Know What You Own, And Know How to Increase ItNavigation
First off, as obvious as it may seem, let’s decide on WHEN you’d like to retire. Mainly, at what age would you like to be when you retire? 65? 55? 75? 35? …you need to first know this because we’re going to work backwards from here. The next questions is naturally, how old are you now? After this, subtract. So for example if you want to retire at 65, and you’re 35 now, you have 30 years to meet your goals.
Second, is how much would you like to have upon retirement? Do you want to have 1 million in the bank? 2 million? And don’t pick a random number, really try and figure out what your lifestyle will be like. To decide, look at your habits now. How much do you spend? You’re likely to keep spending that much. Hopefully you won’t have a mortgage anymore at that point, so you can subtract that amount from what is needed for your monthly living requirements. So if you spend $6k/month now, and half of that is your house payment, you’re essentially living off of $3k/month. Then figure out a reasonable estimate for life expectancy. 85 years old? It could be longer nowadays if you’re living healthy so keep that in mind because you don’t want to run out of money. 20 years at 12 months each is 240 months, at $2k/month would be a needed $720,000. If you live to 95 make that $1,080,000.
What about cost of living increases? Or better yet, do you plan on eating away at your nest egg? That probably isn’t the best idea. With a fixed amount it gets lower and lower each year, giving you less and less to live off of. What I like is owning something that produces income. So if I had rental properties worth a million dollars (so let’s say 10 of them), and each one gave me $1,000/month, that gives me a million in the properties that I never have to touch, because I live off of my rental income ($10k/month, which is well in excess of my needs).
There are a lot of things you can do, IF YOU PLAN AHEAD. Run these numbers for yourself, see how you stack up. How old are you now? When do you want to retire? What do you spend now? What will you spend then (with inflation adjusted)? How are you going to get there? If you need help I’m happy to help you find properties to get you there or even come up with an alternative plan. The point is to have a plan because the VAST majority of retirees today are living below poverty. You do not want to be a burden on your family or loved ones. instead, create a great income producing nest egg that you can pass on to your family when you pass and leave you living comfortably until then.
Let us help you decide because it can make a big difference on what you choose to do.
First, let’s look at the stock market. Research shows an average of 6.X% increase in stock market value over a 100 year period. Now that’s not to say you can’t have higher gains, IF you find the right 10 year period you could hit 14% let’s say, even with a drop, but the trick is knowing when to get in and get out. Hindsight is great for this, but by then it’s too late.
Knowing the right time (which is not easy) is why the stock market is known mainly as a “young man’s game” because you are able to take the hits, the losses and move on, to hopefully win out in the long run. What do they say to do in old age? Go for the more stable, lower return, investments.
So how does that compare to real estate? Well, this video makes a great case, basically because owning a home FORCES you to save, whereas if you don’t own, you won’t always invest how much you would be putting into a home. One item of note though is that when things fluctuate, your results will wildly vary.
But… can you get a standard double digit rate of return with real estate? Find out below the video…
Ok, now that you’ve watched that, here’s what we feel is the most important part of the puzzle.
With stocks, once you retire you have to start eating away at your portfolio, which means there’s less and less to offer a return, until you drain it dry.
With real estate, IF you find a nice double-digit ROI property (we find them daily), and you reinvest to buy more, that compounding adds up to potentially twice as much as the stock market would.
BUT, once you retire you do NOT have to start eating away at your investments.
NOTE: this is for rental properties only. With a portfolio of rental properties the strategy is not to start selling off your homes, but to live off of the rental income which can support you very comfortably with enough of them. Then you use your actual homes to pass on to your kids, letting them live off of the rental income and wait until the market is prime for selling.
Please contact us because we’d love to help you find a strategy that works best for you.Read More