Investing in Yourself, Not for the Weak at Heart
I've recently had potential clients call me up wondering whether or not they should put their money into cd's or to invest in real estate. The short answer is Real Estate! The long answer is leverage. Leverage is basically the use of other people's money. The goal of course is to capitalize on someone elses's money while you collect the rents on a building, and watch your investment appreciate. Banks use your money as leverage to make money. Why let them receive all of the benefits of your money?
Whether you invest in real estate, or in the stock market, there is always a certain level of risk but the payoff's are usually higher. Of course everyone will tell you to buy and hold to minimize your risk. Understandably, if you are close to retirement, you don't want to be too risky. You don't want to lose your hard earned nest egg. You also want to have something to call a nest egg! If you were to invest $50,000 into a c.d. at 5.0%, the average going rate right now, over 5 years you would make approximately $166.67 per month and that base investment NEVER appreciates!
Now, if you were to invest $50,000 toward an investment property that cost $450,000, you would reap tax incentives, rental income, and the appreciation on the value of the investment. You would be earning appreciation on the total $450,000 duplex you just bought. Let's assume that the property was appreciating at a modest 3% per year. You've now earned $900 per month versus the measly $166!
Of course, what I always get asked is....Natasha...."what about the risk?" Yes, it's risky. Not as risky as the stock market, but risky. That $900 is not deposited into your account every month. Real estate is a tangible investment. It's a physical asset that needs maintenance. It needs to be managed by you or a management company. The market also goes up and down. Take this into consideration. If you think that the market will go down another 10% over the next year, then have your agent write the offer for 10% less than what the comps are! But what ever you do, invest in yourself now!
Why let other people make money off of your money?
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