Why I don’t max out my 401k and other secrets to building wealth

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When I first started my adult life, I believed the standard middle-class narrative that a good job, a house, and a 401k were the secret to a good life. I worked long, hard hours at my job trying to get a promotion and a raise, I had a big house because I believed it was an investment, and I maxed out my 401k every year hoping I would have enough to retire by sixty-five.

The reality was, however, that even though I had a good job, I wasn’t building wealth. After I realized that what I was doing wasn’t working…

What mainstream financial advice won’t teach you about financial security

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Like most people, when I started my adult life, I had no concept of what it took to be financially secure. I assumed that having a good job and socking away money in my 401k was all I needed to be safe. I planned to keep my head down and work hard to ensure that I was valuable to my company and hope for the best.

Then the layoffs came.

What a stressful time. To not know if you will have a job, a salary or medical insurance for your family is tough.

I was fortunate enough to stay employed…

Learn how to make the market work for you

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I used to believe that the stock market was primarily an investment for appreciation, rather than cash flow. I would put my money in low-cost index funds and watch the value increase over time, hoping that I would have enough to live on by retirement.

Since the S&P 500 (or pretty much any other index) doesn’t provide much of a dividend (currently 1.51% as per multpl.com), I assumed I would have to start selling off my stocks to capture my equity gains and have money to live.

A $1 million account in the S&P 500 would currently provide only $15,100…

4 common problems and how to handle them

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Real estate is a great way to build wealth. I have been a real estate investor for the past decade and have used it to grow my net worth at high rates of return and receive monthly cash flow from my tenants.

It is easy to imagine that this path to riches is paved with gold. However, the reality is that the road to wealth is mostly paved with hard work and problems that require your tenacity and ingenuity to overcome.

Investing in real estate is not a “get rich quick scheme”. It can take years to build up enough…

Don’t let SPACs steal your money!

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One of the latest inventions by fee-hungry Wall Street is the Special Purpose Acquisition Company (SPAC). This involves a group of founders holding an initial public offering (IPO) to raise money to buy a company in the next couple of years. Investors in SPAC’s don’t know what company will be bought or what price will be paid for it, but hand over their money to the SPAC hoping they do well.

The SPAC founders then have somewhere between 18 to 24 months to find something to buy and spend all the money they raised. …

Understanding these concepts will help you find your way to wealth.

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When I first started my adult life around fifteen years ago, I had little understanding of finances, investing, or how to build wealth. I focused on my job, my house, and my 401k, assuming that by doing what everyone else was doing, I would soon be rich.

Before I knew it, even though I had a six-figure engineering job, I was living essentially paycheck to paycheck. My net worth was inching up at a snail’s pace rather than the rocket speed I had assumed.

How I learned to be a contrarian and stand out from the crowd.

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When I first started adulthood, I was fortunate to have some decent money habits such as not buying things I couldn’t afford that kept me from becoming poor, but I had no real idea of how to build wealth or how to get financially independent.

I focused on my job, my 401k, and my house because that is what I learned from mainstream financial advice. I knew some people made money in real estate, the stock market, or by starting a business, but I was clueless on how to do it.

Even though I had a good job with a…

Stories you may have missed

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As we finish up the month of April, I wanted to recap the top stories from Building Arks for the month.

The first is about the power of using selectivity and patience to grow wealth, two concepts that will help you carefully select and hold your investments for the long-term to maximize your returns.

The second article discusses the benefits of looking for value in the market, rather than trying to time the market. If you stop worrying about short-term trends and instead focus on buying quality assets at good prices, you will do well.

The third article that makes…

And how to turn it around

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There are many reasons why families struggle to build wealth. The fact that we don’t learn much about money, personal finance, or investing in school means that we are on our own and often absorb the habits of our parents, for better or worse. If your family is decent with money, chances are you will be too. If your family struggles financially, then, unfortunately, unless you break the mold and do something different, you may struggle as well.

Out of all the reasons families struggle, I believe that consumerism is one of the most fundamental and dangerous. As per Investopedia:

How I learned to stop trying to time the market

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The crash of 2020 taught me a lot about the stock market. Before last year, all my security investing was in low-cost index funds that tracked the S&P 500 and the total bond market. As I watched the S&P 500 get higher and higher over the previous couple of years, I kept moving more and more of my money from stocks into the bond fund, preparing for a crash.

When that crash came in March of 2020, I was standing by with a decent pile of cash (60% bonds / 40% stocks). I watched the S&P 500 tumble with excitement…

Building Arks with Jason Clendenen

Self-taught investor helping busy professionals learn how to ignore mainstream advice and build real wealth. Build your ark today!

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