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401K for the ceo

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Kelly!

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Apr 1, 2021
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I got done reading The Millionaire Fastlane about a week or two ago. In there MJ talks about NOT taking part in the 401K. He makes an excellent point that Warren Buffet does not have a 401K.
So, my question is, as the owner of a company that’s doing pretty well (not millionaire status, not even close, but living very comfortably), should I keep my 401K or toss it in the wind and use that money to invest in other vacation/short term rental properties (my second business, of which I currently have two vacation properties) or other investments.
 

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Kelly!

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Apr 1, 2021
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Which one do you think will bring a higher ROI?
Investments will for sure, in the perfect world! Nice knowing I have a backup with the 401K, but still that’s measly compared to what the right investment property could potentially bring in. Currently I have one on the coast that’s doing great, it’s booked non stop. The other, near a ski resort, isn’t doing quite as well. With the housing market the way it currently is (sellers market) it makes me hesitant!
 

ljean

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A self-directed 401k can own real estate.
 

MJ DeMarco

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He makes an excellent point that Warren Buffet does not have a 401K.

Not sure that's what I said, doesn't sound like it as I wouldn't be privy to that information. I probably said something to the effect that Warren's 401(k) is not why he is rich.

Nothing wrong with utilizing tax-advantaged plans. I have a ROTH IRA, a regular IRA, and an SEP-IRA -- to the point above however, these vehicles are not responsible for the life I enjoy today. They're tools in the toolbox.
 

Kelly!

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Not sure that's what I said, doesn't sound like it as I wouldn't be privy to that information. I probably said something to the effect that Warren's 401(k) is not why he is rich.

Nothing wrong with utilizing tax-advantaged plans. I have a ROTH IRA, a regular IRA, and an SEP-IRA -- to the point above however, these vehicles are not responsible for the life I enjoy today. They're tools in the toolbox.
Ahh, yes. My bad for misquoting you!

Thanks for the reply :)
 

PapaGang

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I am no expert but I distinctly remember reading Thomas J Stanley's book Millionaire Next Door, and he dedicates a chapter to the financial plans of the wealthy. I recall that sometimes business owners can set up their own pension plan as a way to reduce realized income and reap the benefits of investing in appreciating assets.

I'm sure an astute CPA can outline the benefits and downsides of each. The answer is most likely dependent on your situation.

I am putting most of my money into other business ventures or property since they seem to have a better ROI, but often carry more risk.
 

thechosen1

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I am no expert but I distinctly remember reading Thomas J Stanley's book Millionaire Next Door, and he dedicates a chapter to the financial plans of the wealthy. I recall that sometimes business owners can set up their own pension plan as a way to reduce realized income and reap the benefits of investing in appreciating assets.

I'm sure an astute CPA can outline the benefits and downsides of each. The answer is most likely dependent on your situation.

I am putting most of my money into other business ventures or property since they seem to have a better ROI, but often carry more risk.
This is definitely true. In my family's business, the owners have certain structures in place like all other employees because they help with taxes. The government sets up all of these rules and things and sometimes the best option you have is to take advantage of them, even as the owner.

Our CPA advises and helps set up a lot of this stuff.
 

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