Lux Investing
How can i invest my 401k money outside of stocks and bonds?
I've heard real estate is one option.
Public Comments
- Putting more money into the 401(k) has a much bigger (and more certain) effect than savvy investing. You could invest in real estate investment trusts if it's self-directed.
- Some 401ks may let you invest in REITs, real estate investment trusts, but if you want to buy a house and flip it you are sol
- There are custodians which allow you to buy real estate in an IRA. One example is Pensco. It only matters what your custodian allows you to do.
- You can only invest a 401(k) in the options offered by your employer's plan. Some offer a "self-directed" brokerage account option, others only a handful of mutual funds. Look at your plan.
- you can only trade securities in your 401k, the only way you can get real estate into your plan is through REITS, ETFs, or Funds. You should verify this with your 401 administrator but the chances are going to be slim to none
- It's possible but not a good idea. First, your employer must allow it. Second, your employer must hire a special trustee that's more expensive than any normal trustee. Third, ALL costs associated with the property must be borne by the 401k account that holds the real estate. That means repairs, taxes, insurance, etc etc etc.... You will have to either a) continually contribute money to this account or b) liquidate holdings to pay for it. Fourth, you can't do any of the work mentioned above...you must hire it done by someone that is not associated with you. Fifth, you can't use the property in any way shape or form. Nor can you allow someone who is remotely related to you use said property (rent or free). And lastly....no deductions on your taxes for rental losses. All of that for a return that will likely be lower than the stock market? Not a good idea. Want real estate inside an IRA or a 401k? Buy a REIT....
