What should my financial plan be for next 10 years.

[Asim G.]

Hello,

I need help with long-term financial strategy questions for me and my family and hope the folks on this forum can help. Here is my financial summary:

* Both me and my wife have W2 incomes (AGI > 400K). Most of the income is from base + cash bonus. There isn't a significant stock component to it.

* 2 kids in elementary school who will be going to college in ~10 years

* We stay in an extremely high-cost-of-living area (think NYC or San Francisco). Current jobs can not be remote. But relocating to another area while maintaining similar incomes might be possible in ~1-2 years. This is something we are working towards.

* Investment strategy so far has been Max out 401Ks ($20,500 each), backdoor ROTHs, diversified index funds/some stocks, and 4%+ CDs or Treasury bonds.

* We have 3 rental properties (2SFR and 1 triplex). Total cashflow from these is ~$1500/month. All of them are on a fixed rate mortgage with 10-20 years remaining.

We are blessed to be in a position of being financially comfortable and have an opportunity to plan for the future.

We need help answering the following questions:

1. Where can we invest to reduce our income tax bill today and have steadier income 5-10 years in the future? Someone suggested looking into multifamily syndication. Is there any other investment or business endeavor that can us achieve our goals?

2. There might be a one-time financial windfall from either of our employers due to an acquisition/IPO. How should we plan for this windfall?

We want to invest today so that today's earnings/savings translate into income when kids are finishing high school or entering college.

I have talked to a couple of CPAs about this and they are only interested in entering my financial information into a software and bill me for filing taxes. The Financial Planners I talk to only want to sell me financial products, which I dont trust.

Both I and my wife figured out rental property investment, house hacking through BP and are looking forward to learning more.

[Randall Alan]

@Asim G.

I think real estate would perform better than a stock return, so I would quit max funding your 401k and just put in  what your company will match.  Then take the money you didn’t put into the 401k and put it toward more passive income investments… for me that is rentals… but there are obviously  other options.   Since you are familiar and comfortable with rentals I would stick to that plan.  Syndication likely won’t make you more money than a self managed rental, but is more passive than self managing your own units.  

You don’t mention college funds for your kids.  You might think about how you plan on funding that and put that plan in motion. 

Your 401k won’t turn into income when the kids are hitting college unless you will be hitting retirement age then.  So that is another reason to not max-fund your 401k.

Rentals will provide you additional income each month and hopefully with 10 years appreciation you would see a significant gain on your property that you could use the remainder after taxes to fund some of your education expenses by either selling it, or cash-out refinancing it.  Or you could sell your primary home and pocket up to $500,000 in gain with no tax consequence. 

Randy