My opinion: 401K VS RE

[Melanie Baldridge]

Why I like investing in real estate more than 401(k)s.

Both offer tax deferrals, but here's the difference:

If you're making pre-tax contributions to your 401(k), then withdrawals = ordinary income tax.

With real estate gains, you're paying capital gains tax (which is typically lower).

Plus, RE investors get:

1. Cash flow from their properties

2. The ability to do cost segregation and bonus depreciation

3. The ability to use leverage to acquire more attractive assets and amplify their potential gains

4. A physical property that has real-world use and value vs. holding stocks and bonds

5. The ability for 1031 exchanges

6. Access to Opportunity Zones

7. Step up in basis to reduce your heirs' taxes and more

[Parmesh P.]

I agree with all of the points laid out here, but people should also be aware of the benefits of TDAs such as: 
1. Guaranteed Returns: A fixed 7% is impressive in today's market and provides predictability unmatched by most investments.

2. Truly Passive: No management, no tenants, no repairs, just consistent income.

3. Low Risk: TDAs are insulated from market volatility, offering peace of mind.

4. Simplicity: TDAs require minimal effort after initial setup, making them attractive for those seeking stress-free investment.

For investors like myself, seeking both stability and growth, combining a TDA with real estate investments creates a diversified portfolio. TDAs offer peace of mind and a safety net, while real estate provides growth potential, tax advantages, and wealth-building opportunities. Both approaches have merit. The key is understanding your risk tolerance, time commitment, and financial goals to find the right balance.

[John Bowens]

I don't see a 401k/IRA as a competition with real estate as with the correct setup, you can self-direct 401k/IRA funds into real estate. That said, if you are working for a company that does not allow real estate in their 401(k) setup (most dont allow) then I can see where you might look at where is best to put my hard earned dollars.

If you have your own business/self-employed you might qualify for a Solo 401(k) or multi-participant 401k whereby you can self-direct into real estate with those funds.