IRA/Retirement Fund

[zinfamous]

property is a good investment but it also involves massive amounts of risk in terms of factors that you have absolutely no control over.

Also, are you taking care of those 4,000 doors? It sounds like you are advising people to switch to a full-time job managing real estate, which is not retirement investment. Or are you saying invest in something like REITs, which is just another index fund without the same risk and without the work of dedicating your time to managing property.

There is also a significant barrier of entry into real estate compared to simple index fund investing. Also, real estate is a high-debt venture. Not everyone wants the risk and anxiety of taking out multiple mortgages on multiple properties and just amplifying their risk and stress levels. Pretty much all of those guys are in debt up to their teeth, but their product, "their success" is the image they project. Just look at Trump. But I like the idea of saving money into a roth or brokerage account until you have enough cash to start putting downpayments on property. But that isn't retirement savings--that's work.

I fail to see how a 401k is bad when most employers offer some sort of free match. What real estate investment gives you free, tax-deferred growth that requires no extra work and no extra risk? The 401k is only a scam on the middle class if the individual holder doesn't do due diligence and make sure they aren't being scammed by shitty financial advisers. In that case, I absolutely agree, but the tool itself is perfectlyfine.

 

[DaveSimmons]

Rich people also have tiny dogs in purses, inherited wealth, a network of people connected to their rich parents to get them jobs not offered to the poors. Also, correlation is not causation, and Trump inherited his money before all of the bankruptcies whittled it down.

So "rich people own land" and "a rich person says 401ks are a trap" as reasons to avoid 401ks doesn't carry much weight with me

 

[s0me0nesmind1]

The first thing you need to do is evaluate the future. And no one here can tell you what that will be. It mainly centers around the below 3 questions:

1. How much do you make now? This will determine if you are eligible to contribute to a Traditional IRA or a ROTH IRA only.

2. When you retire, how much do you anticipate that you will use/consume per year? Depending on how much you consume will determine how much you will need to pay in taxes

3. What do you think the taxes will be when you retire? Most people live under the premise that tax rates will only increase under retirement. Do we know that for sure? Absolutely not.

I was talking to a friend of and his argument, since I'm in the lowest tax bracket, it's best for me to put it into a ROTH IRA (I'll be working a 10/hr part time job). Then as I near or reach my peak, to switch to a tr IRA.

I'm learning so much right now, thanks so much.

On another note, he also suggested I go for whole life insurance before opening an IRA.

Stupid question, but if you're in the LOWEST tax bracket, how in the fuck are you able to afford to put money aside to an IRA?

 

[s0me0nesmind1]

I'm going to go a different route than what most of the people are saying here, because there are many different ways to prepare for retirement.

I'm a huge follower of Grant Cardone and he suggest not to invest in 401ks, because in his opinion the 401k was a scam perpetrated on the middle class. He makes a case that the wealthy dont have 401ks. And they don't. So, I'm going to say save your money and invest in real estate.

This is what Grant has done. His portfolio has nearly $500m worth of real estate. Not just any real estate either. He's invested in multi-family apartments. That means he has multiple doors paying him a paycheck. In his case, 4,000 plus doors paying him anywhere from $800 -1k a month. That's the type of investment that interest me. Not a 401k. You can't even touch your 401k unless you want to incur fees which is bullsh*t because it's your money!

Just a thought. The tax codes benefit people who own real estate. Why? Because many of the wealthy are politicians who own real estate.

I know I'm going to get a lot of hate because what I'm suggesting is different from what many people are saying. But, if you look at the wealthy the one thing you'll find is most own property.

http://grantcardonetv.com/articles/9-reasons-to-invest-in-apartments/

No. No. And... did I mention? No!

The key point of retirement is not putting all your eggs in one basket.

Dont place all your eggs in a domestic basket.
Don't place all your eggs in an international basket
Don't place all your eggs in a stock basket
Don't place all your eggs in a bond basket.

What's the underlying point? DIVERSIFY. What does investing in real estate do? It places all your eggs in ONE industry in ONE basket. It is hands down the dumbest fucking move you could ever do from a retirement standpoint. Do NOT do something to that level of stupidity. Remember what our most recent economic crash was - and tell me that it could never happpen again.

 

[DaveSimmons]

^ which is why I'll usually recommend Vanguard's Target (year) fund as a first fund for an IRA. One low-expense index fund that is made up of their other index funds including stocks, bonds, US and international. Fully diversified with just one fund.

Putting all of your retirement savings into a house or apartment building is much more risky.

 

[Exterous]

Rich people also have tiny dogs in purses, inherited wealth

Research in the late 90s showed that most millionaires (~1.5 million in todays $) were self made. A more recent study (2012) says 35% of the Forbes 400 were from lower to middle class with no inheritance. 22% were from middle to upper and might have received limited assistance.

Stupid question, but if you're in the LOWEST tax bracket, how in the fuck are you able to afford to put money aside to an IRA?

Putting anything substantial on less than $10k would be hard but I think some people forget the 10% tax bracket even exists. Maybe he meant the 15% which is $37,650?

 

[Ken g6]

To the point of diversifying, it occurs to me that if you're going to have higher-growth investment, safer investment, Roth, and a regular IRA, you should put the Roth in the higher-growth investment and the regular IRA in the safer investment. That way presuming growth happens you save more taxes.

 

[Wuzup101]

I would personally do full Roth in the OP's situation with the expectation that after he graduates and gets his first post-college job, he will likely have a 401k and may have some matching (along with a much higher income given that he's only working 10hr/week now). At that time, he can first put money in his 401k up to whatever he match is, then put additional money in the Roth up to the max, and then put more money into his 401k up to the limit OR real estate. After 401k is maxed, it's either an independent investment account or real estate.