Firstly, please pardon any problems with formatting, This is my first post.
Where I work we get a 6% match on our 401k that vests instantly. A buddy that I have wants to contribute 6%, get the match, and then withdraw his balance every few years (taking the 10% penalty on top of his normal income tax of 25%) with the goal of using this money to invest in real estate. His argument is that even with the penalties, he will earn more having the freedom to invest his money in real estate rather than in the funds available in a 401k. I personally am pushing for moderation in his investments (a nice mix of real estate and mutual funds) however my layman's knowledge is not enough to concretely pin down what (if anything) is wrong with his plan. My instincts tell me that he would be cheating himself, but I cannot prove what I intuitively feel.
Please help me understand the pros and cons of this, as I feel the knowledge he and I have of these topics are surface deep at best.
For reference: we are talking about a 6% contribution of a $75000 salary in Texas.
Submitted May 19, 2017 at 10:08PM by 401Kabuse http://ift.tt/2rB2cAT
