The Real Smart Thing To Do With Your 401(k) Is To Invest In Real Estate

We let the younger, up and coming generation make mistakes and we watch, vigilantly, to point them out to them…to laugh at them…but really so we may learn from them. They think they are learning from us? Hah. No, elders learn (also) from the babes.

Millennials Are Doing 3 Things Wrong With Their 401k Investing…Poor Baby-Adults.

Check out this trickle from the top-down:

  1. NOT having one.  Read more here.
    • Many millennials are opting out of starting a 401(k). It’s easy to imagine how that’s possible. It’s called the try-it-out-20’s. If I’ll be at this job for an unknown, maybe shorter, amount of time I may not see the point of starting another retirement plan to deal with.
      • It’s like a couch you don’t want to carry home from a good garage sale when you know you’ll be moving…you know, some time.
        • That’s the reputation that millennials have in jobs: they don’t stay. Let’s argue that why should they? Finding a niche can take time, and it’s appropriate to give your career room to breathe.
          • It’s known that the silent generation, or traditionalists as the more flattering title, want a Legacy. This would coincide with a 401(k).
            • The baby boomers want a Stellar career, and work really hard, generally. Probably work even though they are collecting retirement. Perhaps they didn’t have or didn’t have a 401(k) soon enough…trends skip a generation.
              • Gen X want a portable career…with meaning, so they get globalization and want to be the bosses with their millennial minions.
                • And the Millennials prioritize jobs with meaning, but also this other thing: parallel careers. If only Millennials would put as much of that multitasking into investing…
  2. Not investing appropriately. Read more here.
    • A generation that is more liberal than all the others socially is more comfortable calling themselves conservative investors.
      • It’s like millennials trust cash more than a 401(k). 39% of those under age 30 chose cash as their preferred way to invest the money they don’t need for at least 10 years.
        • This generation is three times more likely to have cash instead of investing in stocks.
          • This love of cash will really freak out the 65% who DO have a 401k and notice that 80% of their account balance is in equities, says an ICI/EBRI report.
            • They might sell when they see the expected, natural yet extreme losses that can happen over the supposed long life of the investment. That brings us to point #3.
  3. Pulling money out of 401(k) Plans Prematurely. Read more here.
    • Fidelity discovered that 41% of 20 to 39 year-olds were cashing out their 401(k) after leaving their job.
      • This is the long-term equivalent to shooting yourself in the foot. And isn’t recommended BECAUSE….

One Smart Thing To Do with Your 401(k) Is to Put The Money Into REAL ESTATE

Now – wait a second. You aren’t allowed to invest a 401(k) into assets. That’s right. So, turn your 401(k) into something else.

This guy, Larry Breen, sees the secret. Invest your 401(k) into Real Estate, IF you first change it to a self-directed IRA. Because your minimum distribution included real estate and rental income you can shave some off the top to put into assets, that also make money perhaps through renting and/or flipping…the profit rolls into your account, IT DOES NOT DIRECTLY GO TO YOU. It goes back into your account, and that why it’s called real estate investment, not real estate pay out.

The theory is you can turn a 50,000something investment into a 70,000something while ALSO pulling returns on that 20,000something…making yourself more and more money.401(k)

Normally You Cannot Use A 401(k) for buying property…of course because that would be a profitable option. Of course the thing that makes sense isn’t easy. But here is the secret.

You can roll it over into a IRA tax-free account and use the proceeds to invest in real estate, although you cannot actually manage your own property in that case. You’d need a property manager – less work for you.

RECAP / The Old Adage Is True: You Have To Have Money To Make Money

Most people have money…that they cannot touch…in a 401(k). Increase your 401(k) by turning it into a self-directed IRA, buy the property, hire a property manager (consider this an investment into your 401(k) even though it’s out of pocket), pull the extra income back into the account and you have treated yourself like your own employer putting 4 or something% into your account monthly…

This is how to be a old millionaire…or a start.

If you don’t get this at all…don’t worry…start here, click to learn: 401(k) For Dummy’s.  

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