#601: Q&A: The Stock Market Isn't Great. Is Private Equity an Improvement?

      Nick and his wife have $100,000 to invest but are concerned about the fluctuations in the current stock market. Should they consider alternative investments like private equity?

      While Roth IRAs allow for tax-free withdrawals in retirement, Josh is anxious that an increase in his tax bracket could undermine these benefits. Is his concern valid?

      Cindy has secured the retirement aspect of her financial plan and is now concentrating on her taxable brokerage account. What investment strategy will enable her to be work-optional in a decade?

      In today’s episode, former financial planner Joe Saul-Sehy and I address these inquiries. Enjoy!

      P.S. Have a question? Feel free to ask it here.

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      Nick asks (at 01:31 minutes): My wife and I are both 36 years old, working full-time, and have a combined income of $260,000. We want to invest half of our $200,000 emergency fund, but we’re apprehensive about the current volatility of the equity market. What other investment options should we explore?

      We’ve accumulated $550,000 in investments—mainly in our 401(k)s, alongside Roth IRAs and brokerage accounts. Our monthly expenditure stands at $7,000, and our only debt is our mortgage, which has a 3.5 percent interest rate and 22 years remaining.

      We considered investing in real estate but feel it would require too much active management in addition to our jobs. We're contemplating private equity options like EquityZen. However, do we even have sufficient capital to pursue private equity as a viable option?

      What are the advantages, risks, and possible oversights of this approach? Are there other investment types outside the stock market that we should consider?

      Cindy asks (at 23:27 minutes): My husband and I are in our mid-40s, completely debt-free, with over $900,000 saved—90 percent of which is in retirement accounts. Our aim is to be work-optional in 10 years, so I'm now focusing on bolstering our taxable account.

      I've come across varying views on whether it’s better to invest in growth assets now and later convert to income-generating assets for retirement, or to start with income-producing investments and reinvest the returns.

      I understand that both strategies have tax implications. What do you suggest as the optimal approach?

      Josh asks (at 39:00 minutes): Should I be worried about the extra tax implications of withdrawing from a Roth account compared to a traditional 401(k) in retirement?

      I know that withdrawals from 401(k)s are taxed while those from Roth IRAs are not. However, how does income from a Roth IRA influence tax brackets during retirement?

      Resources Mentioned:

      Finding Hope and Happiness in a Confusing World | Website

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