Real Estate Investor · Raeford, NC · Member since 2014 · 137 posts · 39 votes
I am in the Military and I have a ROTH IRA that I have through USAA. My superiors that have been in for over 20 years tell me I really need to do the TSP also...Any of you ever done the TSP?
Would you invest in the TSP or sink your money into Rental Properties?
I do both. I max out my traditional TSP (due to my tax bracket it makes sense) every year and also invest in real estate. Last time I got promoted, I continued to live like I was at my old rank and dumped the rest of my income into retirement accounts and real estate savings. The other thing I did was take a $50k TSP loan and used that to help fund another rental property. I pay that back each month with interest back into my TSP. And, since the market has dropped since then, every month I buy shares cheaper than I got them loaned out to me. That is just a benefit of the timing for me and wasn't planned. When I leave the military I will be able to self direct that TSP (401k basically) into real estate if I like.
I also have a self directed ROTH IRA that I use for real estate investing. I rolled that over from Vanguard index funds last year and have been lending with it for the last year. You could also buy rental property with it like you said and it will in fact be tax free money.
I would suggest all of you get away from USAA investments and move your money to a low cost index fund if you will keep it in the market. Read a book call the Boglehead's Guide to Investing and use that 3 fund strategy. Very easy to do and very low fees!
I have tilted more toward real estate over the last few years and am very happy that I can add the value to see big returns. But, it is active investing where the other half of my portfolio is not.
Good luck and feel free to reach out to me if you have any specific questions or need some support. I am not a CFP or CFA, just a guy who takes his finances very seriously.
Real Estate Agent · Kennesaw, GA · Member since 2015 · 307 posts · 153 votes
10y
Great discussion. I have used the Roth TSP for things like tax free reenlistment pay I parked it there while I was deployed and now have taken a loan against it to buy a rental free and clear. My base pay pays back the loan while I save the cash flow for additional properties. If you reallocate the distributions of the fund you can get some much better returns I had years where I was over 20% return in the TSP. But it has not been that good for a few years. I use it as a tool. It like most other things in investing you must learn all about to use it effectively.
Commerce City, CO · Member since 2017 · 4 posts · 0 votes
8y
Hi BP,
Should I cash out 401k to pay for finishing basement for a rental property? A couple facts. I’m 30, I have enough in 401k to cover finishing cost(45k) after all penalties. Basement will rent for conservative 1200 a month. After running the numbers it seems like a no brainer but I need advice. Additionally, is the money spent on the finishing cost tax deductible so that my actual cost of taking 401k out would only be 10% penalty? Thanks