Today’s REI Classroom Lesson

Retiring wealthy is a goal for most people in life. Dmitriy Fomichenko explains how using a Solo 401k plan can be utilized to your benefit, as being self-employed or a small business owner.

REI Classroom Summary

Listen in as Dmitriy explains the power a Solo 401k plan has to offer and how you can invest with alternative assets inside of it.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. Now, let’s meet today’s expert host.

Dimitri: Hello, my name is Dimitri. I’m the host of the REI classroom show and today’s topic is how to retire well with solo 401k plan.

Mike: This REI Classroom real estate lesson is sponsored by uglyopportunities.com.

Dimitri: If you are looking towards future, towards retirement, then you’ve got to look into the solo 401(k) because it is considered one of the most powerful investment retirement vehicles out there. And the solo 401(k) plan is set up for those people who are self-employed or own a small business and one of its key features is the ability to make large contributions.

It actually allows you to contribute up to $59,000 per year from your income. So it’s not only allowing you to build wealth quickly but on top of that it also allows you to defer your income from taxes, and I’m just going to give you a quick example to illustrate the power of the solo 401(k)

Let’s say you’re a self-employed individual, because a solo 401(k) plan are designed for those people who are self-employed and so you’re making $100,000 a year in income and out of that you shelter in about $20,000 into your solo 401(k) plan. You actually can do more. You can accelerate your time but let’s just use this example. And you’re doing that for the next 20 years, from age 40 until age 60.

And if you invest in using a self-directed solo 401(k) plan, if you invest in alternative assets outside of the stock market, something that you have much greater control, something that’s actually less risky than the stock market, and actually providing better terms in investment. You can invest in tax liens and trust deeds. In real estate you can do hard money lending.

So if you do that for the next 20 years and average about 10% return on your money, you can end up with just little over $2 million in your solo 401k. So when you have $2 million you can just deploy this capital to work for you and you can simply live off of the interest. Off of the return in investment. When you have $2 million and you get 10% return on your money, that’s $200,000 at retirement. Now, a solo 401k plan also allows you to invest tax free using the roth component. So if you did that that could be a tax free money, or a portion of that could be tax free.

This is a great investment vehicle if you are self-employed. If you’re a real estate investor you’re probably self-employed. You’ve got to look into that. You’ve got to use that to complement what you’re currently doing to accelerate your retirement. I hope you research that for yourself and thanks for joining us and we’ll see you on the next show.

Mike: HomeVestors, the We Buy Ugly Houses folks is a franchised system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro or looking to take your business to the next level or whether you have no experience at all but a burning passion to be successful at real estate investing, please visit FlipNerd.com/ugly to learn more.

Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.

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Dmitriy is the founder and president of Sense Financial Services LLC, boutique financial firm specializing in self-directed retirement accounts with checkbook control. He began his career in financial planning and real estate investing in 2000. He owns multiple investment properties in various states and is a licensed California Real Estate Broker. Over the years, he has instructed hundreds of investment and financial planning seminars and has mentored thousands of investors.