Learn about my 401 Kondo and 401 cabin. Is a condo or a cabin a good investment?
In this episode, you're going to be blown away with my take on should you invest
in a condominium sooner or later for a vacation or a cabin? Yes, you're going to
understand why do we put those things off. Because that's a fallacy many times
from a mathematical standpoint.
I'm Doug Andrew. And this is my studio. I've had a national radio show for 11
years. I love to talk to my audiences and be on TV write books. But this is just a
little one-on-one with you right now. And something that's near and dear to my
heart about what most people do when they save for certain goals in
retirement. Because I've been a retirement planning specialist for 45
years. And so many times when I would interview people and I'd say, "So, what is
your dream? What do you want to do in your golden years?" And all too often,
people say, "Oh, well... My wife and I want want to finally build or buy the cabin.
The dream cabin. Or the condo in a nice warm climate that we can go down to
during the winter months." And we just can't wait till we can get to that point
in life to do that. Now, to be honest with you, many of those couples that waited
and waited and put it off to do something like that, within 90 days, one
couple the wife died. Usually the husband dies first. And she died of a massive
heart attack. And he goes, "What was all that for?" Let me share with you what I
call my 401 cabin. Now, there is no section in the Internal Revenue Code
that talks about a 401 cabin or condo. That's my terminology. I actually sort of
got the idea from Don Blanton. So, I have a 401 cabin. I have a 401 condo. And I
began to realize... You know, my wife Sherry and I,
we have 6 children and now 17 grandkids. And most people, they sock away
money into tax-deferred IRAs and 401Ks. Okay? Trying to save money to achieve
that financial independence. So, for example, real true story. Way back when we
were first married, we decided to buy a piece of property in central Utah. We
were very fortunate to pick up this 20 acres. And a cabin that my friend had
built on that for $100,000. Now, that was a while ago. That cabin has doubled in
value. It's appreciated about 7.2%. And so that will double every 10 years.
So, in 10 years, it's worth 200,000. Another 10 years it's worth 400,000.
So, in 20 years, the cabin we bought 20 years earlier for 100,000
is now worth 400,000, right? This is where most people
make mistakes. They go, "Well, I was talking away the
money into an IRA or 401K. I've I socked away $100,000." And they
put it into a tax deferred account. Let's say they're earning 7.2%.
So, that doubles in 10 years to 200,000. And it doubles in
another 10 years to 400,000. So now, they have the $400,000
in a tax deferred IRA to buy the cabin. They could about 20
years earlier for 100,000. But they have the money and they go take out
the 400,000 but that's not all their money. They have to pay tax on
it. So, they pay tax of at least 25%. So they're short. They only
have 300,000 after tax. The cabin cost them 400,000.
They're still a 100,000 short of what they could have
bought the cabin for 20 years ago. So, let me share with you my take and why
that's maybe not the smartest thing to do when you think about "What are you
going to do with that money? What's your real goal at the end of the day? If
you're starting to get this, what do I have with that cabin? And the same is
true of a condo. We bought a condo in st. George Utah for 125,000.
And it is also increased in value. And what my wife and I have
is file cabinets full of memories, photographs, family vacations with a
purpose. Of all the experiences we had with our children while we raise them
and the outings to the cabin and the condo, 20 years of memories and now in
the cabin that's where sherry and I hold our annual grandpas camp. We've been
doing that for 7 years. And this is where our grandchildren come for the
week without their parents. I mean, the teenagers come for the first 3 days.
We talk teenage talked, we do high adventure stuff. And then the 8, 9
10, 11, 12 year olds come and join them with me at 10,500
feet right above our cabin on a ridge. And the 4, 5, 6, 7 year olds
are with Grandma on the cabin. What I'm talking about is, we have 20 years of
file cabinets full of photos and memories using the cabin. What do the
people have that chose to put it off until they could buy a cabin? They have a
file cabinet full of mutual fund, IRA 401k statements. Oh, how exciting.
"Look honey!" I mean can you imagine a John telling Suzie, "Oh, let's go spend a
romantic weekend." Well, we don't have anywhere to go. I know I'm talking about
honey a romantic weekend looking at the IRA 401k statements. "Look, we made this
much money this quarter." What? No, that doesn't score points with your wife. You
know... But if I said to my wife, "Hey, honey. Let's go spend a romantic weekend in the
401 cabin. Or would you rather go to the 401 condo? That scores points. Is this
making sense? It's the same money. If I socked away money, I realize, it's going to
cost me 400,000 down the road because the condo and the cabin
increased in value actually tax deferred better than the money in an IRA or 401K.
What's the takeaway? So, here's the key takeaways. Rethink your thinking. What are
you really saving that money for? What are you going to do with it at the end of
the day in retirement? And instead of waiting 20 or 30 years to have the money
and then what you were gonna do with the money costs
4 times as much as it did when you started. "Hello!" The end of the day I would
rather build a file cabinet full of memories than a bunch of IRA,
401K statements. Then be able to continue to use it just like you would
have used it if you would wait until you were 60 or 65 to do that. And you don't
have the energy to be able to use those facilities. And so, consider maybe getting
a cabin or a condo or a property to have family vacations with a purpose. My radio
show producer, when his folks heard this concept, they immediately started
building their dream cabin. And they have thanked me several times because now,
they've been building memories in this beautiful cabinet. In fact, they prefer
the cabin even more than their home as they have been in retirement. The only
regret is they wish they would have done it sooner. So, there is no section in the
Internal Revenue Code. This called 401 cabin or condo. That's just a terminology
I've used because that's what I would be doing with the money. So why don't... Why
not just cut to the chase and enjoy it now. The message is smell the roses now.
If this is resonating, its aroused curiosity, I would recommend that you
click on this video to understand really the difference between the strivers and
the thrivers. How to achieve financial independence in a unique way and not
follow the herd. And you'll also have the opportunity to get a free copy of my
most recent book, the laser fund use paid nominal shipping and handling fee
if you would like. Again, consider a 401 cabin or condo in your life.