Are All Of Your Assets Locked Away In Retirement Accounts?

By: ispeculatornew
Date posted: 11.06.2012 (4:00 am) | Write a Comment  (1 Comment)

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For the past few months, I’ve been putting more energy into tracking my passive income flows, doing my best to be able to live off of that income as quickly as possible. It’s not that I need or even want to retire right away. I do however aim to be able to do it fairly early. We hear more and more about people that are able to retire in their thirties or forties. They usually don’t do it, but just knowing that it’s a possibility is already a major step.

I’ve been able to steadily increase my passive income, in large part thanks to my dividend investment and my ETF holdings. I do expect my online company and other projects such as real estate to end up being significant but there’s no doubt that investments will likely be the biggest part of my passive income strategy.

One Major Issue

There are very clear benefits to investing in retirement accounts such as RRSP’s in Canada and 401K’s/IRA’s in the US. Mostly because of the fiscal impact, it becomes much more advantageous to use such account types and that is mostly what I’ve done up to now. The problem though is that I’ll suffer penalties if I eventually have to retire money from those accounts. So do I have significant amount of assets that generate decent dividends? Yes. Can I use them to retire early or even in case of emergencies? Not as easy…

Going forward, I will start paying more attention to this. Yes, I want to optimize tax savings but I also want to be able to have a decent amount of savings in standard savings accounts. The best and ideal way to do it of course is to save enough to both cap my yearly limit in retirement accounts and save a significant amount in non-registered ones. It doesn’t happen overnight but if you’re able to do that, there’s a decent chance that you’ll be able to retire early.

What About You? Do you Hold Most Of Your Assets In Retirement Accounts? Do You Care At All?

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1 Comment

  1. Comment by Robert Zaleski — November 6, 2012 @ 11:34 am

    Yeah, I think you depressed me about the potential fees awhile ago.

    I hope to retire in 10 years, but I think I will semi-retire as you mention. If nothing else, do something fun and let my assets compound for 10-20 more years.

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