Best Way to Save for Retirement
Let’s talk about about retirement, we’re talking about real estate. Real estate and retirement now that sounds funny, not for the wealthy. So let’s talk about saving for retirement because there’s a huge problem with the way I think society tackles retirement. In fact, I think we have a very broken system because what we’re primarily taught is to put our money in places that actually don’t pay us, and do you know what you call that kind of investment? Speculative, Speculation.
Speculative & Residual
As a general rule of thumb, I never put my money into something that doesn’t pay me every single month. And yet we’re really trained to put our money in a 401(k), or in an annuity, put it in these things where you’ll get charged fees, and other people make money, and you’re going to be penalized if you try to access and touch your money, meanwhile, it’s going to pay you nothing. So there’s a world of a difference between the accumulation mind-set and a cash flow mindset. In general, society says you’ve got to accumulate yourself to freedom. You gotta save, save, save. You got to put money in 401(k)’s, IRA’s, pay off that house. You got to save a chunk of money. For most people, they need a seven figure chunk of money and most people because they can’t save that, it means that they’ll never save enough. Fortunately for us there’s another door that you can go through and it’s a different mindset, it’s a cash flow mindset. And that mindset says that it doesn’t matter how much money you have in the bank, it says what are your assets spinning off in terms of residual income every month? Because once they produce enough residual income then you can retire. Now when you compare the two against each other one of these is very feasible and the other isn’t. In one of them, we can’t accumulate enough to get to freedom but in the other scenario, we can produce enough residual income to cover all of our expenses and then some. Take the stock market for example, you take your money, you put in the stock market, maybe it’s in some kind of mutual fund or maybe it’s directly in the stock market, but when you put your money there, you’re on this roller coaster ride, it goes up and it goes down and when it goes up, you’re really happy, when it goes down you’re really sad and we’re going to play this long-term average but all the while what’s it paying you? Nothing!
I’m a real estate guy so you didn’t really expect me to be a huge fan of the stock market right? There is actually something that I like less than the stock market, and its annuities. The reason why I don’t like annuities it’s because it’s like the stock market but the financial planner traps the money in it and says that you have to wait for 3, 5, 7 years or else you’re going to be penalized. Normally you can put money in the stock market, there’s no penalty associated with it. And that annuity when you look at what it kicks off, it’s a fraction of what real estate can give you. So I know a lot of people they finally get to retirement they’re thinking “well I’ve had my money in the market my entire life- 401 (k)s, IRA’s, now let’s listen to the planner and annuitize it,” and it’s going to kick off a really tiny little bit of money. And here’s the deal, it usually cannot kick off any near what you need which means you have to start pillaging some of your other accounts, spending everything down until everything you’ve saved is completely depleted and it’s gone. Not a great solution. Now just for a moment, compare that to real estate, if I put my money in real estate how is that actually really different? Well I put my money somewhere and then every month it has the potential to what? if I did it right it’s going to pay me a cash flow. If my mortgage is $500 and my rent is $800 and there’s a management fee, oh now I’m making $220 a month. I get paid every single month. There are more benefits than that, you have control over it and if you buy it the right way you can liquidate it, you’re not going to be penalized. So there’s a lot of benefits to considering real estate as a diversification or a part of your overall retirement planning strategy.
Real estate is King!
Let’s see the advantages that real estate gives you compared to the stock market
- Accumulation Mindest
- Inflation Hedge
- No Control
- Fear of running out
- Residual Income Mindset
- Perpetual Cash Flow
- Financial Freedom in 5-10 Years
- Natural Inflation Hedge
On real estate this residual income mind-set you have a perpetual cash flow, you could actually do something that in 5 or 10 years could actually lead to financial freedom. You have a natural inflation hedge. In fact, what happens when inflation hits, you better hope that you have tons of hard assets like real estate. You have solutions for market volatility. You don’t have withdrawal penalties. You actually have not increased but maximum tax advantage. and cash flow increases over time
I love real estate, I invest in real estate that is the one safe secure investment with this philosophy, strategy and system I’m always going to go after.
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