Max out retirement before real estate ?

[David Limbaugh]

Hello BP family, I'm a recent grad (<2 years) and have been working since graduation (corporate job). I have been educating myself as much as I can financially, and real estate seems like a really good potential investment. My Goal is to become FI and either retire early or live life less stressed. A bit of advice I see a ton is advising to max out all retirement accounts (in order below) then invest your extra money: 1. 401k to company match 2. HSA 3. IRA (Roth depending) 4. 401k to IRS limits 5. Invest in taxable accounts I understand this is to take advantage of tax shelters, but I also understand that you can avoid/delay taxes with some real estate deals. I agree that is good advice however, I only make ~52K a year so it will be a while before I could max out my accounts and further invest. My question is at what point is it most financially responsible to focus more on real estate that some of the retirement accounts. I think I would like to do the buy & hold strategy with rentals as it really makes sense in my mind. I plan to match 401k and max out my HSA as a minimum. Other than that should I focus on real estate ? If anyone has some lessons learned (success or otherwise ) I would greatly appreciate it. Thanks for the help!

[Mark Fedorov]

Do the math first.

Figure out how much money you need in the 401K when you retire.

Then, assume that you max out your 401K, you are 23ish?... look at your 401K portfolio and see what your expected returns are (or assume 7% for stocks, 4% for bonds), assume you are going to max out the 401K and get the company match and you will be getting 3% raises every year....bring that out until you are 65 (22 years)...  how much money do you have?

... probably more than you need, so temper that down so you are not maxing it out but the end value (when you are 65 is a reasonable number).

If that is true, you can ignore the IRA.

I am not sure of the need to max out the HSA, when I had one it was use it or loose it per year, so I would normally just put in my medical insurance costs and an approximate of my known expenses so I would not be flushing money.

Put the rest in a short term bond fund (Vanguard has a few you get a check book for it and it makes about 3% a year), and save for a few years while you learn about real estate investments. 

Remember, real estate investing is not an investment, it is a part time job.