Solo 401(k) vs IRA

Smart moves Abe. The solo 401k is key to getting that mattress full of money for retirement. Of course, nothing stops you from putting the same money aside in a taxed account in the meantime. I have a friend that was a saving-fool and retired at 58 when he got fed up with working. A decent portion of his retirement fund was not in an IRA or 401k. Meanwhile, a former neighbor was incredibly foolish with their investment strategy and the last time I saw him he said "I'm going to have to work for the rest of my life".

Save now, don't pay later.
 
Anyone can say anything about safety and rules and regulations. It doesn't mean a thing when it all comes crashing down. Maybe they will make good on a promise and maybe they won't. You don't know. Don't take anyone's word about anything in regards to the safety of your money. Here is one of the most respected money managers talking about safety - https://www.youtube.com/watch?v=ab1NTIlO-FM
 
Paul F said:
Smart moves Abe. The solo 401k is key to getting that mattress full of money for retirement. Of course, nothing stops you from putting the same money aside in a taxed account in the meantime. I have a friend that was a saving-fool and retired at 58 when he got fed up with working. A decent portion of his retirement fund was not in an IRA or 401k. Meanwhile, a former neighbor was incredibly foolish with their investment strategy and the last time I saw him he said "I'm going to have to work for the rest of my life".

Save now, don't pay later.
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My main goal is not to maximize returns, per se. Or at least, I don't like to gamble. I don't chase the thrill of free money. I'd just like to sock away as much as I can and put it in an investment that will grow. Deferring taxes seems like a good way to start with a larger sum that will grow exponentially. Minimizing risk is way more important to me than maximizing returns.
 
ahalpert said:
So, the plan is to get an EIN
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I'm suprised you don't have an EIN already. I haven't given out my real SS# to anyone for many, many years. I also use a box at a local UPS store as my mailing address. But other than that, your investment scheme pretty much mirrors what I already have done. I could quit working anytime I want to now, so it is rare for me to work on anything that doesn't interest me beyond just the money. That is a nice position to be in.

The secret to a happy life: Spend less than you earn, and put away as much as you can for future needs and let interest and growth work in your favor rather than the opposite.
 
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ahalpert said:
Or at least, I don't like to gamble.
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I gamble with a certain percentage of my portfolio. Sometimes it pays off, and sometimes it doesn't (don't ask about Virgin Orbit), but I never gamble more than I am willing to let go all they way to zero. And I never pretend those risky stock buys are "investing". It is gambling.
 
Doug Jensen said:
I'm suprised you don't have an EIN already. I haven't given out my real SS# to anyone for many, many years. I also use a box at a local UPS store as my mailing address. But other than that, your investment scheme pretty much mirrors what I already have done. I could quit working anytime I want to now, so it is rare for me to work on anything that doesn't interest me beyond just the money. That is a nice position to be in.

The secret to a happy life: Spend less than you earn, and put away as much as you can for future needs and let interest and growth work in your favor rather than the opposite.
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Doug, I agree with everything you said. There is a big difference between working because you have too and working because you want too.
 
Could anyone recommend a bank with a high-yield savings account that they like? Based on the reviews I've read, it looks like the accounts with the highest yields have miserable service. Presumably, one needs to find one with a slightly lower yield in order to have a properly functioning account with no surprise fees...
 
ahalpert said:
Is that just an identity theft precaution?
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Yes. Protecting your SS number is extremely important, especially when you run a business and work for yourself. I'm surprised YOU don't have an EIN already. Do you also use your home address for business?
 
Doug Jensen said:
Yes. Protecting your SS number is extremely important, especially when you run a business and work for yourself. I'm surprised YOU don't have an EIN already. Do you also use your home address for business?
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I use my home address for business, although I'm apprehensive of what you'll say in response to that admission. I think that if I get an EIN and keep using my address, I'll probably be fine
 
ahalpert said:
I use my home address for business, although I'm apprehensive of what you'll say in response to that admission. I think that if I get an EIN and keep using my address, I'll probably be fine
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Well, you can do whatever you want, but if someone was asking for my advice as they got started freelancing or running a small production company, I would suggest they immediately get an EIN, rent a box at a UPS store to use as the official business address (and to securely receive inbound mail/packages), and of course, open a checking account using the business name. All pretty simple stuff that could be done in an afternoon. Not only for security, but also to have a more professional front.
 
Paul F said:
Anyone can say anything about safety and rules and regulations. It doesn't mean a thing when it all comes crashing down. Maybe they will make good on a promise and maybe they won't. You don't know. Don't take anyone's word about anything in regards to the safety of your money. Here is one of the most respected money managers talking about safety - https://www.youtube.com/watch?v=ab1NTIlO-FM
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Hi Paul, quick question to you or anyone else who might know --

So, I'm opening a solo 401k at Vanguard. I told them i was planning to open a different one next year at another brokerage and they told me that it's generally advised to have only one solo 401k. (My plan had been to open 7 but to fund only one each year to make it easy for me to stay within the contribution limits.)

I looked online and people are saying that having multiple solo 401ks is a red flag for auditors.

So, do you feel like I would be secure having all my retirement investments at a single brokerage, even if they're spread across at least 7 different vehicles? I feel like it's a better idea to use multiple brokerages, no? I also think that I'll only have SIPC coverage on the first $500k in the 401k...

Thanks
 
I have 11 brokerage and investment accounts, but none are a 401K and only one is an IRA that I max out each year. I prefer to use regular accounts so that I can buy, sell, and move money around without any penalties or strings attached.

BTW, you can get more than 5% now on regular CDs. But individual stocks have always done best for me.
 
Doug Jensen said:
I have 11 brokerage and investment accounts, but none are a 401K and only one is an IRA that I max out each year. I prefer to use regular accounts so that I can buy, sell, and move money around without any penalties or strings attached.

BTW, you can get more than 5% now on regular CDs. But individual stocks have always done best for me.
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But there is a tax advantage to using an IRA or 401k as opposed to a regular account, no? Either up front by deferring or on the back end if you went Roth?

With a solo 401k, I can invest up to 25% of income + $22k. (Limit $66k.) So, depending on one's income, one can invest more in this vehicle than in other types of IRAs.

Personally, i have little interest in playing the market. I was going to invest mostly in ETFs, S&P 500 type stuff. And stay passive. Except now my wife says she doesn't want to invest in weapons manufacturers, so I have to figure out how to avoid that.

I opened a regular old savings account recently at CIT Bank that returns 5%. I was going to keep excess cash there unless it gets big enough that some should go into stocks. But we have enough home improvements that need doing that that should take a while.
 
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You might be right. I'm too close to retirement to care or switch now. :-)
I generally buy and hold anyway, so there are no tax consequences until I sell something. And even then, long-term capital gains aren't taxed at your regular rate. And any losses also offset the gains. No matter what you decide to do, I suggest you diversity and not put everything where there are strings attached.

Don't forget real estate too. I have some properties in Florida that have have more than doubled since I bought them over the last 6 years. Not to mention the rental income.

The strangest "investment" I have is seven 100 oz. bars of silver bullion that I accepted as payment many years ago from a client. They look cool.

Bottomm line --- pay off all debt and diversify.
 
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