How do you balance starting a business or becoming a landlord with investing in traditional assets like stocks, bonds, and cash/equivalents? Are there any good resources  that teach how this is done the "right" way?


I started a GC business in college and eventually had to give it up to pursue my career. Now in my late 20's I can't stop thinking of how one day I'd like to get back into the game with a series of LLCs doing general contracting and multifamily rentals (maybe even timber/AG too). Funding a 401k and Roth won't get me there, but I'm hesitant of the opportunity costs of not funding these tax advantaged accounts and of putting all of my eggs in the same basket.

No one can give you the perfect answer. Some will say of course you need to save. Others, may say go all in for your own business ventures. You must do what your instincts tell you.  

There have been many business men who have became millionaires by putting it on the line, and many more who have nothing.

There is no "right" way.

Set a goal and a year to meet that goal. Build a step by step business model to get there.  

How would anyone tell you the right way to meet your goals? They can't. That's akin to calling the dealership and asking them how much they can sell you a vehicle for without telling them what you want.  They will have no clue.

There is no set formula and it is never wise to put all your eggs in one basket but in the majority of cases investing in your own business will have much higher returns than any other investment. I own mutual funds a few rental houses to be diversified but I have found a dollar invested into my business returns about ten times as much as a dollar in put into the market or real estate.

No right or wrong way.

i would say 401k is probably the "Safer" or more conservative approach and is also a lot easier which is why it is so popular. For the avg joe six packs its nice to just have 10-15% auto deducted from your paycheck, dont even think about the market and 30+ years later when you retired you can cash out and live your golden years comfortably. The problem with a 401k is you are limited to $18,000 in contributions per year. Even if you max out your your contributions from day one and work for 35 years, assuming a 7% growth rate and 2% inflation rate you are only looking at about 1.4 million in present worth dollar. They key to retiring with stock investments is to get enough value built up that you can just live off of the interest and not touch the principal, allowing you a never ending source of income without doing anything and when you die it allows you to give a large inheritance to your heirs.

Buying investment properties, be it for flipping or long term renting is significantly more work and carries quite a bit more risk, however, the reward can be significantly higher. Good investors can see as high as 20% ROI when it comes to rental properties and eventually you also end up with the equity in the property once paid off along with an indefinite source of revenue. If you acquire enough properties it can actually be cost effective to hire someone to manage them all for you. Sure that reduces your profit, but instead of cutting grass, collecting rent, etc... you can wake up and just go golfing, shooting, take a trip to Jamaica, and the money just keeps coming in.

Ideally do both. Max out your 401k then save up and buy investment properties. Just remember money is made on the purchase, not the sale and be careful in the housing market, its a sellers market right now so deals are difficult to find. Im personally banking cash and waiting for the next recession to hit, where I will buy single family homes for pennies on the dollar and turn into rental properties.

If only buying rental properties this is true but if flipping it isn't. Buyers or sellers market doesn't matter as long as you are flipping in the average timeframe.

If you buy in a sellers market high, it will sell high if you are still in that market. If you buy low and are in a buyers market it will sell low.

Much less risk buying in a buyers market as you don't have to worry about the market collapsing. 2008 being the perfect example. I know quite a few people who got in the process of flipping six figure value homes when the market fell apart, most ended up filing for bankruptcy as hey couldn't cover the mortgages, had to short sale and at the same time lost their day jobs

Depends on how predictable the business is and what your percentages are.  If it's a real business that is well done no investment will be better than the business.   But don't be like my mom and run my grandpas business putting all the business dollars back into it so it will grow.  Then find out some relatives were trash and the will wasn't specific so the business got split 4 ways instead of 2.  The investment was wise the follow through wasn't to the tune of 1.5 million.  She would have been better to bonus herself for 15-20 years and invested it herself.  

Sorry for your friends

Were the day jobs in real estate as well?

I had some contractor friends lose their shirts during that time frame. New construction dried up at the same time they got stuck holding the houses they were trying to flip. The one guy that made out pretty good was the one building cheap duplexes for sale. He couldn't find a buyer for several years, but he had renters knocking down his door the whole time.

No, just avg joes who watched to much HGTV and thought they could flip houses because they knew how to open a can of paint.

In my area, buying properties as rentals doesn't make any sense right now.

Duplexes for $450k are getting $1,900/month in combined rents. But whack jobs are buying them left and right.

10 years ago a duplex here bringing in $1,900 a month could have sold for $100k. Now not selling for less then $250,000. Not as bad as your market but still shitty. I will not buy anything that at the most won't pay its own cost  in 8 years and that is stretching it.