"Put your saved money into secured, sacred (untouchable) accounts," he writes on Entrepreneur. "Never use these accounts for anything, not even an emergency."
A secured, sacred, untouchable account... like a 401k?
A secured, sacred, untouchable account... like a 401k?
"... To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access."
I assume this is just poor reporting.
He misses a massive thing about the 401K.. companies may match and It can lower your taxable income. If you are really wealthy this matters little but if you are that magical $250K putting money into a 401K is probably worthwhile.
But in general I sort of agree that the 401K is massively overrated. It is just a reminder of how messed up the tax codes are. IMO just make zero loophole flat tax percentage on income. No capital gains tax. Just a percentage tax on income. If someone tries hide income go after them hardcore.
Owning rental property IMO (ie depreciable asset) in the right locations I found more effective than a 401K and many retirement accounts but I still have old 401Ks and even a Roth IRA on autopilot. The US embraces property ownership too much (tax deductions) which makes investing in other ventures less desirable (which probably hurts the country overall).
Exactly. Most match up to 3.5%-5% - which is a lot of free money (and this doesn't even take into account if you invest your 401k/IRA)!
Since the author advocates putting your money into a savings account instead, author is forgoing a lot of free growth, while gaining virtually no security.
You're aware the tax brackets are graduated right? Only amounts over the bracket are taxed at that year, not your entire income for that year.
The only time money should be pulled out would be for a serious emergency and even then as a last resort its pretty stupid as bankrupcy would make more sense as bankrupcy courts can't go after your 401k.
If you're regularly pulling money out of your 401k then you're doing retirement planning wrong.
This Yahoo writeup is poor compared to the original, but what he means is that once you have your emergency fund ($100K in this case), put the rest of your money into "untouchable" (not literally, but that's how you treat it) places so that you can make investments with it later (in Cardone's case, nearly always property purchases).
The purpose of a non 401k is to invest so you don't have to wait until you are 65 to retire.
I think the most sensible approach is to contribute enough to your 401k that you max out an employer match (hopefully you have one of those), and then invest the remainder of your savings in the market.
But waiting until you have 100k in cash before you do something with it seems crazy to me.
The theory is that without a healthy emergency fund, you won't take risks on better investments later on.
I buy into this as I played it pretty safe until I had a year or two's income saved. I then decided to do my own thing for a bit, and now I'm running a healthy business that I wouldn't have been otherwise (basically a freelancer to business owner transition).