{ "media_type": "text", "post_content": "I'm currently putting 13%(6roth and 7 trad) in 401k and feel so poor and low on cash, I'm 24 and have 41k in retirement. Thinking about reducing to 7% so I can invest in real estate...good?", "post_id": "59dd726462527700171506da", "reply_count": 62, "vote_count": 8, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting", "feed_type": "crowd" }

I'm currently putting 13%(6roth and 7 trad) in 401k and feel so poor and low on cash, I'm 24 and have 41k in retirement. Thinking about reducing to 7% so I can invest in real estate...good?

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OP - see EY1's advice on dollar cost averaging. When it comes to retirement savings just set it and forget it - don't try to time or predict the market. You have a 30 year horizon and ups and downs now will be muted over time - the benefit is just being in the game. I thought the market was overvalued a year ago and we've been up 20% since. I realize I could be slaughtered at any time, but when that happens I'll just keep buying equities "on sale". Don't worry about today's prices as long as you are comfortable with your overall asset allocation (think stock to bond ratio) and the risk your overall portfolio carries for your time horizon

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S&1- completely disagree. You are forgetting leverage. I.e I buy a place for 200k. I only put 20% down so that’s 40k. I could have chosen to put 40k in market, but will do so in real estate instead. Let’s assume I can get a positive return each month of 200 (surplus to all expenses) that’s 6%return. If I’m in a decent market I can also get appreciation of 1-3% (much more in a high market). Also numerous tax advantages. Lastly, the renter is paying YOUR equity so you are gaining another 3K in equity per year or about 7% of your down payment. Conservatively this is 14-15%. Sure this doesn’t beat market last year, but given where market is now... that’s where I’m putting my money. Saving for #3👌

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41k at 24 is great! Keep going if you can. Your older self will thank you (so they say). I'm 30 and only have 80k put away.

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Personally I'd keep working towards maxing your 401k to the 18k limit, then a Roth IRA to 6k, then to HSA and so on. The money you save now will come back in multiples with over 30+ years to grow. You'll be so much better off than those that wait to save until their mid 30s or 40s and whose money has half the time to work for them. I'm 35 now and can not believe how much those small sacrifices towards savings have yielded now in retirement portfolio.

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No. Max our your 401k if you can. Real estate investment does have downside in addition to rewards. Again - it depends on your risk tolerance but do contribute to 401k to ensure you get a March from your firm

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I have $1.3m in savings, I'm 17. Feel so poor.

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I would just invest in ETFs outside of your 401k to have liquid assets. Renting property is not something I would recommend if you already feel short of cash. A few repairs or vacant periods can add up rapidly.

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Deloitte only matches up to 6% of your contributions to your 401k anything else is extra money that you decided to put in. If you are feeling poor I would lower contributions down to 6% and then invest in other vehicles besides retirement

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Def do not reduce tax advantaged contributions, in fact, increase them!
Max 401k
Max IRA
Max HSA

Revise spend plan to use rule of thumb percentages of net income in spend categories and adjust lifestyle to fit.

As others have said, your future, rich ass self will thank you!

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Real estate can be good but you'll have to work for that money in terms of finding the right properties and then managing them - with our jobs you'll be tight on time to do it right. Passively investing in index funds, you have the power of all Fortune 500 companies working for you. If you like RE and are bullish on it, a more passive avenue would be REITs in a retirement portfolio. If your focus is just more income now, you can probably make this happen quickest kicking butt in consulting with the potential growth in pay in our industry

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Best thing about 401k vs. other investments is that you dollar cost average with the market. You never sell when you the market dips and you are buying stocks on sale when it does. The market always recovers and as long as you invest consistently you can more or less insult are yourself from fluctuations in the long term. Real estate is more of a crap shoot, especially as an investment vs. home where you are building equity.

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You go OP

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Thanks for the excellent advice everyone, sincerely appreciate it. BTW I have 27k invested in stocks and just trying to diversify, I'm staying away from stocks now since market is highly overvalued. I'm looking for another investment vehicles and I thought real estate was it but guess that is at its peak as well. Maybe international markets, but will keep researching.

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I disagree with some folks here. Personally I would not put too much money in 401k that has zero liquidity and low rate of return. Investing money in stocks, dividend ETFs, or Real Estate etc doesn't mean you are not saving money, as long as you don't have spending problems. Max out 401k firm match and try other investment channels. Stock market is high now and will be higher in 10 years, regardless of ups and downs along the way.

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All that's said is true. But, spending money now is more fun than when you're 60. You could also get hit by a bus tomorrow and never see the day; finding the right balance is key. Life is for living, after all.

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You're doing great keep going. Tax incentives in your 401k and Roth will give u much better returns over real estate. If you think real estate market will go up (I don't personally) you can invest in that industry through funds

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Buy low, sell high. Problem is both stocks and real estate are high. Income/investment property is never a bad idea if you can float it.

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Real estate would be the opposite of diversification at this point.

You’d have 27k in stocks and 270+k invested in a single property in a single city. If the values drop 10% then you’re at 0 net worth. It’s extremely undiversified and risky until you’ve built up more significant wealth through stocks.

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Boggleheads is a great resource for forum/wiki or book

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Also make sure you are investing in the share purchase plan. You should make sure to match that out before you contribute anything beyond your 401k match

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If you're single and make more than $133K, aren't you ineligible for a Roth IRA?

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