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I did use my 401K for the purpose of funding a business. Not all of it, just some of it. And I am doing fine, and have a healthy balance sheet, and my business is growing. I used it for a franchise, however, and would never risk it in creating my own business from scratch. That's to much risk. But, if you find the right franchise, with a good solid success history, it will minimize the risk, you will be generating revenue usually within 3 or 4 months to start paying the bills, and usually within 12-18 months, you can be in profit. And, I am now contributing back to my 401k.
401(k) money should be for the following purposes:
1) If you are in such desperate straits that your house is going to be repossessed.
2) If your mother, daughter, son, or wife needs a lung transplant and the insurance company won't pay for it.
3) You are fleeing the country, never to return.
That's about it. And certainly not to start a business.
401(k) money should be for the following purposes:
1) If you are in such desperate straits that your house is going to be repossessed.
2) If your mother, daughter, son, or wife needs a lung transplant and the insurance company won't pay for it.
3) You are fleeing the country, never to return.
That's about it. And certainly not to start a business.
401(k) money should be for the following purposes:
1) If you are in such desperate straits that your house is going to be repossessed.
2) If your mother, daughter, son, or wife needs a lung transplant and the insurance company won't pay for it.
3) You are fleeing the country, never to return.
That's about it. And certainly not to start a business.
I see where you are going and agree with you, and all others on this subject. Regarding, #3, that is hilarious and I'm seriously considering that option more and more with these jagaloons that we call "our leaders".
I will agree with you on #1, though. With real estate being the way it is, not unless my house is darn-near paid off, or if it's paid off and just behind on taxes will I use 401K to save it. Otherwise, they can have it.
Regarding, #3, that is hilarious and I'm seriously considering that option more and more with these jagaloons that we call "our leaders".
I dunno man, look around the world at any place that seems worthy of moving to, you'll likely find leadership with just as high a jagaloon-factor except with far more pervasive corruption and cronyism.
Politics is politics, move somewhere else and it is same crap different toilet.
I know this is an old thread - but it is relevant to my situation.
I completely understand the word of caution - but I'd like to add a spin / additional note of question.
What if the opportunity to buy the company that I have been at for the past 26 year presents itself? (and that is my situation) I have the operating capital to get things going... but I am seriously thinking about using my 401k to nd my down payment for the company.
As i said above, I have been there 26 years, the company has a mature customer base, and has been servicing a segment of the construction industry for over 35 years.
Would the fact that its a mature business and not a food joint sway any of your opinions?
I am very interested to read your feedback.
Thanks,
I hate when people give hard and fast rules about finance.
You KNOW your situation better than anybody on these boards. Just be very prudent and understand the business in terms of cash flow, future revenue outlook and what things affect profitability and how much risks is involved if those things changing.
The reason that most people never achieve anything great in life is they don't take any risk.
Last edited by JazzyTallGuy; 04-02-2012 at 07:40 PM..
401(k) money should be for the following purposes:
1) If you are in such desperate straits that your house is going to be repossessed.
2) If your mother, daughter, son, or wife needs a lung transplant and the insurance company won't pay for it.
3) You are fleeing the country, never to return.
That's about it. And certainly not to start a business.
Although, I can understand where you are coming from.
I disagree that you can't use your 401K to start a business. I'm not talking about just any business, but a solid proven business. Done the right way, there are no taxes and penalties, you end up funding your business with no debt, and you can end up returning more on your 401k then you would have letting it sit, if you build your business to be profitable. Plus you are able to offer a 401k to your employees, as a benefit. Once you reach retirement age, and you sell your business, most likely, you would have started contributing to your 401K again, so you should still have a nice nest egg, plus the value of your business. Most 401k's go up and down in value with the stock market, so you aren't guaranteed to have a lot when you retire anyway.
Now, I wouldn't use my 401k to save my home, chances are, if I am in that dire straits that my home is going to be repossessed, I probably need to let it go, it usually means that I am having a hard time keeping up with the payments. And, in today's economy many people are upside down in their homes. I would move and start renting at a rate I could afford.
Personally, I view owning a profitable business as a better asset (and investment) than owning a home. The business is a cash generator, your home is a cash consumer...
Now granted, owning a business is a risk, but so is owning a home, and getting into business for yourself, can cost less then buying a house. But, if you don't have faith in your own skills, you shouldn't own a business, but if you do, and you have managed successful businesses before, and you have the skills, it may be a right for you, and therefore, right to use your 401K. Never say never.
401(k) money should be for the following purposes:
1) If you are in such desperate straits that your house is going to be repossessed.
2) If your mother, daughter, son, or wife needs a lung transplant and the insurance company won't pay for it.
3) You are fleeing the country, never to return.
That's about it. And certainly not to start a business.
That's one opinion.
By your "rules" someone with $700k in retirement shouldn't roll $75k into a self-directed 401k/IRA to collateralize a loan.
Every situation is different. Using that money to grow wealth is a little different than using it to build a deck.
I just read the post(from a year ago) about using your 401 k money to buy a biz,and I was wondering if you did it or what happen?
I am wanting to buy a franchise and the only way that I know of to do it is use my 401k money and I see a lot of different opinions on doing that.any help would be appreciated.
Thanks
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I agree with you.
