Anonymous wrote:

Anonymous wrote:I'm making money in my Vanguard 2040 fund, so that's where I've put mine. I assume you understand the max 25% of your W2 wage limit with the solo 401K?

It shows me -17% YTD, how is it making money for you ?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Max it out. You already have a lot of exposure to real estate.

But what instrument do I invest it when it's in my solo 401k? Is there a guaranteed cash-like 5% bond ETF or similar? I am concerned about investing it into S&P tracking ETF, it doesn't look like deferred taxation benefits from shielding some of the business RE income in solo 401k outweigh poor returns at this time.

Honestly, I just wanted to prepay the remaining mortgage on one of the homes I own in 6 years when my 2% mortgage rate will hike to 5%, or just getting another investment property as I always select only those at min 7% return. It's below stock market but guaranteed, I never had a nerve watching hundreds of thousands evaporate on brokerage accounts

The time to buy is when they market is down, and right now, the stock market is down and the real estate market is still near its peak. If estate makes you comfortable, buy real estate. However, I have relatives like you who only buy real estate and some have done very well because they got lucky and bought in hot markets and saw lots of appreciation, and some died broke because their real estate value stagnated. Real estate is not risk free (it’s just looked that way if you lived in DC over the past ten years) and the carrying costs of maintaining property at high level are considerable. Do you really want to put all your eggs in one basket? I do own some real estate investments via REITS, but there’s no way I would invest even the majority of my assets in one sector.

The building next door to mine is over 100 years old, the 3rd generation of owners are still living off this income. It’s central DC. REITs are managed by other people who don’t have your best interests in mind, and you are remotely not familiar with carrying costs of the RE they hold. It’s totally different from self managed high quality RE. Carrying costs are not as high and you can always exchange or expand using 1031 to a larger newer project

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm making money in my Vanguard 2040 fund, so that's where I've put mine. I assume you understand the max 25% of your W2 wage limit with the solo 401K?

Yes I do. Do you also realize the employer /your single owner business entity can match that 25% ?

+1 We contribute a combined $120K into our 401k solo from our self employment income, but we are also 50+ so we get the extra catchup. But yes, you can contribute both your employer and employee's portion into your 401k. Employer's portion is a % of your self employment income; employee's portion is fixed.

Anonymous wrote:

Anonymous wrote:I'm making money in my Vanguard 2040 fund, so that's where I've put mine. I assume you understand the max 25% of your W2 wage limit with the solo 401K?

Yes I do. Do you also realize the employer /your single owner business entity can match that 25% ?

Anonymous wrote:I'm making money in my Vanguard 2040 fund, so that's where I've put mine. I assume you understand the max 25% of your W2 wage limit with the solo 401K?

Anonymous wrote:

Anonymous wrote:This is a complicated question, and we can’t really answer it did you. I would get Turbo Tax or some such and play around with different scenarios, with both regard to your current tax situation and retirement. If you’re going to have a lot of yearly income from your real estate in retirement, your tax bracket may be high enough that the tax deduction you get now may not be worth getting hit with taxes on big RMDs in retirement. Ideally, you’d have only as much income from RMDs as you actually need to live on.

You can manage non-qualified investments so that they produce little taxable income, so the question is whether you will be in a lower tax bracket in retirement when you realize the “income” from a qualified fund, and whether you’ll need the income in retirement, or whether you’d be better off paying the tax now and letting the money continue to appreciate in retirement without RMDs.

Same issue with paying off the mortgages — you’ll need to run the actual numbers and see how that affects your net taxable income over time, now and in retirement.

Thank you, this is my thinking as well. I just can’t figure out how to run this integrated analysis of all components. Do financial advisers offer this (without offering their products)?
I am concerned that at some point in older age I won’t be able to manage my RE as efficiently. What if I get sick, mentally disabled etc? There is only one heir who is mentally handicapped and won’t be able to help me in older age.

Anonymous wrote:This is a complicated question, and we can’t really answer it did you. I would get Turbo Tax or some such and play around with different scenarios, with both regard to your current tax situation and retirement. If you’re going to have a lot of yearly income from your real estate in retirement, your tax bracket may be high enough that the tax deduction you get now may not be worth getting hit with taxes on big RMDs in retirement. Ideally, you’d have only as much income from RMDs as you actually need to live on.

You can manage non-qualified investments so that they produce little taxable income, so the question is whether you will be in a lower tax bracket in retirement when you realize the “income” from a qualified fund, and whether you’ll need the income in retirement, or whether you’d be better off paying the tax now and letting the money continue to appreciate in retirement without RMDs.

Same issue with paying off the mortgages — you’ll need to run the actual numbers and see how that affects your net taxable income over time, now and in retirement.

Anonymous wrote:I'm making money in my Vanguard 2040 fund, so that's where I've put mine. I assume you understand the max 25% of your W2 wage limit with the solo 401K?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Max it out. You already have a lot of exposure to real estate.

But what instrument do I invest it when it's in my solo 401k? Is there a guaranteed cash-like 5% bond ETF or similar? I am concerned about investing it into S&P tracking ETF, it doesn't look like deferred taxation benefits from shielding some of the business RE income in solo 401k outweigh poor returns at this time.

Honestly, I just wanted to prepay the remaining mortgage on one of the homes I own in 6 years when my 2% mortgage rate will hike to 5%, or just getting another investment property as I always select only those at min 7% return. It's below stock market but guaranteed, I never had a nerve watching hundreds of thousands evaporate on brokerage accounts

The time to buy is when they market is down, and right now, the stock market is down and the real estate market is still near its peak. If estate makes you comfortable, buy real estate. However, I have relatives like you who only buy real estate and some have done very well because they got lucky and bought in hot markets and saw lots of appreciation, and some died broke because their real estate value stagnated. Real estate is not risk free (it’s just looked that way if you lived in DC over the past ten years) and the carrying costs of maintaining property at high level are considerable. Do you really want to put all your eggs in one basket? I do own some real estate investments via REITS, but there’s no way I would invest even the majority of my assets in one sector.

Anonymous wrote:

Anonymous wrote:Max it out. You already have a lot of exposure to real estate.

But what instrument do I invest it when it's in my solo 401k? Is there a guaranteed cash-like 5% bond ETF or similar? I am concerned about investing it into S&P tracking ETF, it doesn't look like deferred taxation benefits from shielding some of the business RE income in solo 401k outweigh poor returns at this time.

Honestly, I just wanted to prepay the remaining mortgage on one of the homes I own in 6 years when my 2% mortgage rate will hike to 5%, or just getting another investment property as I always select only those at min 7% return. It's below stock market but guaranteed, I never had a nerve watching hundreds of thousands evaporate on brokerage accounts

Anonymous wrote:Max it out. You already have a lot of exposure to real estate.