Investing for Retirement in 401(k) or Real Estate? Good News Is, You Don't Have to Choose

Written by: Adiel Gorel
Max Out Your 401(k) – And Also Invest in Real Estate One of the questions that occurs to investors about investing for retirement is about their 401(k) plan and whether this is a better option than investing in real estate. Luckily for investors, they don't have to choose. It is not an either-or situation. It […]
Published on December 26, 2023
Last update: ago
Est. Reading: 3 minutes

Max Out Your 401(k) – And Also Invest in Real Estate

One of the questions that occurs to investors about investing for retirement is about their 401(k) plan and whether this is a better option than investing in real estate. Luckily for investors, they don't have to choose. It is not an either-or situation. It is perfectly possible – and, in fact, desirable – to do both. One can contribute to one’s 401(k) as an employee and also invest in real estate at the same time. This can radically alter one's financial future for the better.  Here’s what I would advise a smart investor with an eye on investing for retirement to do…

Max out your 401(k).

investing for retirement

Max out your 401(k), but don't forget that it is real estate investing that will really help you build wealth. – Adiel Gorel

The 401(k) plan is an excellent provision for employees to invest for retirement. It is a contribution plan where people make pre-tax contributions of a certain amount each year into a fund. The great thing about it is that employers are required to match the contribution that is made to the fund. With money coming from the employer as well as the employee, this is a fund you can grow quickly and consistently.

Another benefit of the fund is that it is a tax-saving device. The contribution to the fund is not taxed (tax is deferred), and the fund earns compound interest. Further, this is the employee's plan, and it stays with them. So, even if they change jobs and move to another place of work, they can take along their fund.

For all of these reasons, the 401(k) is a great way to invest for retirement. My advice is to max out your 401(k). Contribute as much as the statutory limit permits or as much as you can afford to put into it. Use any surplus funds you have saved to make down payments for rental homes. If you want to know more, you may want to check out my Remote Control Retirement Riches course or the book.

Down payments for buying single-family homes.

Buying an investment home is actually a lot less complicated than you may think, and that 401(k) fund can help. Since the required down payment can be as low as 20% of the value of the home, you can finance this with the help of your fund. The rest, you finance via that most wonderful financial gift called the 30-year fixed-rate loan. This loan means that your mortgage payment never rises regardless of price rise or inflation.

Be sure to choose good quality homes in nice neighborhoods, preferably in the larger metropolitan areas of the Sun Belt states. This could change later, but right now, there are good investing opportunities in these areas. New homes here are still affordable and likely to appreciate. This is also where young families are looking to live and rent nice homes, making it a great option for investing in retirement.

To sum up, invest in your 401(k) for sure. However, consider residential real estate investing to really, radically change your financial future. That needs something more, which is buying rental homes. Check out my podcast for more details and strategies, or simply call us if you have any questions.

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