LLC. IRA is great, but there is a better plan out there. At least
in my opinion. Its called a qualified retirement plan. Unlike the IRA which
only allows a contribution about $6000/year, with a qualified retirement
plan you can contribute $50,000. Also comes with many benefits. You can
roll your IRA over as well. Now I’m just an investor like you and you sound
like you know more about finance than me, but I think you should look into
the QRP and I know it will be a right fit your business. check out
http://www.qrpassociates.com. They go more into detail and you can always call
them if you need further info. Love the videos
We all have to remember the stock market has losses, but you will gain much
more over a life time then you will lose. I think its pretty reckless for
most people to pull money out or not invest altogether. I invest in both
real estate and 401k, but I would not invest in real estate before maxing
out your 401k(17,500). I could spend two days talking about this retirement
vehicle, but I will leave it at that.
Keep up the good work.
This has been very helpful. Thank you for sharing. You should form an
investment group.
I am in the process of watching all of your videos. I have gained so much
valuable information from your videos. I sensed some of the info prior to
viewing your videos but you help clear a lot of the fog. Thank you so much.
God bless you young lady
Wow! Thank you the info…
Much appreciated!!!
SR
Hi Lisa, I enjoy your videos however, you’re missing one major point. If
your employer matches 50 cents to the dollar, that’s a guarantees 50%
you’re making on your dollar. Who cares if the market goes down 20% or 30%,
you’re still ahead because you already made 50% on your dollar. Your house
loses value when the market crashes the same way your 401k goes down in
value.. But you wait it out and watch it go up in value again! Besides
market crash is good because you’re buying stocks on sale!