To IRA or not to IRA…

[Franklin P.]

My employer gives me the option of setting up an IRA or Roth IRA and they will match up to 3%. My goal is to continue to buy real estate and be able to spend some of those profits as I go and reinvesr the rest of the profits back into real estate.

In this case is it better to invest in a Roth IRA (self-directed IRA?), or is it better to save all the cash until I find the next property?

[Dmitriy Fomichenko]

@Franklin P.,

Roth IRA is an individual account that you establish yourself, it has nothing to do with your employer. You probably mislabeled it, did you mean to say 401k?

Anyways, if your employer offers you to participate in the retirement plan and will match your contributions - it would be foolish to decline that. Let me explain: let's say that 3% equals to $2,000. You contribute $2,000 to your employer-sponsored retirement plan and they will match it by contributing another $2,000. That is 100% return on your money, immediately! You most likely not going to be able to get this kind of return in real estate. Contribute up to the match and then direct the rest of your discretionary income towards real estate.