Borrowing from 401(K) for the purpose of investment? Sounds like a good idea!
This is Part 1 of a 9 part series focused on educating others on retirement accounts, alternate means of investing with these accounts, and ultimately how we can provide multiple forms of investment opportunities with these accounts within our business in which you can attain high rates of returns at substantially low risk.
Newspapers are every day telling us stories how the US economy is set to look up in 2014 after suffering through hard times in recent years. There is finally some good news from sectors like real estate. The time has come when lots of Americans are planning to invest their money with hopes of getting great returns. However, they are facing a peculiar, catch-22 situation – the bad times left people with no capital or savings to leverage the benefits of good times. What to do in such a scenario?
There is an option but it comes with a common quandary. The option is the money lying in your 401(K) or IRA (Individual retirement account), but the quandary is – should you or should you not borrow from your retirement for the purpose of investment? This topic has been the source of such passionate, yet directionless discussion that people are left confused on whether it is or isnt a viable and safe way of investment.
The problem lies in the fact that the debate has somewhat lost track in the melee of opinions that we hear every day from financial experts from TV and newspapers or in our friend and family circles. The most important thing to understand here is when to borrow and when not to borrow from an account that is meant to help you survive through difficult times after you retire. With most experts on the subject being heavily invested in the stock market, it is rare that someone will encourage you to remove your money from their source of success in order to invest elsewhere.
Keep in mind, borrowing from your 401(K) account or IRA to purchase a car or support lifestyle expenses is different from borrowing to make an investment. As the economy is gradually shaping up, you can consider borrowing from your 401K or IRA for the purpose of investment. And believe me, it may prove to be a financially rewarding decision in the long run. Keep following the rest of our 9 part series to learn more!