Dreaming of retiring before the traditional age of 65? It’s possible with the right combination of investments, including rental properties and other financial tools. Whether you’re just starting out or already building your nest egg, these eight strategic steps can help you create a diversified portfolio and reach financial freedom much sooner than you think.
Welcome to the Real Estate Rookie podcast where hosts Ashley Kehr and Tony J. Robinson lift the veil on their personal retirement plans. They discuss their investment journeys, the adjustments they’ve made over time, and the investment ‘order of operations’ that can help you build long-term wealth. From 401(k) employer matches to HSA accounts and 529 plans this episode provides a clear roadmap for achieving your long-term financial goals.
Ashley and Tony’s Investment Journeys
Ashley and Tony’s introduction to retirement planning began with their first jobs after college, where they were introduced to 401(k) plans. Ashley’s first job lasted only six months, but she managed to roll over her 401(k) into a Roth IRA with the help of a friend. She later consulted a financial advisor who set up 529 plans for her children, although she found the service costly and not particularly beneficial.
Tony’s first job after college did not offer a 401(k) but his subsequent job at Target did. He contributed up to the employer match, which was a common practice for him. Later, while working at Tesla Tony took advantage of the company’s Employee Stock Purchase Program (ESPP) which allowed him to buy Tesla stock at a 15% discount. This investment proved to be highly lucrative and provided the foundation for his real estate portfolio.
The Role of Real Estate in Retirement Planning
Both Ashley and Tony entered real estate investing with the goal of achieving financial freedom. Ashley initially focused on cash flow but later strategized to hold properties with high appreciation potential. She aimed to have salable assets with easy exit strategies and significant equity built up for future needs.
Tony, on the other hand, was influenced by his father’s advice to invest in assets that pay regularly. He focused on short-term rentals and believed that holding these properties for the long term would provide substantial loan paydown and appreciation. While both acknowledged the work involved in managing rental properties, they saw the long-term benefits as crucial for their retirement plans.
Diversifying Your Investment Portfolio
Diversification is key to a robust retirement plan. Ashley and Tony discussed various investment vehicles, including 401(k) plans, HSA accounts, Roth IRAs and 529 plans. They emphasized the importance of taking advantage of employer matches, maximizing contributions to tax-advantaged accounts, and exploring options like the backdoor Roth IRA for high-income earners.
The HSA account, in particular, offers a triple tax advantage, making it an excellent tool for saving for future medical expenses. The 529 plan is another valuable resource, allowing after-tax contributions to grow tax-free for educational purposes. Ashley shared her experience with 529 plans for her children and the flexibility of changing beneficiaries if needed.
Ashley and Tony also highlighted the importance of having multiple avenues for accessing capital, whether through Roth IRAs investment properties, or other assets. This approach ensures financial flexibility not just in retirement but throughout life.
As they continue to navigate their investment journeys, Ashley and Tony encourage listeners to explore diverse investment options and create a well-rounded portfolio that supports their long-term financial goals.
