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"Put your saved money into secured, sacred (untouchable) accounts," he writes on Entrepreneur. "Never use these accounts for anything, not even an emergency."

"Put your saved money into secured, sacred (untouchable) accounts," he writes on Entrepreneur. "Never use these accounts for anything, not even an emergency." A secured, sacred, untouchable account... like a 401k?

Slimbo 10y ago
He specifically said accessable as well. If you access the funds in your pension before retirement there's a hefty tax penalty.
- deleted 10y ago
  [deleted]
- riebschlager 10y ago
  I dunno, semantics I guess. But "secure, sacred and untouchable" and "accessible" seem mutually exclusive to me.
- drzaiusapelord 10y ago
  Well, you shouldn't. The whole idea with retirement accounts is that they aren't fun money for investing whims or when you get jealous your neighbor has a new mercedes and you don't. The only time money should be pulled out would be for a serious emergency and even then as a last resort its pretty stupid as bankrupcy would make more sense as bankrupcy courts can't go after your 401k. If you're regularly pulling money out of your 401k then you're doing retirement planning wrong.
- toomuchtodo 10y ago
  If you contribute to a Roth IRA (after tax money, ideal for those under the 25% marginal rate), the contributions can be removed at any time penalty free. It quite literally can be treated as an emergency savings account if you have no other liquid savings available, and insist on investing every available dollar (and is also protected from creditors in almost every state, something a savings accounts is not).
programminggeek 10y ago
No, not a 401k unless you don't want to be able to do anything with it until you are retired. The purpose of a non 401k is to invest so you don't have to wait until you are 65 to retire.
- mattzito 10y ago
  If you're at a company that matches your 401k contribution, you're literally leaving free money on the table if you don't contribute to a 401k. I think the most sensible approach is to contribute enough to your 401k that you max out an employer match (hopefully you have one of those), and then invest the remainder of your savings in the market. But waiting until you have 100k in cash before you do something with it seems crazy to me.
  - petercooper 10y ago
    But waiting until you have 100k in cash before you do something with it seems crazy to me. The theory is that without a healthy emergency fund, you won't take risks on better investments later on. I buy into this as I played it pretty safe until I had a year or two's income saved. I then decided to do my own thing for a bit, and now I'm running a healthy business that I wouldn't have been otherwise (basically a freelancer to business owner transition).
    - mattzito 10y ago
      But let's say you have a 50k 401k that you can borrow against in an emergency, and a 50k index fund - that's 75k in liquidity that you have available to you with a few days notice. 100k in the bank sitting there is getting you maybe 1% and the need for that money on an instant's notice seems...low.
petercooper 10y ago
(I am a huge Cardone fan and buy into most of his shtick.) This Yahoo writeup is poor compared to the original, but what he means is that once you have your emergency fund ($100K in this case), put the rest of your money into "untouchable" (not literally, but that's how you treat it) places so that you can make investments with it later (in Cardone's case, nearly always property purchases).
davidjeet 10y ago
I think he was implying that is where you initially store money while accumulating that first $100K (that will be later used for investing purposes).
agentgt 10y ago
You missed the even more the important/hypocritical part of the quote: "... To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access." I assume this is just poor reporting. He misses a massive thing about the 401K.. companies may match and It can lower your taxable income. If you are really wealthy this matters little but if you are that magical $250K putting money into a 401K is probably worthwhile. But in general I sort of agree that the 401K is massively overrated. It is just a reminder of how messed up the tax codes are. IMO just make zero loophole flat tax percentage on income. No capital gains tax. Just a percentage tax on income. If someone tries hide income go after them hardcore. Owning rental property IMO (ie depreciable asset) in the right locations I found more effective than a 401K and many retirement accounts but I still have old 401Ks and even a Roth IRA on autopilot. The US embraces property ownership too much (tax deductions) which makes investing in other ventures less desirable (which probably hurts the country overall).
- Alupis 10y ago
  > He misses a massive thing about the 401K.. companies may match and It can lower you into another tax bracket Exactly. Most match up to 3.5%-5% - which is a lot of free money (and this doesn't even take into account if you invest your 401k/IRA)! Since the author advocates putting your money into a savings account instead, author is forgoing a lot of free growth, while gaining virtually no security.
- blahshaw 10y ago
  >It can lower you into another tax bracket. You're aware the tax brackets are graduated right? Only amounts over the bracket are taxed at that year, not your entire income for that year.
  - agentgt 10y ago
    Yes I'm not sure why I said that (I removed the bracket). I just meant lower your taxable income which maybe worthwhile at certain income levels.
- deleted 10y ago
  [deleted]

Slimbo 10y ago

He specifically said accessable as well. If you access the funds in your pension before retirement there's a hefty tax penalty.

deleted 10y ago
[deleted]
riebschlager 10y ago
I dunno, semantics I guess. But "secure, sacred and untouchable" and "accessible" seem mutually exclusive to me.
drzaiusapelord 10y ago
Well, you shouldn't. The whole idea with retirement accounts is that they aren't fun money for investing whims or when you get jealous your neighbor has a new mercedes and you don't. The only time money should be pulled out would be for a serious emergency and even then as a last resort its pretty stupid as bankrupcy would make more sense as bankrupcy courts can't go after your 401k. If you're regularly pulling money out of your 401k then you're doing retirement planning wrong.
toomuchtodo 10y ago
If you contribute to a Roth IRA (after tax money, ideal for those under the 25% marginal rate), the contributions can be removed at any time penalty free. It quite literally can be treated as an emergency savings account if you have no other liquid savings available, and insist on investing every available dollar (and is also protected from creditors in almost every state, something a savings accounts is not).

programminggeek 10y ago

No, not a 401k unless you don't want to be able to do anything with it until you are retired. The purpose of a non 401k is to invest so you don't have to wait until you are 65 to retire.

mattzito 10y ago
If you're at a company that matches your 401k contribution, you're literally leaving free money on the table if you don't contribute to a 401k. I think the most sensible approach is to contribute enough to your 401k that you max out an employer match (hopefully you have one of those), and then invest the remainder of your savings in the market. But waiting until you have 100k in cash before you do something with it seems crazy to me.
- petercooper 10y ago
  But waiting until you have 100k in cash before you do something with it seems crazy to me. The theory is that without a healthy emergency fund, you won't take risks on better investments later on. I buy into this as I played it pretty safe until I had a year or two's income saved. I then decided to do my own thing for a bit, and now I'm running a healthy business that I wouldn't have been otherwise (basically a freelancer to business owner transition).
  - mattzito 10y ago
    But let's say you have a 50k 401k that you can borrow against in an emergency, and a 50k index fund - that's 75k in liquidity that you have available to you with a few days notice. 100k in the bank sitting there is getting you maybe 1% and the need for that money on an instant's notice seems...low.

petercooper 10y ago

(I am a huge Cardone fan and buy into most of his shtick.) This Yahoo writeup is poor compared to the original, but what he means is that once you have your emergency fund ($100K in this case), put the rest of your money into "untouchable" (not literally, but that's how you treat it) places so that you can make investments with it later (in Cardone's case, nearly always property purchases).

davidjeet 10y ago

I think he was implying that is where you initially store money while accumulating that first $100K (that will be later used for investing purposes).

agentgt 10y ago

You missed the even more the important/hypocritical part of the quote: "... To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access." I assume this is just poor reporting. He misses a massive thing about the 401K.. companies may match and It can lower your taxable income. If you are really wealthy this matters little but if you are that magical $250K putting money into a 401K is probably worthwhile. But in general I sort of agree that the 401K is massively overrated. It is just a reminder of how messed up the tax codes are. IMO just make zero loophole flat tax percentage on income. No capital gains tax. Just a percentage tax on income. If someone tries hide income go after them hardcore. Owning rental property IMO (ie depreciable asset) in the right locations I found more effective than a 401K and many retirement accounts but I still have old 401Ks and even a Roth IRA on autopilot. The US embraces property ownership too much (tax deductions) which makes investing in other ventures less desirable (which probably hurts the country overall).

Alupis 10y ago
> He misses a massive thing about the 401K.. companies may match and It can lower you into another tax bracket Exactly. Most match up to 3.5%-5% - which is a lot of free money (and this doesn't even take into account if you invest your 401k/IRA)! Since the author advocates putting your money into a savings account instead, author is forgoing a lot of free growth, while gaining virtually no security.
blahshaw 10y ago
>It can lower you into another tax bracket. You're aware the tax brackets are graduated right? Only amounts over the bracket are taxed at that year, not your entire income for that year.
- agentgt 10y ago
  Yes I'm not sure why I said that (I removed the bracket). I just meant lower your taxable income which maybe worthwhile at certain income levels.
deleted 10y ago
[deleted]