When I started flying as an airline pilot I did the traditional thing- Invest a portion of my paycheck into the company-provided 401(k) and max it out.
After all, everyone does this so it must be the best thing to do, right?
Some background on the 401(k). They were created as a supplement to pension plans. They were not intended to be the ENTIRE retirement plan. But companies saw that 401(k)’s were growing in popularity and it was removing some of their headaches so they decided to start phasing out the pension plans.
Now the 401(k) is a little bit of a gamble. We hope that whatever stock, mutual fund, or index we have our money invested in will have grown to an acceptable amount by the time we reach retirement. I’m not suggesting you should not invest in the company provided 401(k) but I’m suggesting to look at other options to complement your retirement plan.
At the time of writing this article (mid-2022) many are experiencing the decline in the stock market.
People’s 401(k) portfolios have gone down as much as 40%.
If you are counting solely in the money in your 401(k) for retirement and your portfolio drops 40% – What are your options? Maybe work a few more years until the stock market grows past the level you were once at and reaches the new level you need to be at depending on what happens with inflation so that you can retire.
If you are an airline pilot and you turn 65 years old you may not be able to go back in the cockpit unless you fly for some corporate company. But let’s be honest, do you want to keep doing that? Some do, some don’t. It is better to have options.
This is why I suggest that you study and educate yourself about Real Estate syndications.
While the stock market had been plummeting, all of my investments kept cash flowing. Even throughout the pandemic I kept getting wires in my bank (the new version of mailbox money).
Wall Street does not promote these alternative options because they can’t make money with any investments outside of what I previously mentioned (Stocks, mutual funds, and indexes). This is why it’s no surprise that not many people know about them.
There are great returns in this investment strategy. And one of my favorite things is the alignment of interest. The compensation for operators running a real estate syndication is heavily weighted towards the successful performance of the asset. During distributions passive investors get paid before the operators. This motivates the syndicator team to ensure they do well. If you want a breakdown of how a real estate syndication works, check out my article here.
Most real estate syndications that we do have a projected timeline of 3 to 5 years and a 2X Equity Multiple return on your money. Meaning you invest $100,000 and it turns into $200,000.
What’s even better you don’t need to become an expert real estate investor to be able to invest.
You just need to find a sponsor or syndicator like us that you like and trust and who has a proven track record of delivering returns at or above their projected numbers, and invest with them. If you you want to join our Investor Club Click Here.
CAN YOU LEVERAGE YOUR 401(K) TO INVEST IN THESE TYPES OF INVESTMENTS?
The answer is yes. Some companies may offer a SDIRA or you can roll your 401(k) over to a plan that your custodian deems acceptable to allow you to self-direct your investments.
Although I understand that you may be wanting to stay on the company plan to take advantage of their company matching. Many people just keep contributing to their 401(k)’s and save up cash on the side to invest in Real Estate syndications.
That’s the plan I follow. I stack up cash, then invest it. I stack up more, then invest it again. Once older syndication deals get sold, I grab the profits and reinvest it into new syndications.
LOOKING AT THE NUMBERS
Historically a 401(k) portfolio will generate a return of 5-8%. Meaning at best you will double your money every 9 years. At worst 14.4 years. Therefore it’s safe to say there’s an average of somewhere between 11.7 years to double your money.
Bringing back the numbers we saw before, in a real estate syndication we project to double our investor’s money every 3-5 years.
It’s easy to see how quickly you can multiply your capital for retirement.
You may be able to retire sooner than you think. Or you may not want to retire BUT at least you’ll know you have the ability to do so. You may encounter a situation that grounds you from flying at some point (hopefully not) and you may be glad you accrued capital fast.
If you want to find out even more about what we are doing visit our website.
We have a lot of educational content for investors to get informed and make the right decisions about their future.
Satch Bernhardt
CEO | V1 Capital
