As a real estate investor, you probably have realized the earning potentials from leasing or flipping properties, but what is in your retirement fund right now? A lot of real estate investors successfully built their wealth upon strategic investments in properties, but their retirement funds are left to perform poorly with stocks and mutual funds. What an Individual 401 k can do is to help investors turn the situation around and start to grow their retirement savings in real estate as well.
Why real estate is good for your retirement portfolio?
Real estate is usually seen as a long-term investment, which is perfect for retirement planning. By adding a residential property to your portfolio, you can wait for the value to appreciate for years to come, while collecting rental payments directly into your retirement account.
Too impatient or do not have the time to wait? A lot of investors are also engaging in where the properties will be remodeled and sold for profit in a short period of time. Often, this is seen as a riskier move, but can potentially grow your fund much quicker than other assets.
The main benefit of adding real estate to a retirement portfolio is the secure nature of real estate. Unlike stocks, investors are less likely to lose everything they invested, as in the worst case scenario, they can always sell or foreclose the real estate to recover some of the principal.
Individual 401 k as the solution
Knowing the benefits of real estate investments, a lot of real estate professionals still have a pure stock and fund retirement portfolio. Simply, they do not know that it is possible for their retirement plan to own real estate assets.
The truth is, it is truly impossible for traditional retirement plans. However, with a self directed individual 401 k, investment choices are now almost unlimited. Account holders can now invest in real estate, among many other investment choices such as private businesses, precious metals, tax liens, and tax notes. Not only that, the plan is considered one of the most flexible retirement plans, which allows higher contribution limit and self-directed option. Plan holders can contribute up to $57,500 in 2014, which is about 10 times higher than a traditional IRA account.Should you consider the option?
As with any investment fund, investors can only succeed with wise, educated investment decisions. Certain plan holders do not have the expertise or time to monitor their funds and would like to have a custodian to help them manage the account. That is certainly fine and can work out well for this type of investors.
For others, however, if investing in real estate, or other assets for that matter, is something you do for a living, or have years of experience, then why not? Adding real estate in your retirement portfolio can be a smart move to help improve the security and growth of the portfolio.
Comments