Buy land or fund an IRA?

[Jackson]

I am contributing to a 401 at work and getting matched but I was wondering about savings on top of that. From your experience, if only 1 option is possible, As far as retirement goes or years on down the road, would it be better for a younger person to fund something like a Roth or save money and start buying land as an investment? I say only 1 option because I figured if I funded a Roth it would just put me further down the road on having the money to purchasing land.

 

[Jackson]

I would purchase pasture land and put cows on it and grow my herd and if the right offer came along sell it and buy a bigger tract and keep reinvesting that way.

 

[Son of Butch]

IRA - over the last 30 years mine has done so well.... wish I would have started it earlier and funded it to the max each year.
Land is kind of a sore spot with me right now...had to pay property tax 3 weeks ago, we got hit with a 20% INCREASE in property taxes over last year, no added land and yet the p.t up 20%

 

[skyhightree1]

Jackson when I say this im not being a butthead but seems to me your mind is all over the place on things and what to do. I was your age I wanted everything to come to me over night and wanted no issues and everything I decided to work out for the best but that didn't always happen. Land is a good investment I try to buy as much as I can. However, Buying pasture land and growing a herd and waiting for someone to buy it someday may be good but id ask this. If someone does buy it you have your cattle where will they go once the lands sold ? You would need to buy more land to put them on probably. What if that land isn't fenced nor does it have grass planted? What if you can't find anything close? Those are some of the things that you may be faced with. I am not by any means the smartest person in the world but I been there done that so have a lot of us some it turned out well some not so much. I don't see anything wrong with a 401 because once you get grounded if you need the money you can go and get it out and buy land if you choose.

 

[JMJ Farms]

I'd rather invest in land. They ain't making any more of it.

 

[Jackson]

Jackson when I say this im not being a butthead but seems to me your mind is all over the place on things and what to do. I was your age I wanted everything to come to me over night and wanted no issues and everything I decided to work out for the best but that didn't always happen. Land is a good investment I try to buy as much as I can. However, Buying pasture land and growing a herd and waiting for someone to buy it someday may be good but id ask this. If someone does buy it you have your cattle where will they go once the lands sold ? You would need to buy more land to put them on probably. What if that land isn't fenced nor does it have grass planted? What if you can't find anything close? Those are some of the things that you may be faced with. I am not by any means the smartest person in the world but I been there done that so have a lot of us some it turned out well some not so much. I don't see anything wrong with a 401 because once you get grounded if you need the money you can go and get it out and buy land if you choose.

you said it correct, it is all over the place. Just trying to get a picture in my head of which direction I need to go and what I need to work on to get where I want to be. I guess right now I will just try to save as much as I can.

 

[True Grit Farms]

I'd rather invest in land. They ain't making any more of it.

And no one but the government can steal it from you. There's to many paper pushers and crooks in the market for my likes. What kind of down payment or securities do you get when you give someone your money? Think like a bank.

 

[ez14]

Jackson when I say this im not being a butthead but seems to me your mind is all over the place on things and what to do. I was your age I wanted everything to come to me over night and wanted no issues and everything I decided to work out for the best but that didn't always happen. Land is a good investment I try to buy as much as I can. However, Buying pasture land and growing a herd and waiting for someone to buy it someday may be good but id ask this. If someone does buy it you have your cattle where will they go once the lands sold ? You would need to buy more land to put them on probably. What if that land isn't fenced nor does it have grass planted? What if you can't find anything close? Those are some of the things that you may be faced with. I am not by any means the smartest person in the world but I been there done that so have a lot of us some it turned out well some not so much. I don't see anything wrong with a 401 because once you get grounded if you need the money you can go and get it out and buy land if you choose.

you said it correct, it is all over the place. Just trying to get a picture in my head of which direction I need to go and what I need to work on to get where I want to be. I guess right now I will just try to save as much as I can.

i don't own any land or have a 401 and this is NOT a smart way to look at it but i look at it like this i can put it in a 401 and see some numbers or put it in land and have something that's real to me i can see and feel it (and put cows on it)

yup save as much as you can you can't do anything with money you don't have

 

[SteppedInIt]

I'd rather invest in land. They ain't making any more of it.

+1. Also, I am not sure about an IRA, but my 401K will not just LET you take out YOUR money. They will LET you borrow YOUR money and pay it back with interest. Also, for tax purposes, you will have to pay huge fees and income taxes on it unless you have massive medical expenses. So, I wouldn't use a 401K with expectations of using that money to buy land before you retire.

Its good you are thinking about this kind of stuff at your age. The earlier the better.

 

[John SD]

IRA - over the last 30 years mine has done so well.... wish I would have started it earlier and funded it to the max each year.
Land is kind of a sore spot with me right now...had to pay property tax 3 weeks ago, we got hit with a 20% INCREASE in property taxes over last year, no added land and yet the p.t up 20%

I'm with Son of Butch. I would fully fund a Roth in good mutual funds first, then after that would sit down with a pencil and see how I could make best use of what I have to work with after that. At age 21 you are in a good position to just hang on and ride out the ups and downs of the market.

All things considered, I still think land is a good investment, but land requires some pretty deep pockets or significant borrowed money to own it. Lease pasture for now as you grow your cattle operation, but keep your eyes peeled for land deals that would fit your operation. I'm not opposed to borrowing money for land, but all deals must be carefully considered. You don't want to be hopelessly in over your head if things really go south.

 

[Dave]

At this point I would stick with the IRA simply because they are matching. That is increasing your net worth without doing anything. When it comes time to step out and buy land you can borrow from it or use it as collateral to borrow against it. Either way the IRA is growing much faster than you simply saving money.

 

[Cross-7]

I'll give my 2 cents

Save all you can and live as cheap as possible
Stay away from new pickups and big payments. Good used older pickups do the same job for lots less money
Same with a house. A house with good bones that needs some tlc is a good investment, if bought right in a good area.
Put all you can into your 401k
Save every dime you can.
Having cash when deals come along really helps.
This is based on my oldest son so I didn't just dream this up
He just sold his new dodge diesel
His big nice new house and taxes are draining him.
He bought an older pickup.
Traded his wife's fancy little car.
Selling his house and building a bigger metal style home in the country to raise his kids.

The land part
My personal experience.
Sometimes, not all the time, you have to really look and wait, but you can find land that has problems that have need to be fixed.
Just a couple of examples
There was one that was land locked and no easement so it was cheap.
I talked to my neighbor and bought an easement before I bought it
Another the irrigation right had been sold off. I talked to the county that owned the water rights and they said livestock and domestic use was ok and I could use the existing well but couldn't drill another well unless the current well failed. We had an attorney draw the agreement up and I bought it.

A couple others just needed cleaned up, fences repairs, brush sprayed and recovery from overgrazing.
They were cheap because they looked bad and had sat on the market.

Point is look for places that are undervalued that just needs work that people don't want to do.

Again stay as debt free as possible. Try to look at everything as investment.
It's not entirely possible as its takes money to live and things like cars depreciate. Houses and land appreciate but the interest on the loan eats a lot of that up.

Just my thoughts
Take it for what it's worth.

 

[Bigfoot]

Save and build equity in as many different ways as you can. Go light on things that depreciate. If somebody is matching your investment, do the max.

I personally wish that land was the only thing I had ever invested in. Your generation, may or may not be able to say that.

 

[millstreaminn]

Save and build equity in as many different ways as you can. Go light on things that depreciate. If somebody is matching your investment, do the max.

Good advise. We have 12 employees at the hotel. We offer 100% match Simple IRA for all employees. Only 3 take advantage of it. I can't believe the others don't.

 

[Caustic Burno]

Land does not have the return many think it does when you start adding interest on the loan and taxes by the time you sell you paid a heck of a lot more per acre than you think:
As far as growth on capital you will never beat a 401 it only has income not the outflows of taxes and interest.
The risky part of 401s is stupid high risk investments plenty of safe stuff out there.

 

[Bestoutwest]

The problem with investments is that they're all subject to market influences. If it goes up, that's good. If it goes down, well, you're stuck. We lost $15K on a house that I NEEDED to sell b/c we no longer lived there and I didn't want to be a landlord 3,000 miles away. I like my cash liquid b/c you can get to it whenever you want and there's no market influence on it.

 

[SJB]

A Roth IRA may be a good compromise. Anything you contribute to a Roth can be withdrawn penalty and tax free.

You cannot make money (in most cases) if you figure in your land purchases. The land purchase has to be considered and investment. We can argue all day long, but when you add up what you spend to buy it, the taxes, upkeep, etc, it's not a great long term investment in most cases.

But its not at terrible one either. And there isn't anything quite like owning land. For me, it's right under that top line that has God, Kids, Family and Country on it.

If it was me, I'd start saving into a Roth IRA over and above what your employer matches, lease you some land to try cows on, and watch for at deal on land over the next 10 years. If you find the right deal, you can rob the ROTH for your down payment. If not, you have a good start on your early retirement plan.

 

[HDRider]

Hard to get a better response than what cross said.

 

[John SD]

Hard to get a better response than what cross said.

+1. A lot of good old fashioned common sense in that post :nod:

 

[melking]

Hard to get a better response than what cross said.

+1. A lot of good old fashioned common sense in that post :nod:

I would agree with one exception. How sure are you that there will be an America when you are retirement age and how sure are you that whoever you are investing with is honest. I am struggling with the same thing for my son right now. He asked me the other day wha I thought he should do and I don't have a clue. I am leaning toward defendable land/