piggybacking on 401 question?
If i decide to cash out my 401k what investment (MMA, savings, etc) could I invest in to receive the largest return? I plan to buy an investment property next year and I would like to have money available.
Public Comments
- always remember-the larger the return the higher the risk. We can all give you ideas on this site, but ultimately, if we "really" knew that answer we would all be rich.
- If you cannot get a 100% loan on the investment property, then you shouldn't be fooling with it. Thus, you really don't need 401K money to buy good investment property. Good is defined as property that earns enough to pay for itself.
- Remember, with the penalties and taxes on a 401k cashout, I hope your looking at property valued at about 60% of your 401k balance, and not the full amount.
- 1) You should be aware of the penalties for early withdrawl from a 401K can be around 20%. This is unless you are qualified to make withdrawls (i.e. 55 1/2 or older). 2) Assuming that you make the withdrawl, due to your timeframe of needing the money over the next year, your best option would be something like a money market account which earns around 5% annual interest. 3) When you ask the question... "where can I get the largest return?" you ask a pretty open ended question. You could go to the casino for example and play one hand of blackjack and make a 100% return. The point being that while you want to make a lot of money you need to be aware of the risks associated with investments, and realize the ones that can make you the most money can also lose you the most money. So although investing in things like the stock market can make good financial sense, they aren't a good idea for your situation with needing the money so soon. 4) A better option for you might be to find a loan for the investment property, so that you can hold on to some cash. Either keep the money in the 401K or if you take it out invest in mutual funds that can earn in good times 15-20% where as your interest on a loan might be 6-7%. So basically you would be making more from your investments than you would be paying in interest on the loan. 5) Sorry for being so winded and I hope this helps you!!
