Time to re-invest in a 401K?

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@Matt BacenetBut that 100% COC from the match only applies to year 1. And I don't know that I would consider that COC as you don't really get to pocket any cash. :-)In terms of my rentals, I get far greater "COC" return based on your scenario there. I buy my rentals with hard money. My HML puts up 100% of the purchase and 100% of the rehab. I'm paying the points (4) plus closing costs. My typical deal is a 150k house that I'm all in around 100k to 110k. My typical out of pocket is 6k to 8k. So for 6k to 8k investment, i'm gaining 40k to 50k in equity. Plus, as soon as I get it rented and rehabbed, I'm getting 150/mo to 200/mo in net profit that goes into my pocket today - tax free. I haven't paid taxes on my rental income in the 9 or so years I've been investing. And I've still got over 100k in carry forward losses to boot.And while I do understand there is a risk on housing coming down, that risk is probably going to be closely tied to the stock market going down as well. The difference to me still comes down to the same things:1) Buying real estate lets me get income from rents today PLUS lets me build up a very sizable net worth over the long term. With 401k, I don't get anything from that until age 67? That blows.2) I can use leverage with real estate to where my returns are so much greater than what I can do with stocks, its not even close.Now the tradeoff I come back to is the effort. But given what I started with and where I'm at, there's no way you can sell me that I'd have been better off donating to a 401k. And maybe I'm a bad example because of how many houses I have. But even if someone were to buy 4 or 5 rentals, they are going to end up far better off with those 4 or 5 houses than with a 401k. They'll get money they can use today and they'll get a really sizable chunk of net worth when they get older.

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@Mike H. Love your post but I think you may be slightly underestimating the power of a 401K. The company match alone just got you a 100% COC return, do your rentals give you 100% COC? As far as your appreciation play, all I can say is 2009. everyone saw that double the value of your house example, the next day it was gone. Same applies for stocks. And as much as I love real estate, I also love being diversified. @Jay Helms I think its unfair for you to have a this or that view. why not do both? every CFP and CPA etc will always advise you contribute at least the company match on your 401K. you will literally get a 100% return on your investment regardless of what the market does, plus you get the tax write off. After you at least contribute to get the full company match, why not take the rest and invest for real estate? Both of you, the S&P 500 YTD return is 17.5% (as per CNN Money). I'm pretty sure that is on par or in the same ballpark with your returns for your rentals. Then factor in the 100% return via the company match and id say your 401K is looking pretty good right about now. plus your now in a better diversified position. there is no reason why you shouldn't being doing both.

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@Jay HelmsNo offense to those that swear by 401ks (best of luck to those individuals) but the 401k is nothing more than a vehicle created to take your money and have Wall Street play with it making good rates of returns while throwing you the crumbs. What @Mike H. stated above my comment is also great advice.If your really interested in putting funds into another vehicle, try a self directed IRA. This tool allows you to take it out at any time for real estate investing (please consult a professional for the details) without the ridiculous fees and restrictions you get from a 401k. Best of luck!

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I stopped putting into my 401k about 8 or 9 years ago just as I started seeing the returns on real estate. Here's the problem with the 401k - you have to get a lot of money in there to return enough later on to move the needle. Here's the other problem - you can't really get to that money until you retire without taking the massive hit.Now if your company matches, then technically it would be a way to sock away some of your income free and clear if your intent is to leave your job at some point in the next 5 to 10 years and cash it out.i.e. If you put in 200/mo pretax and your company matches 200/mo, you get 400/mo put in. Then in 5 years, lets say your fund made no profits and you pull it all out and pay taxes, you'll end up getting back what was the equivalent of 240/mo (60% of what you pull out).So that will essentially be every dollar of your pretax money plus a little more. And now you take that and invest and maybe that makes sense.The problem is that if you can't pull that out and invest in real estate, then whats the point? You can get far better returns in real estate with the use of leverage than you can get in a 401k over a 30 year run. And better still is that you can get access to some of those returns today as opposed to having to wait til you're too old to enjoy em. :-)Lets say you put 5k a year in your 401k for 5 years and they match with another 5k. That gives you 50k. What does 50k look like in a 401k in 30 years? How about 30 years, 7% compounded? Seem reasonable? That would come to 400k. And as you draw that out, you will have to pay taxes on that as regular income.Now take that same 25k over the next five years and pay taxes on it. Leaves you with 20k. Leverage that and hard money to buy 2 houses worth 150k that you're all in at 110k. Houses that will make you 150/mo in net profit to begin with or 3,600 a year in net profit - which is also going to be tax free for the first 7 to 10 years maybe after you factor in depreciation....Now assume the house doubles every 20 years. Or worst case it doubles in 30. Those two 150k houses are now worth 300k apiece and are completely paid off so you now have two assets worth 600k total. If they double every 20 years which is the historical avg, you'd be looking at more like 850k worth of assets.You could now pull out 400k in equity in those homes tax free and they'll still cash flow a couple hundred a month each and you can do it all over again. And all the while you will have been getting to reap the rental income over a 30 year period. There's no way you can tell me you can get a better return from a 401k. That being said, there's no way you can tell me that its easier to manage rental properties than it is a 401k. So that is where the return on your time comes into play. You will make a lot more money with real estate over a 401k assuming that the money you forego putting into your 401k is actually used for investing in real estate. But you will spend an infinite amount more time managing your real estate than you would managing a 401k account.So therein lies the tradeoff. Do you want a lot more money and headache and less free time OR do you want less money and headache and more free time? More money and headache equals real estate. Less money and headache and more free time equals 401k.

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The securities markets are a big distraction from investing. Stop worrying about what they are doing.What are your long term financial goals? Does your company's 401K and the investments offered within it help you reach your long term goals? If so, use the 401K as the vehicle to get you where you are going. If not, find the better vehicle to get you where you are going.Best of Luck on Your Journey!

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@Mike H.is correct, the leverage can boost your returns SIGNIFICANTLY. BUTin real estate, you can make a lot of $ or lose a lot of $. I have seen the latter more than the former, sadly.education is the key.

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@Mike H. the 100% COC applies every year, and probably every month you contribute to the 401K on the contributed amount. i.e. 1K contributed in year 1 gets a 1K match in year 1, additional 1K contributed in year two gets a 1k match in year two. I view it as COC because although its not being pocketed so to speak, its certainly in an account held in your name, so at the minimum, your net wealth is increasing. I would also challenge you on the "tax free" income. yes in that year its tax free but there in another side to depreciation that will be paid back to the IRS when you sell, unless you intend to live in the house for 2 years prior to selling (probably going to change soon based on the tax reform bill). I agree, housing market will go down just as fast as the stock market in another 08 scenario. To your point, no one is saying the stock market is better than real estate. I mean none of us would be here if we believed it was lol. I tend to agree with the age old expression "don't put all your eggs in one basket". this new tax bill is a prime example of why. they are proposing numerous changes that can and will impact returns for RE investors who invest in certain ways. it would suck if all your eggs were in buy and hold rentals and they decided to change the way your rental income was taxed. hence why you should diversify. If what your doing works for you and your risk profile, then who am I to tell you no. for me personally, I sleep better at night knowing that my investments are scattered through many different asset classes.

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Until I got into real estate investing I maxed out my 401K every year. Now I regret it. (I've been with my employer for 22 years so have no access to those funds, save a $50K loan.) You can make soooo much more in real estate.If I had not been so diligent about funding my retirement account, I WOULD ALREADY BE RETIRED!

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@Jay HelmsSince a 401k is a long-term savings vehicle, it is never too late or early to start saving for retirement. As far as investing, it is all about diversification in my view. Investing in Index and exchange traded funds is always a good way to play the equities market.

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Capturing a company match is a slam dunk win: you can instantly double your money. Otherwise, it is just a tax deferred investment in the stock or bond market. Consider your asset allocation categories and all of your retirement investing options: IRA, 401k - and don't forget 529 plans for the kiddies!