What’s the End Game Of Your Investment Plan? Is Your Plan Congruent With It?

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Let’s say you have, give or take, $70,000 in your Wall Street investment account, or 401K. This account generates $500/mo in income. You’ve been adding $1,500/mo out of your after tax salary to the account, resulting in a monthly investment of $2,000 — 25% of which doesn’t come out of your family earnings from work.

 Question: 74 months down the road, will your original $70,000 + $500/mo (monthly cash flow/dividend) + $1,500/mo from salary(s) end up as — $255,000 + almost $1,600/mo in cash flow?

No? Not even close?

How ’bout if we cut that $255,000 to $200,000 — and cut the cash flow to, say, $1,200 a month?

Still no? Do you know of a stock paying non-stop dividends in the 5-10% range, year in and year out for two to three decades? I don’t.

In fact, even if the Wall Street (WS) investment account ended up worth $255,000 — and the (Spoiler alert!) real estate investment property ended up at $200,000 — would the WS account deliver, year in and year out, a 5.7% dividend? Shake your head no, cuz we both know that’s a pipe dream.

In other words, if the real estate investment property lost over 20% of it’s original value while it’s Net Operating Income (NOI) dropped by around $25%, it’d still completely out perform your WS account when it comes to retirement income.

 And, if I recall correctly, isn’t retirement income the name of the game?

Now, tell me again how well your 401K is doin’?

About Author

Jeff Brown

Licensed since 1969, broker/owner since 1977. Extensively trained and experienced in tax deferred exchanges, and long term retirement planning.

2 Comments

  1. You have definitely shook up my preconceptions about investing in 401k’s. My wife and I are now looking at making an early withdrawal to buy a new house for us, and turn our existing one into a rental. I am speculating on using the rest of it for more real estate investment, and to also stop contributing to the 401k, but instead to put towards our business.

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