Beyond Retirement Funding

Andrew in Albany and his wife are debt-free and ready to fund their retirement. Beyond retirement funding, what do they do to build wealth? Dave explains.

QUESTION: Andrew in Albany and his wife are debt-free and ready to fund their retirement. Beyond retirement funding, what do they do to build wealth? Dave explains.

ANSWER: The next step is attacking the mortgage on your home. Then I would limit my investments into retirement building to 15%, and everything else I can scratch up, I’m going to pay off the house. When the house is paid off—that’s Baby Step 6—move on to Baby Step 7, the last step, which is to become very wealthy and give a bunch of it away. Let’s fast-forward to there, and say your house is paid off. What’s the next step? We want to maximize everything we can with 401(k)s, Roth IRAs or anything else we have available to us to shelter money from the government with a retirement plan. Maximize every retirement plan that’s available after the house is paid off. Then we’re left with taxable investing, which is where I am today, and the only investing I do is very simple and very clean. I personally buy growth stock mutual funds and real estate I pay cash for—no mortgages. That’s where I park wealth. But you max out every dime you can put into retirement, and above that, I buy real estate and mutual funds that have a low turnover ratio so they don’t activate the taxes.

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