A steady income from your business can be a huge relief, but it only guarantees a small growth opportunity. But the money you earn from your company can help you invest and multiply your revenue streams. If you plan your portfolio well, you can accumulate wealth for retirement and meet many financial needs quickly. Do you have a Solo 401(k) account? If you contribute money to this savings plan, you can channel the amount to invest in diverse assets, such as stocks, bonds, and more. Higher yields and smooth portfolio management can make your life easy.
Those who are self-employed and want to know about this account type can visit solo401k.com. Before this, let’s study investment opportunities.
Stocks
These have been consistent performers for people looking to increase their wealth as a long-term goal. Stocks work better than precious metals, bonds, and savings accounts. Data suggest that the stock market helped generate 9-10% returns on average in the long run. If you invest USD $10,000 and reap 10% compounded interest over three decades, your funds can grow as much as USD $175,000. American stocks do well because you run the show as a stockholder. The economy improves with increasing profitability as your business adds more value. Warren Buffett says that putting money in US stocks is like putting money in an American company, which is one of the finest bets.
Like any other investment vehicle, stocks also have some shortfalls. Everyone knows the risks because of the dramatic market conditions. If you study the S&P 500, you will realize that it fell by 37% in one year and rose to 38% the next time. Anyone in their 30s can invest purely in stocks because they have a long run. If you are in your 40s, you can invest around 70% of your funds in stocks. 70s-something should focus on stocks that ensure growth.
Bonds
According to a few people, you can divert 30% of your money into bonds. However, the asset type should provide stable income. That way, bonds make a good choice. As part of a long-term goal, one must focus on wealth creation. After you have attained that, you can put money in bonds. There are three options – corporate bonds, municipal bonds, and treasury bonds/ bills/notes.
Real estate
Like stocks, keeping money in real estate properties can be a good idea. Some believe commercial properties have been strong even in the face of an economic meltdown. Fortunately, Solo 401(k) account holders can use funds for this type of investment. Rental properties also make a favorable option for some investors. Do you need more affordable real estate investment solutions? You can explore REITs, then.
If you plan to invest in these areas through SOLO 401(K), you must know it can be a lucrative decision. You can contribute more than IRAs. Also, your tax liability will be cost-effective. During withdrawals, you will pay only as much tax as you pay on your regular income. However, early distributions will attract penalties. In 2023, you can contribute USD $66,000. For self-employed people, it’s a tremendous retirement-saving opportunity.
