9 Questions to ask BEFORE you mention Rental Real Estate, Private Investments, or Advanced Tax Strategies

WRITTEN BY: Gideon Drucker, CFP® AIF® ECA

I have a lot of prospective clients that on our very first "Right Fit” Call mention wanting some form of passive rental income, or wanting to set up business to pay their kids through an LLC (even though they don’t have any business income), or wanting to become an investor in IPO’s and private companies... the list goes on.

I totally get it. This is all we all hear about on social media when it comes to building wealth: the one “genius” or “secret” idea that will catapult you a decade at a time!

But as a CFP® working with high income earning mid-career professionals in their 30’s and 40’s, I can tell you that in my experience, that I have NEVER seen a prospective client find financial independence from one such play.

All of that is a distraction from the sort of personal & behavioral financial planning decisions that will allow you to reach your desired financial outcomes over time.

With that in mind, here are the 9 questions to ask yourself before you contemplate real estate investing, private placement, IPO’s, setting up an LLC etc.

Do I have a 6-month emergency reserve sitting in a high yield savings account?
Am I saving/investing at least 25% of my gross income each year?
Am I maxing out my 401k?(Or Solo 401k/Sep IRA if I’m self employed?)
Am I max funding my kids’ education accounts (if applicable)?
Do I have enough life insurance & disability insurance (based on actual calculations) to protect myself and my family if something were to go wrong?
Am I on target (90%+ likelihood) of hitting my financial goals in the next 10 years?
Am I on target (80%+ likelihood) of hitting my retirement goals?
Am I utilizing a flexible investment account that allows me to tax-loss harvest?
Do I have a Backdoor Roth IRA strategy and a strategy for converting Pre-Tax IRA’s over time?

If you can confidently “Yes’ to these 9 questions, than you should truly feel FANTASTIC about where you stand financially...If you don’t, well, every financial thought you have should be about solving for them!

If you’d like some help getting there, you can schedule a 15 Minute Right Fit Call here.