Investing For Retirement? Real Estate is a Great Choice, Here’s Why
You are spot on with this Dulcey Schuster . I couldn't agree with you more. In fact any financial adviser worth his/her salt will tell their clients that they shouldn't be more than 10% vested in stock and commodities and to invest in dividend growth stocks for retirement.
My financial advisers have encouraged me to pay off my primary residence which we did because after 35 years of raising our 5 children here and due to the fact that it's a beautiful one story California Ranch estate we are planning to stay put until we're removed boots up. Plus our 14 Grandchildren and extended family of in laws and outlaws love doing Easter and Christmas here at "Casa de Aire y Sol" and would probably have us committed should we ever attempt to sell our home. LOL!
However, expanding your RE portfolio is also very prudent and you can do this over several years/decades by leveraging capital to acquire rental properties and building equity with the goal of having everything paid off before you plan on retiring. Doing this will set you up pretty comfortably for your golden years.
You just need to set aside some $$$ for maintenance, insurance and those unknown and unexpected variables that can and do impact your cash flow from time to time.
Great post and definitely worth a re blog. Thanks!
Incorporating real estate as part of your retirement plan is a great way to diversify your portfolio. Most people think of more traditional investment vehicles such as stocks, bonds, and mutual funds. For those of us that are self employed or small business owners the stock market can be an option that doesn’t return the profits we would want. With no employer matching contributions and the volatile nature of the stock market some people shy away or at least want to diversify there investment portfolio. There are a lot of reasons that real estate is a great investment option and I’m going to go through at least some of those reasons below.
1. Rental Income: Real estate can or at least should provide monthly cash flow to supplement your income.
2. Appreciation: Over time real estate appreciates and if you buy and sell the property at the right time during the real estate cycle you can get a great return on your investment.
3. Equity: Real estate is a rare investment vehicle in which you can borrow against. Pulling equity out of a property and using the banks money can increase your ability to purchase more real estate dramatically. The money could also be used to invest in other investment vehicles.
4. Banking on Inflation: Real estate differs from the stock market based investments in that during inflationary periods you can demand higher rents whereas the stock market may struggle.
5. Banking on Recession: The same is true for stock market based investments during a recession as is true during inflationary periods, they tend to struggle. Real estate on the other hand can be purchased at a great discount during a recessed market.
6. Taxes: Having investment properties has the benefit of being able to write off losses, mortgage interest, and depreciation.
There are traditional retirement plans that offer real estate investments but there are limits on annual contributions. I suggest informing yourself, finding a mentor, and getting out there looking for a great investment property to add to your investment portfolio.
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Dulcey is a member of Rentec Direct who provides Property Management Software, tenant ach payment processing, tenant credit check, and criminal reports for property managers and landlords. The information in this post is just that, informational and should not be used as a substitute for legal advice.
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