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Updated over 9 years ago, 08/15/2015
Contributing to 401k or 403b or ROTH vs. Saving for Down Payment on Investment Property
I have been inspired by the podcasts and insight on BP and appreciate how a LONG-TERM buy and hold approach (my niche and strategy) can lead to quite significant 'passive' income streams over time. I also understand the importance of diversification and respect the long-term annualized rates of return in the stock market over the last 50+ years.
I suggest reading Lifestyles Unlimited's article on 'How 22 rental properties can retire you faster than a 401k' and their previous article on 'How 15 rental properties can retire you faster than a million dollar 401k'.
As fellow real estate investors, I was wondering how others approach this situation. Obviously the less you contribute to your 401k, the longer it takes to produce a down payment on your next investment property. Also, it's difficult to rationalize allocating funds to a retirement account which may yield 7-9% annualized when you could get 20% cash on cash in a rental property which also has the potential to appreciate.
Personally, I contribute 8% pre-tax to a 401k and I also get a company match. What are your strategies? Do you contribute the minimum to receive the company match (if offered)? Do you contribute nothing? Certainly, I understand that many may not have a company 401k to invest in at all (what are your retirement planning strategies). I am quite interested in people's strategies.