A BETTER Way To Invest For Retirement Than The 401(k) & IRA
ฝัง
- เผยแพร่เมื่อ 5 มิ.ย. 2024
- 00:00 Intro
00:28 Conventional Wisdom
01:39 Picking A Property
03:43 Safe Withdrawal
05:18 Barriers To Entry
07:15 Not Passive Or Guaranteed
08:27 Taxes
09:16 Roth v Traditional
Some of my favorite books: amzn.to/3KF3tlr
Camera & equipment I use: amzn.to/3Z20lof
Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
Join the family & subscribe to my channel here: / erintalksmoney
Thanks for watching, I appreciate you!
I never had to spend 90 days and hundreds in fees to evict a non-paying tenant from my 401(k)
True. But I guarantee you your returns are far less as well
@@obie1coby For years my "professionally managed" funds never beat the market, and rarely matched it, so you'd be right about that. However there is also the question of risk. In my state eviction is a nightmare for the owner, one I don't care to repeat. If real estate were my full-time job I might have a different outlook.
Real estate isn't always profitable. Ask anyone who has dealt with squatters, evictions, or significant property damage from tenants.
Exactly, you are at the mercy of tenants, squatters and increasingly awful laws regarding the two. You are always one nightmare away from losing it all.
I max Roth every year for my wife and me. I have also bought real estate. Because of leverage & appreciation my real estate is 2x my investment portfolio.
Real estate is much more difficult than dollar cost averaging in Roth’s in index funds.
Roth is passive smart savings
Real estate is a business
Cardone is sketchy.
😀 and yet so many have made their fortunes with it.
Approximately 90% of millionaires attribute their wealth in part to real estate holdings.
@@dobeyxxl2889 accurate according to my experience
@@dobeyxxl2889yes. But they do it professionally and take on massive amounts of risk. Risk that normal people can’t and shouldn’t take on with their retirement money. 😊
27 years of pumping money into 401K, IRA's, (Roth and Traditional). Me and my Wife, regular middle class people in mid 50's now have 1.5 Million in these accounts. S&P and Mid-Cap low ER Index Funds. How to do this on middle class income. Nice but basic house for past 25 years, (Now Paid for). Same House/Same Spouse. Kids went to In-State-State College that we cash flowed. Engineering Degrees, No student loans and making good money by 23-24 years old. Out on their own with their respective Ladies. NOT living in our Basement :):):) Oh, most important, No Leased Cars, we buy good used cars for cash and run them for 10 to 12 years. GREAT Video's Erin, please keep teaching our Youth.
Congratulations!! This gives me hope!!! Can you talk about how much money was invested on a monthly basis on average?
Am I your twin? lol
Only difference is kids 27, 25, 23, not engineers but financial analyst, speech therapist, logistics/trucking operations mgmt.
You are describing almost the same path as my wife and I have taken.
Joe Kuhn, is that you? 😁
You guys need to come together and write a book. Embarrass those who lie to young people telling them it's not possible
Based on the experiences of my coworkers who rented out their (inherited) homes, renting them out is a great way to make some money (if you don't mind paying for background checks, calling tenants to ask why you didn't receive their rent payment, arguing with tenants over late fees, repairing damage the former long term tenants never told you about, and documenting EVERYTHING in case the tenants take you to court over not returning their deposits). totally worth it.
Dividends don’t require maintenance and property taxes and you don’t have to deal with tenants.
So very true. And if your assets are in a Roth IRA, you can sell them and get dividends stocks and not even worry about what percent you withdrawal from the account.
I'm in construction, and I've worked with/for many landlords. Investment property is getting progressively more difficult. It has to do with the quality of relationships that have been aggravated surrounding landlord/tenant rights. Speak to a landlord with some years of experience before you buy an investment property. As for me, for now, index funds for the win.
A date with Grant Cardone is only red flags
Grant Cardone is like that sales sleaze who peddles annuities to teachers and cafeteria workers them in their 403b. Except on steroids. Literally on steroids.
Now in my 70's, I've bought & sold 5 houses in my lifetime.
In chronological order, starting in the late 1970's, 1. Lost value, 2. Broke even, 3. Increased value, 4. Lost value, 5. Breaking even (still own it). Personally, I view real estate as a risky investment.
Real-Estate Risks: Vacancies, Repairs, manager ripoffs, deadbeat tenants doing damage, lawyers, etc.. .............. Been there did all that, NEVER AGAIN!!!!
Read "Landlording" by Leigh Robinson
@@MeltingRubberZ28 That book doesn't include chapters on getting "blood from a stone", or how to deal with selling rental property at a Loss after busting your butt for several decades renting it. SERIOUSLY .. NO THANKS!! ... Renting Real-Estate is NOT for the average person, there are so many better investment options.
@KrustyKlown sounds like you either: didn't screen your tenants, or bought in a bad neighborhood...or likely both. My brother's one property has increased in value 300k since he bought it prior to covid (that's not even including cash flow).
@@MeltingRubberZ28 Your brother may turn a profit.. many others will not and/or will endure a lot of work, stress, and insanity. Tenants are who there is to rent to, that can change drastically over a multi decade ownership.. when your building is vacant cause you can't find the very best tenants, you rent to who shows up. Also people lie, provide fact references, etc .. evicted several. It's all a butch of active nonsense with a lot of risk ... investing in the market is without most of that.
My parents were friends with a couple that had a few homes that they rented. They had one renter that quit paying rent and took months to get them to leave. When they finally got them out and went into the house and all of the cabinets had been torn out and burned in the fireplace. Apparently they didn't pay the gas bill either and used the fireplace and their cabinets for wood. That left my parents friends in a financial bind and of course they were really angry.
Great video but let’s also not forget about HSA accounts. 401K, ROTH IRA & HSA is a great trio.
Great video. I owned a duplex for 5 years. Yes, it made money. Was it passive? Heck no! It took a tone of work. I delegated 90% of the work, but I still had to stay on top of things. I'm glad I did it. It was a learning experience and I'm glad I did it but finding a 100% hands-off real estate situation is like threading a needle. And I was relieved when I sold it. I made money on the sale as well, but that was more about fortunate timing.
More people need to be honest about this. My older relatives were landlords and they recommend that I _never_ be a landlord 😂 Plus I don't agree with buying up SFHs for rentals.
I have known a lot of people who have invested in real estate and the vast majority of them have told me it was a big mistake. They invariably say that the headaches are not worth the benefits. Two have even had to file for bankruptcy. My 401k made me a multimillionaire. I don’t regret it in the least bit. These commentators make statements like this just to get the clicks. Another excellent video Erin.
As a former landlord, it's not easy to just buy properties and rent them out, even with a manager. One house is enough of a pain. I became an accidental landlord when I moved from my house's city and rented out the home for 13 years. I sold my house a couple of years ago and now buy REITs inside and outside of my retirement accounts. Much easier, good dividends and I can diversify my real estate investments geographically much more easily. Plus, I can buy and sell the REITs (or any percentage of one) quite easily. Some REITS like with Fundrise can have waiting periods though.
I'm in the accidentally landlord camp too. Moved to be closer to my mom and have friends renting my old place. But I do all the other accounts too....I'm all about hedging my bets on growth and on taxes.
What REITs funds are you invested in?
@@almontoya5703 In Fundrise, they have regional US funds and growth or income ones. They distinguish between equity and loans. In my IRA, I'm in NLY, VNQ for domestic and REET for international.
My three favorite channels: Erin Talks Money, Stock Brotha, & How Money Works. Make my week complete! 🔥 🔥 🔥
I'm guessing the guy who wrote this article also has a Real Estate seminar/class he sells.
Ha! Probably
Right?! What average person is turning down a lump sum that meets the 4% rule?
His clients are the 1% lol
He does, yes - and this is how he actually makes his money. I don't think real estate is that bad an investment, but Grant Cardone is not someone anyone should really listen to.
As a landlord myself, I would say real estate is not for general people. The initial purchase money (even just 25% downpayment - that’s how much you need to put upfront for investment property) will put over 95% people outside the door. Even you are the 5% who has the extra cash for this type of investment, you need to be sure that you actually LOVE maintaining house & doing handy works, and you ARE ABLE TO DO IT YOURSELF. You will also need to understand local laws and rights and being smart enough when screening tenants - another perspective of the high bar of real estate investing. That is why we call it “sweat equity”. You can ONLY get profit by doing it yourself and doing it right. It is not for everyone who wants easy money and has no clue of their own capabilities.😢
I completely agree. Real estate is a lot of work, hassles and headaches. Property management is not easy whatsoever. The stock market is much easier and more reliable. I would rather just throw my money in a low cost index fund and let that do the work for me.
Yeah. I tried real estate. It was a 2 family house. After a few years I found out it was NOT for me. I had great tenants until I didn't. It only took one bad tenant for me to decide to not want it. Not for me. Tenants had way too many rights for me to turn profit. Never looked back and I ended up retiring at 52. Life is good. I am still converting my IRA to a Roth 100% tax free little by little each year. Now that is a win win, it went into the IRA tax free and I am converting it tax free too!
Good, landlords are leeches.
I love Dave Ramsey's take on Rental properties. It is NOT passive income. Anyone telling you otherwise has either never managed rental properties, is lying, or is trying to sell you property.
I've got the same feeling on real estate. A coworker bought a 4-plex apartment in good shape and with good renters. But renters leave, there's the risk of getting bad renters, when something breaks it needs to be repaired immediately, there's taxes, etc. Considering the cost he said the income wasn't that great and was not worth the hassle. I mainly invest in the stock market through IRAs, 401ks and it's done quite well for me at a little over 2M. I do have some farm land I inherited and rent out. Farmland is better than a house or apartment building as there are no building to maintain, renters stick around for decades, and if you need a new renter people are tripping over each other to be first in line. But considering the cost of the land the returns aren't great. If I had put the value of the land into an IRA when I got the land I'd be money ahead. But the land has been in the family since the 1880's and it means a lot to me. And I've got my parent's farmstead too, which is a nice get away spot when I want some peace and quiet.
Oh my. He says, "No one needs a lump sum for retirement." If you've saved enough for the 4% rule, that means you've saved about 25 times your annual salary so... that takes the average 65 year old retiree to 90 which is past the average life expectancy. That lump sum is awfully attractive
Considering a quarter of people retire without any retirement savings and the median savings is about $150k? I don't know many people that would turn down a lump sum.
Real estate is waaaay too much work. Stocks and bonds are fairly passive. Also the ability to claim depreciation on real estate drops off eventually unless you are churning properties every few years and paying transaction costs in the process while the tax benefits of Roth accounts never go away. Also rental income is taxed at ordinary income rates unlike long term capital gains and qualified dividends. Real estate investing can make you wealthy, but its a full time job and not without plenty of market risk.
We moved into owning farmland and renting it out, vs. renting out homes. The farmers do all the work, take care of the land and pay us twice a year. I’ve never even seen the land, just the rental checks that come twice a year.
Smooth as silk delivery & great content
I love your enthusiasm for the 401K Erin!😂 The hard part about real estate to me seems like maintenance and finding the best renters, but I am sure it can be great when done right. Happy Easter to you and your family Erin!
The stock market is just incredibly less risky than real estate. When you own an index fund your money is diversified such that we've never seen a permanent loss in value. With real estate your money is tied up in a physical thing that is subject to all kinds of potential risks and requires constant management, which either eats up your time or cuts into profit margin, sometimes both. Real estate has the high cost of entry as mentioned in the video, but it also requires continuous payments of some minimum value that is likely not trivial, while with the stock market you can put in however much you want, including zero, as the circumstances dictate.
Real estate as an investment is like a double-edged sword. I read about people who have made millions in real estate, but pretty much everyone that I know on a personal level has nothing but horror stories to tell me. Only a small handful of people actually strike it rich in real estate.
Rental properties are way too much work and worry for me. You need to know yourself before you invest in rental properties.
Great comment, so on the money!
Agreed with all your points, Erin. I’ve done both real estate and 401k+IRA. If (and it’s a big if!) you have the stomach and backbone for dealing with tenants, RE can be fabulous. Well, sometimes a pain day-to-day, but _financially_ fabulous. Buying a potential rental and living in it when you’re younger (usually before you have to worry about kids’ school system options) means you can get a homeowner rate. You always have to option to refi into an even lower rate. Then to do it all again, one home after another. If you get started early enough and use homeowner mortgage programs, you can get low down payments, lower mortgage rates, and - very different from the stock market - _leveraged_ investments. That’s a very attractive option for some. Like any other investment, don’t overpay and make sure you know that you’re buying!
Real estate and insurance salespeople always dis IRA and 401k
Gotta love someone peddling annuities inside of a tax deferred account.
They don't care about you making money, as long as THEY do. I have never seen anyone giving financial advice diss market investing unless they were selling something (insurance, a course, etc.)
I fell into that trap, with 2-3% growth
When my stock market is doubled in 5 years
My wife and I started investing in 401k and IRA's over 20 years ago and invested in real estate in 2011 after the bust. We have done really well in both arena's however I must say that our real estate has substantially grown our net worth multiple million because of the time period in which we made the purchases. So timing is a big factor with all investments . And we both believe in no debt and living way below our means
The timing of the real estate markets hurts so much as a youngish millennial. Like now is when I have funds to actually do real estate investing but the conditions for buying now are absolutely garbage. Annoying.
Real estate is a YOLO. Just know that you are YOLOing.
I mean... It isn't exactly wrong, it is just a very different path.
If you are an employee, then Ira, 401k, Roth and HSA accounts are your best friends. Build up enough and then you can retire, and the matches and tax advantages help make it fairly efficient.
If you are an entrepreneur however, then saving for retirement is a drag on your ability to build the business. If you are on that path then the goal is to build enough paying assets to cover your life expenses, or sell your business for a big lump sum to retire on.
It isn't a matter of one being better than the other, they are different paths for different goals. I will never be a sales person, that is not in my personality, and isn't something I enjoy. This severely limits my ability to pursue entrepreneurship options unless I already have a large asset to utilize... Which I don't. 😂
It isn't a good vs bad, or right vs wrong issue. My skills pay well, so it is my due diligence to fund my retirement with that income. That is the path I am on. If I was on a different path, then I would use the appropriate tools for that path.
Navigating life to retirement can be stressful enough without adding to it by having too much exposure to resl estate. A diversified portfolio is the only path.
My in laws have a rent house. About 25 years ago they had a tenant that seemed ok. Air Force airman. After 6 months they stopped paying then disappeared. We found the house wrecked. And apparently they used the garage as a kennel for an unknown number of dogs. They had scratched the garage door into the house so much it was about half its original thickness. And I had to spend an entire weekend with muriatic acid and a power washer to clean the poop and pee out of the garage.
Taught me a very valuable lesson and I’ve never bothered with rental real estate.
I am investing 10% of my pay into a company Roth and I am also contributing as much as I can into my own Roth IRA.
Nice job ETM!, love how you always take what can be a complex topic and make it easy to understand. Congratulations on your increasing reach!
IRA's have low anual contribution limits.
A great First step is to complete that amount each year.
Erin is the cook kid class President
Erin, agree, agree, agree with YOU!! Even with your statement about both RE & Stock being the same coin only different sides. But that being the case, buying a piece of property as your investment (or several) is analogous to PICKING individual stocks. It you do your due diligence and if history continues into the future, your Individual picks (or properties) might turn out to be gold-mines. But there are also a lot of losing picks/purchases and I know you and I both agree it is better to buy into an index fund (or rather, several) with a widely diversified investments than just to buy a couple of individual assets (stocks or properties) -- in order to hedge your bets to coming out ahead. And yes, it was interesting that he only said 401k and IRAs (which are essentially the same) and did not mention Roth IRA at all.
There are some big tax benefits to the real estate path. That and the leverage of a low rate loan in the form of a mortgage can mean that the right rental can really boost your road to retirement
I was warned about professional renters, those that know the law & use it to their own advantage, back in the 80's. If you are not familiar with the law & how to manage property, you are opening yourself up to headaches.
Thank you Erin!!! I love what you say! You have a gift!
Thanks Abby - happy Easter!
I have a 401k from my current W2 job, self directed IRA from 401k rollovers from past W2 jobs, a TSP from my time working in the government and rental homes that were once homes I lived in and didn’t sell when I moved out. I believe that the more revenue streams in retirement the better.
You are loaded with investments. That federal gov pension is great if you put in many years.
I started putting funds in an IRA account at age 23. I also had an opportunity to buy a 200 acre farm when I was 40. Today at almost 67, I've been retired for 15 years and I have more cash flow than any other time in my life. In summary, I thought both IRA and productive farm land were good producing income sources for later in life. It doesn't hurt that I have a pension also.
One of your last lines resonates, "boring is better." I invest in real estate, the market, and am in the process of looking for a business. The thing that had been driving me crazy of late is all of the "sexy" things out there on social media can be extremely complicated and may not benefit you. The KISS method really should be stressed more when it comes to investing for your future (once someone learns more about it that is).
I don't trust Grant Cardone with investment advice. Now if he was giving advice on what steroids to invest in...much higher confidence level.
Pwahahahaha!!!
He's an absolute tool.
I agree with all of your points. I long ago dismissed any idea of directly investing in real estate. When you do so, you become a landlord, which is a job title. I have a job; I don't want another. It carries both responsibilities (I'd want to make sure I'm a good landlord) and risk. If the stock market crashes, I can at most lose 100% of the money I have in it. If I fail to get a renter to pay the mortgage on my rental property, I could be liable for more money than I even have with the leveraged debt.
Nah, real estate is too much headache. Definitely sticking with the simple (and /actually/ passive) stock market. Easy and effective (enough).
Hold on, I have to press play..."Thanks, Erin! Another great video...". At this point, I'm of the belief that Erin should silently say this to herself before she reads a comment, because it's true. The gentleman referenced is not entirely wrong about real estate, but he is wrong in that it's not the right investment for everyone. Or most people. Erin is absolutely correct that equity accounts over the long-term are far better for most people for all the reasons she and the commenters here have made. I'll add I'd much rather have my investments and my employers matching funds (aka "free money") compounded over 20 plus years than real estate, snd thats my preference over real estate. Thanks, Erin 😊
As an avid DIY, home repair enthusiast, and knowing people who owned real-estate. I can appreciate what owning real-estate rental might be like. Dealing with Tennent's, downtime between renters, and upfront costs were just not appealing. I prefer equities investing. No Tennent's to clean up after, no evictions to mess with, no advertising budget, no messy paperwork tax filings. It's fine for some people, we're all different with different taste's, likes, and skills.
As a retired man with a Roth IRA and rental properties, I would say real estate might pay more, but you’re buying hassles. Mutual funds don’t call with a broken furnace in January.
LOL this video came at a perfect time. I was lacing up my work boots in my office while this was playing. On my way over to my rental house to tear down a stone retaining wall and replace with new materials. I had a couple rentals but sold them all but this one, and in this economy it's getting expensive, even owned free and clear. Last year it was a hail storm, insurance claim/deductible, now policy rose another $1,000. And living in a state run by Democrats who keep passing 'rent control' and 'eviction rules' makes me wonder sometimes why I own it. If I didn't have to give the government $250K in capitol gains (30%) I'd move the family renters out and sell it. I have a IRA and it has it's drawbacks in down years, and taxes on withdraws. *Why do I do the work instead of a property manager? Because my brother owned one in another town, renters complained about the front porch light out, his manager charged him $50 to screw in a light bulb. That was 10 years ago, likely a $100 bulb today* I told him the bulb wasn't the only thing that got screwed...
*capital gains
You nailed it Erin! 👍
You look great Erin. Awesome video
Grant Cardone is a grifter. I’m sure he can sell you a real estate course.
I do both. The big advantage with real estate that doesn't get talked about much is once you have built up equity, say 1 million dollars for example, you can borrow against that equity, take out that million and never pay taxes on it. I agree, RE investing isn't for everyone. I've been around it my whole life so I guess I'm used to the negative side of it.
Not everyone wants to be in investment property. Have seen many people go broke doing this. There is substantial risk in this.
Almost all the advocates of RE beating equities won't mention the elephant in the room - leverage. If you take away leverage by investing in RE only for cash, it will have a very very hard time beating equity returns. If you want to swing for the fences and utilize leverage, equities will blow away real estate - if you don't get washed out. RE as an investment has 3 drawbacks that equities don't = it takes leverage to pencil out, it isn't passive, and it has personal liability exposure. Each of those are expensive drawbacks to mitigate.
I'm old enough to have experienced 3 major RE crashes, and I know many people who got wiped out in investment RE. I've suffered temporary pullbacks in my equity funds over the decades, but never a wipe out, and I'm sitting at all time highs today. And I never once had to deal with squatters, lawsuits, property managers or clogged toilets. When you look at long term, successful RE investors, you are looking at survivor bias. What you aren't looking at are all the failures over the years, failures that didn't happen to long term, B-n-H, index investors.
It’s easy to say that “real estate is easy” when you own multiple properties. I’d love to get a rental property, but taking that leap is high risk for me. I’ll keep DCA’ing my way in the market for now.
Real estate investing today is nothing like it was 30 years ago. My suggestion is to find one or two people you trust who all have abilities that will make a long-term Real estate investment work. But always, always fund your Roth account. Great video "Cool Kid"
you could do the real estate thing by buying a solid REIT, many have better dividend returns than %6 and are %100 hands off. Also the real estate write offs are only available because you had to spend money else where ie mortgage interest, property taxes maintenance costs those aren't savings they are just moving your spending elsewhere.
I'm interested. Do you have any examples I could look into?
Yeah, but REITs are probably not going to outperform growth ETFs or the S&P 500. I would only buy a REIT if you have an understanding of the company and surrounding economic circumstances such that your view is that the stock price will increase dramatically and soon.
I love that - "Sometimes it's just fun to say things, whether they're true or not"
This is why housing is completely unaffordable for so many people. Too many real estate investors.
That's part of it. The other part of it is ZONING LAWS pushed by NIMBYs.
@@mysticaltyger2009I would say real estate investors are 100x more liable than zoning laws.
why cant we just put the lump sum in retirement into high yeild instruments that pay monthly. seems so simple, why you complicating it?
Primarily because the high yield instruments erode value over the long term due to low expected returns?
I appreciate your approach to teaching.. To my understanding this just proves how much we need an edge as investors because playing the market like everyone else just isn’t good enough, we just need to hold onto our hopes and wait to see how things turn out because market movements are almost always unpredictable. In my portfolio, I'm noticing more red than green.
I always found the idea of using spreadsheets very time consuming and unnecessary. I just dump a bunch of money into my savings accounts each month and keep my spending money in a separate account and try to spend as little as possible.
There are actually a lot of ways to make high yields in a crisis, but such trades are best done under the supervision of Financial advisor.
Financial security through diligent saving and investing should be on top of everyone's priority ASAP. I really need some guidance can this Fin coach guide me in this unstable times and why do you trust them much?
Yes i agree and right now the markets are going berserk right now. This is the best time to watch them, get to know them better, and strike when the opportunity presents itself. I learned that from my mentor, ’Linda Sue Baier’ she's seen dozens of market cycles over the past few decades, and she has a feel for how they move, why they move, and what comes next.
Wow, i surprise people have same good experience working with Linda, I first dabbled in stocks late 2019, just before the pandemic, and that same year gained over 150% with no prior investing experience, basically all I was doing was following directions of Linda Sue Baier. We are working on a retirement ballpark of $3m and I’m certain my goal isn’t farfetched after subsequent investments and tremendous returns so far.
We looked at real estate as part of our retirement portfolio. Here are the two reasons we opted against - (1) Tighter cash flow now to make a large investment (because we don't use debt as a cash vehicle), and (2) real estate has upkeep and repair costs that can eviscerate the return and take time to work and manage. We wanted neither the risk nor the work-cost, so we chose 401K & Roth IRA. No regrets here.
I have a ROTH were I have dividend ETFs to use the income in the future tax free, I also have a 401k with my employer getting some of that free money from them😁
You've made an excellent video dispelling many myths!
Just buy REITs if you want investing in real estate. Same benefits without any of the hassles.
You can actually find nice little 2-1 in good condition around $60k - $80k bringing $800-$900 in rent a month. However, I bought 3 rentals between 2019-2022, managed to get them under $40k before everything almost doubled in 2023 and not slowing down thus far in 2024. Out of those 3 properties, only one was a nightmare, water leaks issues never ended, all rent money that home produced was going back to repairs, hold on to that property for 3 years until I finally decided to sell it for a $17k gain. So my point is, never buy houses build in 1920s - 1940s, aside from pipes been old they are also prone to mice infestations.
ETFs are the way to go
We have done both, condo rental in FL, it was good but comes with headaches while index investing is probably best for most of us!
Don’t sleep on the taxable brokerage account. Long term capital gains and dividends are taxed more favorably than traditional IRA or 401K distributions.
Plus you can get 0% taxes on long term gains if you were to make less than like 85k. Take a year off work, sell assets: pay no taxes
@@MeltingRubberZ28 excellent point, and I think it’s more like 120 K for a married couple because of the standard deduction, and 60K for a single filer.
Agreed. In fact I believe Erin has a video where she calls the taxable brokerage account her favorite investment account. She’s a smart one!
@@j10001 my preferences, in order, are Roth, taxable brokerage, then tax deferred. I soon will be ineligible for Roth, so I’ll either do backdoor or just taxable.
@@michaelswamiNo HSA in your list of favorites?
We had thought about real estate and renting, but we are in our early 60’s and it just seemed like a daunting task. Made a list of all the pros and cons and we stayed out of that one.😮💨My husband is about to retire and we have a small cattle operation on the side. This gives us plenty to do and we have enough to be in good shape👍Thank you Erin for encouraging and helping so many people❤
Another great video Erin and I totally agree with you. Real Estate isn't and shouldn't be for everyone for a whole lot of reasons. If is was as easy as all these so called experts like to project, everyone would be doing it. Also from a pure legacy planning and gifting standpoint, real estate is much more of a problem than retirement and investment accounts. Larry, Central Valley, Ca.
Also to retire has a different meaning to some. Retirement from my current occupation and to cash flow from my investment and teaching student pilots to fly while having my rental properties and me doing the repairs is golden. Retirement is doing the stuff you're passionate about plus being able to cash flow it. You can always pay 10% for property Management. You don't have to worry about anything.
I’ve done both and they are wonderful investments!
REITs might be a good hybrid option. They typically have good dividend income coming from the RE sector, someone else manages the RE headaches, and they are very liquid, unlike RE itself.
As someone who’s had several rentals and no longer, I can tell you that it’s not easy unless you are lucky. For example, buying rentals that have appreciated due to demand in cities that are growing. Rent in those cities just keep going up.
I would like to own an investment property and we have a decent amount to put down on one. But I can log into my brokerage account and invest $20 even less if I want to. Sometimes when I'm bored I do just that. I'm maxing out on my 401K and between Sue and I we are putting $4500/month into retirement investments/brokerage account which is not too bad in my opinion and shows some degree of commitment, but I just can't convince myself that buying a rental property is a good idea for our particular situation.
Happy Easter Weekend! Yup, hate when real estate investing gets passed off as easy passive income. In-laws, sister, both have had lots of stressful days fighting with bad tenants, and lots of lost income and time dealing with damage. In contrast, our slow and steady savings into tax sheltered index investments seems boring, but peaceful, and effective. As everyone says, finance is personal, and when it comes to my money, I'll take boring and effective every time. If I want excitement, I'll go spend the money I keep reliably making 🙂
Preach, Erin. Preach!
I like your Channel! I do agree that we need to prepare for retirement. I do it myself and everyone around me. I would like to point out that my entourage is composed of university teachers. They all wish to retiere as late as possible, as much as at 80 years old if possible. I also know doctors, and as it is for a lot of them, they want to retire very late in life. All of them could retire at 60, but none want that. I am a teacher, and I have the same story: I want to retire very late! This is not a reason to spend, as you said, we need to prepare. But I would like to point out that retirement is not a purpose for many people. Our job gives us purpose and vitality.
I have both a Roth and a taxable brokerage account do you think its a good idea to say invest in something like XLRE real estate sector etf for both for say longer term and perhaps shorter term wealth? I have other etfs too such as VTI, QQQM, SCHD etc just something else to add to the pie, just curious on your thoughts?
Great discussion!
Real estate can be good, but is hard work and has a large entry cost and effort.
Investing is easy
We are retired and have a good portfolio.
Also have dabbled in real estate. We have friends that have several rentals. It’s a bit of work and has tax consequences on your retirement.
We have the option to have a single rental coming up, but would rather just sell it and pocket the cash.
I’m a property manager of family property with 10 rentals. My sister and I will inherit them and when we do we are selling them. Being a landlord is not for the faint of heart and it is not passive. I would rather invest since I don’t get tenant calls on vacation inevitably every single damn time we leave. Can be home for weeks and it’s crickets . I actually have great tenants because I screen like crazy but still not worth the worry and the change of laws every year. I’ve never had an eviction but I’d take losing money in the stock market than dealing with that or squatters any day!
B.S. to Cardone! You DO need a bunch of money to generate that monthly income!
Yeah Ross, if it's not a Roth, you'll need to pay taxes. That's a given!
Real Estate is great if you want to be a landlord or give 10% to a property manager. Investing is just SO much easier. If you pull money out of the market there is the option to take 5% in a high interest account.
Hello Erin,
I enjoy your videos so much I have to tell you. Present information in an easy to understand way that is so informative.
I’ve written you before with an IRA question and have another one so thought that maybe you could help. I think that TurboTax gave me incorrect advice or guidance even though I paid almost $300.
My question is a two-parter:
My wife and I file married joint and are over income for Roth IRA contributions for 2023.
1. I am under 59 1/2 and had to withdraw 1000 contribution that I had already made for 2023. The could take a slight loss, but my question is will I owe a penalty on the withdrawal even though I put it into my 2024 Roth IRA?
2. Am I able to do a traditional IRA to Roth IRA conversion without paying a 10% penalty on the traditional IRA withdrawal before the filing deadline? The TurboTax advisor thought that I would be subject to the penalty because I am under 59 1/2, but according to my Google searches this is not correct.
These are contributions that I make in addition to maxing out my 401(k) at work.
Thank you for any information that you can provide and keep up the good work on your videos.
I do love the calling out of people saying how easy it is to make money in real estate. Nothing worth doing is ever easy. Being a successful real estate investor requires a lot of capital and time. Just ask all of those bankrupt real estate investors who bought all those properties pre-2008 how passive investing in real estate is.
I’m 52 & I changed my investment strategy from index funds to individual stocks because of the withdrawal strategy. Similar to real estate/rental investing, I buy individual dividend-paying stocks (kings/aristocrats) & plan to live off the dividends. So, invest $500K in real estate or individual stocks & collect rental income (real estate)/dividend income (stocks). Same either way.
I’ve been in he rental business for 29 years. It’s a good source of income but it’s anything but “passive income”. The horror stories are true. ….and the advantages are as well. My properties are small so do the managing. I’m fortunate in that I can do much of the maintenance but I’m turning 67 this year and I don’t think I’ll want to do this forever. I think Erin is SPOT ON regarding this subject.
We have a mixture of single family rental properties and 401k. All our real estate investments are paid for with cash and have much better returns than the stock market because we purchased them at the right time/price. I am happy to put up with a little hassle for a better return and more diversified portfolio. Given the current real estate market I'm not jumping to purchase any more at the moment. I don't think either method is wrong, but would advise against buying a rental using debt.
Grant Cordone: If all I had was 500 dollars, I would buy an apartment complex and become the best of the best of the best at what I do. I'd get a rich mentor and then after 2 days, I would hire a manger to take care of my property. It's that simple, just give me 297 dollars and I'll show you how.
Real Estate is a lot of work and is not always profitable. The best passive cash flow method is investing in strong companies that pay dividends and grow those dividends each year. Be cautious of buying high dividend stocks, but a dividend in a company that grows its earnings and maintains a reasonable payout ratio is amazing to watch its dividends grow.
Something you could do a video on, (and there’s tons of accounts out there that have this but viewers might not see). If you want to be a “safer” real estate investor. That can be through the stock market still, BDCs and reits are great methods for this. There are incredible ones (but also some…crappy ones). Understanding those stocks and their ownership’s ability to run their company could give those stockholders the real estate exposure they would love while most likely making better money than if they tried to invest in real estate themselves
Which one is more stessful?
Until you own 8~10 different units, in geographically diverse locations, all making positive cashflow, then you can start enjoying the advantages.
Before that, you are at risk of losing a lot of money: bad tenants, maintenance, loss of value, vacancy, or even simply having a negative cashflow.
In many parts of the country an investment in real estate, even with leverage, gets you at best 8% IRR, with all the hassle involved in real-estate.
True, If you put down >= 50%, the IRR drops, you get better cashflow, but you need all this money to put down x 8 to make it all work.
If you have the level of control over your company’s retirement plan, profit sharing is better than 401k / IRA. You don’t need to pay FICA on profit sharing. It can be combined with your 401k plan and enjoys the same ERISA protections, with less scrutiny.
5:02 Erin starting a flame-war in the comments section 😅 Keep up the great work.
😂
I do both
I started in stock market very young, and continue to invest in stocks;however, began to slowly invest in real estate in my mid 30’s. Plz consider mobile home lots where you rent the lot to the owner of the monile home. This is low hassle and lower up front cost to buy the lot and produces amazing cash flow if the lot is bought “right”!
Rember if your a high earner that the Traditional IRA may not give you any tax advantage if you have any employer retirement.
Or, if you have a good pension...
Good.