What does diversification look like to you!?

[Kegan Brenner]

My wife and I are currently starting out real estate journey. 1.5 years ago we bought a dental practice, and last year we purchased our dental office building priced at around $2M with $500k in equity. We currently max out our Roth 401k, Roth IRA, and $2k per month into our vanguard taxable account. I want to see what you all do (aside from real estate) to maximize that tax free (or in taxable stock accounts as well) retirement income. Would love to see how you all diversify!

[Pete M.]

Everyone's goals are different, so the vehicles and path to get there will also be different.

I use cash value-focused permanent life insurance, taxable investment accounts, and lines of leverage to purchase real estate directly, syndications, and funds that pay monthly (mostly real estate, but some not).  Gets deeper from there, but that's the high-level.

My goals included being work-optional well before the traditional retirement ages tied to retirement accounts, so therefore the places I put my money needed to afford more flexibility.  Happy to say I just hit work-optional recently!

[Basit Siddiqi]

My diversification

50% Real Estate
25% Stocks
25% Bonds / Fixed Income

[Carl G. Moose]

That is good percentage breakdown, from my perspective. 

[Matt Ruttenberg]

@Kegan Brenner

Building out and leveraging tools like your 401k, 7702 (life insurance), etc. are good ways to maximize your Dental practice.

Stacking plans on top of each other is a great practice.

I specifically work with dentals practices if you want to chat?

[Kegan Brenner]

Thank you for all the replies! What I love about diversification is that it can vary depending on your personal goals and needs and it is ever evolving!

[Don Konipol]

Quote from @Kegan Brenner:

My wife and I are currently starting out real estate journey. 1.5 years ago we bought a dental practice, and last year we purchased our dental office building priced at around $2M with $500k in equity. We currently max out our Roth 401k, Roth IRA, and $2k per month into our vanguard taxable account. I want to see what you all do (aside from real estate) to maximize that tax free (or in taxable stock accounts as well) retirement income. Would love to see how you all diversify!

If you’re 50 or older a defined benefit plan can allow you to contribute $250,000 + per year tax deferred.  I did just that and accumulated $4 million retirement account in 10 years. 

[Kegan Brenner]

Thank you for this idea! I am currently 30 so I will keep this in mind for the future!

[Steve Vaughan]

We ended up holding mortgages when we exited the bulk of our portfolio in '22.  

We laddered the payoff waterfalls to re-deploy into different RE sectors or equities or whatever seems most attractive.   @Kegan Brenner

[V.G Jason]

This all depends on your income, your spending, and your dependents. This can go so many ways.

The last people you want to talk to is a normal, average financial advisor. And anyone that sells you life insurance. Kick their *** to the curb. 

[Pete M.]

Quote from @V.G Jason:

This all depends on your income, your spending, and your dependents. This can go so many ways.

The last people you want to talk to is a normal, average financial advisor. And anyone that sells you life insurance. Kick their *** to the curb. 

Agreed on all except the LI.  A purpose-built LI policy can do so much and still enable RE investing--when, like you noted, it suits the needs.  Off-the-shelf policy that focuses exclusively on death benefit isn't it, and I see those way too often.

[V.G Jason]

Quote from @Pete M.:

Quote from @V.G Jason:

This all depends on your income, your spending, and your dependents. This can go so many ways.

The last people you want to talk to is a normal, average financial advisor. And anyone that sells you life insurance. Kick their *** to the curb. 

Agreed on all except the LI.  A purpose-built LI policy can do so much and still enable RE investing--when, like you noted, it suits the needs.  Off-the-shelf policy that focuses exclusively on death benefit isn't it, and I see those way too often.

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

[Pete M.]

Quote from @V.G Jason:

Quote from @Pete M.:

Quote from @V.G Jason:

This all depends on your income, your spending, and your dependents. This can go so many ways.

The last people you want to talk to is a normal, average financial advisor. And anyone that sells you life insurance. Kick their *** to the curb. 

Agreed on all except the LI.  A purpose-built LI policy can do so much and still enable RE investing--when, like you noted, it suits the needs.  Off-the-shelf policy that focuses exclusively on death benefit isn't it, and I see those way too often.

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

Not at all and history shows elsewise, but I don't see this going anywhere than yet another pointless internet argument--so good luck!

[V.G Jason]

Quote from @Pete M.:

Quote from @V.G Jason:

Quote from @Pete M.:

Quote from @V.G Jason:

This all depends on your income, your spending, and your dependents. This can go so many ways.

The last people you want to talk to is a normal, average financial advisor. And anyone that sells you life insurance. Kick their *** to the curb. 

Agreed on all except the LI.  A purpose-built LI policy can do so much and still enable RE investing--when, like you noted, it suits the needs.  Off-the-shelf policy that focuses exclusively on death benefit isn't it, and I see those way too often.

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

Not at all and history shows elsewise, but I don't see this going anywhere than yet another pointless internet argument--so good luck!

 Do you not pay your fees up front in any of these? That's the only thing that'd make it a modestly okay investment, otherwise all junk. You're an advisor, and becoming the type I tell folks to stay away from. 

[Kegan Brenner]

My wife and I do both have term life insurance that we plan to stop at some point when we are comfortable. We bought a dental practice and I personally feel that this gives us comfort knowing that we will be okay if something were to happen to either of us. Especially when this practice is still our main source of income and will be for quite some time! 

I appreciate all the input!

[Chris I.]

Quote from @Don Konipol:

If you’re 50 or older a defined benefit plan can allow you to contribute $250,000 + per year tax deferred.  I did just that and accumulated $4 million retirement account in 10 years. 

Does this require your employer to setup the plan?  Or are you self employed and were able to set it up for yourself?  Do these plans have a minimum # employees requirement?  I'm co-owner of a small 2 man software dev shop.  We had to shop around for a minute just to find a place that would give us a "company" 401K plan since we're so small. So was just curious if this was even feasible for us in the future

[Mike S.]

Quote from @V.G Jason:

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

I strongly disagree with you. A properly structured cash value permanent life insurance can be an incredible tool in your wealth building strategy. You obviously have not studied enough this asset class.

By borrowing from it you can make your money work at two places at the same time, increasing your total return. It's a long term play as the front loaded fee takes a few years to recover from. But in essence it is not different than using a refi on a real estate property, except that you are protected on the downside as the cash value only goes up while real estate can go down. And on top of it, you have a life insurance to protect your family in case of early demise.

If it was so bad, why would so many sophisticated investors using them? You just need to find the right insurance agent specialized in this kind of policies as the run of the mill policy is definitely not what you want for that purpose.

[V.G Jason]

Quote from @Mike S.:

Quote from @V.G Jason:

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

I strongly disagree with you. A properly structured cash value permanent life insurance can be an incredible tool in your wealth building strategy. You obviously have not studied enough this asset class.

By borrowing from it you can make your money work at two places at the same time, increasing your total return. It's a long term play as the front loaded fee takes a few years to recover from. But in essence it is not different than using a refi on a real estate property, except that you are protected on the downside as the cash value only goes up while real estate can go down. And on top of it, you have a life insurance to protect your family in case of early demise.

If it was so bad, why would so many sophisticated investors using them? You just need to find the right insurance agent specialized in this kind of policies as the run of the mill policy is definitely not what you want for that purpose.

 If you're paying your expense fees up front, it's going to be a terrible investment. I don't need to get into why, it should be obvious.

No sophisticated investor uses them. I don't know a soul in a real high net worth that has it, I see people maybe under $10,15 MM use them and think they're magic. Maybe $25MM net worth but they are new money and/or dumb money if not both that blindly follow an "advisor".  The real HNW don't touch this. 

Only people to fight me on this is the ones who sell them.

[Thomas Rutkowski]

Quote from @V.G Jason:

Quote from @Mike S.:

Quote from @V.G Jason:

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

I strongly disagree with you. A properly structured cash value permanent life insurance can be an incredible tool in your wealth building strategy. You obviously have not studied enough this asset class.

By borrowing from it you can make your money work at two places at the same time, increasing your total return. It's a long term play as the front loaded fee takes a few years to recover from. But in essence it is not different than using a refi on a real estate property, except that you are protected on the downside as the cash value only goes up while real estate can go down. And on top of it, you have a life insurance to protect your family in case of early demise.

If it was so bad, why would so many sophisticated investors using them? You just need to find the right insurance agent specialized in this kind of policies as the run of the mill policy is definitely not what you want for that purpose.

 If you're paying your expense fees up front, it's going to be a terrible investment. I don't need to get into why, it should be obvious.

No sophisticated investor uses them. I don't know a soul in a real high net worth that has it, I see people maybe under $10,15 MM use them and think they're magic. Maybe $25MM net worth but they are new money and/or dumb money if not both that blindly follow an "advisor".  The real HNW don't touch this. 

Only people to fight me on this is the ones who sell them.

 Your money is literally working in two places at one time. Even though you take a haircut on the fees, you will accumulate more wealth over time. Would you rather have 85% of your money growing at 9% or 100% of your money growing at 6%? 

You're right. It's obvious.

[V.G Jason]

Quote from @Thomas Rutkowski:

Quote from @V.G Jason:

Quote from @Mike S.:

Quote from @V.G Jason:

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

I strongly disagree with you. A properly structured cash value permanent life insurance can be an incredible tool in your wealth building strategy. You obviously have not studied enough this asset class.

By borrowing from it you can make your money work at two places at the same time, increasing your total return. It's a long term play as the front loaded fee takes a few years to recover from. But in essence it is not different than using a refi on a real estate property, except that you are protected on the downside as the cash value only goes up while real estate can go down. And on top of it, you have a life insurance to protect your family in case of early demise.

If it was so bad, why would so many sophisticated investors using them? You just need to find the right insurance agent specialized in this kind of policies as the run of the mill policy is definitely not what you want for that purpose.

 If you're paying your expense fees up front, it's going to be a terrible investment. I don't need to get into why, it should be obvious.

No sophisticated investor uses them. I don't know a soul in a real high net worth that has it, I see people maybe under $10,15 MM use them and think they're magic. Maybe $25MM net worth but they are new money and/or dumb money if not both that blindly follow an "advisor".  The real HNW don't touch this. 

Only people to fight me on this is the ones who sell them.

 Your money is literally working in two places at one time. Even though you take a haircut on the fees, you will accumulate more wealth over time. Would you rather have 85% of your money growing at 9% or 100% of your money growing at 6%? 

You're right. It's obvious.

Again, a financial advisor. You guys sell this stuff, no one promotes this besides the one selling it. 

[Kegan Brenner]

Alright guys, agree to disagree. The beauty of investing...you do it how you want! I appreciate everyone's insight in this and hope to chat again soon!

Cheers 

[Mike S.]

Quote from @V.G Jason:

Again, a financial advisor. You guys sell this stuff, no one promotes this besides the one selling it. 

I'm sorry that I am a no one to you... I'm not selling anything and I am using cash value permanent life insurance and recommend it to my fellow investors.

Then no one promotes mortgage except mortgage brokers, no one promotes real estate except real estate agents, no one promotes syndication except syndicators... 

[Drago Stanimirovic]

Hi Kegan,

It sounds like you and your wife have a solid foundation with your dental practice, building purchase, and investment contributions. To diversify further and maximize tax-free or tax-efficient retirement income, there are several strategies you can consider.

One key option is real estate syndications or private REITs. These allow you to continue growing your real estate exposure passively without the hands-on management required for direct ownership. Many syndications provide tax benefits such as depreciation, which can offset income, and some offer favorable capital gains tax treatment when you sell.

Municipal bonds are another tax-efficient way to diversify, as the interest earned is generally tax-free at the federal level, and sometimes state level too, depending on where you live. While they tend to offer lower returns than stocks or real estate, they provide stability and consistent income.

Another potential avenue is health savings accounts (HSAs), which offer a triple tax benefit—contributions are tax-deductible, earnings grow tax-free, and withdrawals are tax-free if used for qualified medical expenses. If your healthcare needs are relatively low, an HSA can act as an additional long-term investment vehicle.

Additionally, tax-loss harvesting in your taxable investment account can help reduce your capital gains taxes, allowing you to offset gains with losses to improve after-tax returns. You can also focus on dividend growth stocks within your taxable account, as dividends can be taxed at lower rates, especially if you hold long-term.

By balancing real estate with traditional investment strategies like bonds, stocks, and tax-efficient accounts, you’ll have a diversified approach that generates tax-advantaged income while minimizing risk.

Let me know if you need help strategizing further or exploring real estate financing options!

Best,

Drago

[Deb S.]

Quote from @V.G Jason:

Quote from @Mike S.:

Quote from @V.G Jason:

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

I strongly disagree with you. A properly structured cash value permanent life insurance can be an incredible tool in your wealth building strategy. You obviously have not studied enough this asset class.

By borrowing from it you can make your money work at two places at the same time, increasing your total return. It's a long term play as the front loaded fee takes a few years to recover from. But in essence it is not different than using a refi on a real estate property, except that you are protected on the downside as the cash value only goes up while real estate can go down. And on top of it, you have a life insurance to protect your family in case of early demise.

If it was so bad, why would so many sophisticated investors using them? You just need to find the right insurance agent specialized in this kind of policies as the run of the mill policy is definitely not what you want for that purpose.

 If you're paying your expense fees up front, it's going to be a terrible investment. I don't need to get into why, it should be obvious.

No sophisticated investor uses them. I don't know a soul in a real high net worth that has it, I see people maybe under $10,15 MM use them and think they're magic. Maybe $25MM net worth but they are new money and/or dumb money if not both that blindly follow an "advisor".  The real HNW don't touch this. 

Only people to fight me on this is the ones who sell them.

 I guess you think the Rockefeller family made terrible investments then. The entire Rockefeller family used permanent life insurance to pass down their generational wealth for decades. The Vanderbilts who were as wealthy as the Rockefellers at the time did not use this strategy and eventually their net worth evaporated due to many things.

Unless you have a license to sell life insurance and know how to structure the policy for the client's goals, you shouldn't be knocking products that can and do benefit MANY people -  especially those who have maxed out other tax deferred accounts.

By the way fees are paid over the life of the policy, not all up front. Like most things in life, you don't get something for nothing.

[V.G Jason]

Quote from @Deb S.:

Quote from @V.G Jason:

Quote from @Mike S.:

Quote from @V.G Jason:

 No, life insurance in all forms is an incredibly stupid vehicle to put money in. 

I strongly disagree with you. A properly structured cash value permanent life insurance can be an incredible tool in your wealth building strategy. You obviously have not studied enough this asset class.

By borrowing from it you can make your money work at two places at the same time, increasing your total return. It's a long term play as the front loaded fee takes a few years to recover from. But in essence it is not different than using a refi on a real estate property, except that you are protected on the downside as the cash value only goes up while real estate can go down. And on top of it, you have a life insurance to protect your family in case of early demise.

If it was so bad, why would so many sophisticated investors using them? You just need to find the right insurance agent specialized in this kind of policies as the run of the mill policy is definitely not what you want for that purpose.

 If you're paying your expense fees up front, it's going to be a terrible investment. I don't need to get into why, it should be obvious.

No sophisticated investor uses them. I don't know a soul in a real high net worth that has it, I see people maybe under $10,15 MM use them and think they're magic. Maybe $25MM net worth but they are new money and/or dumb money if not both that blindly follow an "advisor".  The real HNW don't touch this. 

Only people to fight me on this is the ones who sell them.

 I guess you think the Rockefeller family made terrible investments then. The entire Rockefeller family used permanent life insurance to pass down their generational wealth for decades. The Vanderbilts who were as wealthy as the Rockefellers at the time did not use this strategy and eventually their net worth evaporated due to many things.

Unless you have a license to sell life insurance and know how to structure the policy for the client's goals, you shouldn't be knocking products that can and do benefit MANY people -  especially those who have maxed out other tax deferred accounts.

By the way fees are paid over the life of the policy, not all up front. Like most things in life, you don't get something for nothing.

Again, the only people that speak it up are the people that have to sell it. That's it.

[Deb S.]

I'll pass that along to my clients...........with Infinite Banking policies.