Borrowing from 401k

[Gabriel Benavidez]

Im so iffy about borrowing money from my 401k and use it to invest in more properties. What do you guys think is it worth it or just dont touch it?

[Brian Adzadi]

@Gabriel Benavidez

Many of the BP members here will totally disagree with me but I say "You are young, go for it." The rant and raves from BP members will be "But you will be paying pre-tax dollar with after tax dollars blah blah blah blah." Whatever.

Listen, you and I don't have a crystal ball to say how the economy will be like when it comes time for us to retire. Do you remember the recession of 2008? People who had left their money in 401K plans lost hundreds of thousands of dollars just around the time they were looking forward to retire. Who is to say that will not happen to us when it is time for us.

You can only control things in the here and now. Besides the money you borrowed, is yours. So in essence you are paying yourself back with interest. Don't see anything wrong with, do you? And while you are paying yourself back, you are collecting rent money, you can use some of the cash flow from your rent to pay off the loan even faster. WIN WIN.

Due to your age, I would say you can take out the loan, pay it off and take out another loan to invest with again. You can keep doing this to build your portfolio. I would say otherwise if you are in your 50's or 60's.

I took a loan from my 401K to purchase my first rental and I don't regret it.