Are you worried about massive inflation, if social security is going to be enough for you to retire, if your retirement savings is going to last you throughout your later years, well you’re not alone. The vast majority of retires are very concerned with what is going on in the economy and their ability to retire. Some of the biggest financial problems are facing us in today’s economy. With the amount of funny money the government and banks have pushed into the economy; with the national debt close to hitting 100% of Gross Domestic Product (GDP); with the massive real estate bubble in some of the most volatile states like California, Arizona, Florida and Nevada still deflating; with the inability of social security and Medicare to be funded, we have some major problems facing us that we as the general public need to protect yourself against. Protecting yourself is NOT saving your money and hiding it in your savings account. Why you ask? We are already having massive inflation, just look at the gas pump now over $4 per gallon and increasing. Commodities that we use to live on daily are skyrocketing already in price right under our noses. This means that our purchasing power is decreasing rapidly and pushing the middle class into the new poor. If you are a saver which is what has been drilled into our heads by society for years, you are losing wealth, making being a saver no longer a smart option. If you save in these new economic times, you will slowly become poorer and poorer. For example, if you are saving $5,000 per year but your monthly expenses are going up from $3,000 per month to $4,000 per month due to inflation, along with your income not increasing accordingly, you just became poorer even with your savings. Your expenses went up by $12,000 per year and your savings went up by $5,000 per year. Incomes are not rising currently because of the economy. It is costing more for companies to stay in business, jobs are leaving the country due to cheaper labor in developing countries, the cost of living is increasing significantly and our incomes are staying the same. This is all a recipe for disaster. Okay, enough doom and gloom. There is a way out. There is a way to protect yourself against massive inflation and these tough economic times.
The way to do this is to structure your retirement investments in a way that they are producing income monthly for you PASSIVELY without having to work for them and in assets that appreciate when there is massive inflation. I am a CPA, real estate investor and financial advisor and I can tell you that real estate is one of the best investments you can invest in for this type of economy. Real estate is one of the only investments that has advantages in this type of economy. Here are some of the reasons:
(1) Real estate has the ability to produce returns on your money that beat out the inflation rate. You can make 8% – 25%+ return on your money, safely investing in real estate if it’s done correctly. You MUST do the right due diligence on the real estate your are acquiring.
(2) Real estate values tend to rise during inflationary periods. If we have massive inflation, not only do real estate properties typically rise, but rents rise as well increasing your passive cash flow and financial stability as your monthly costs rise. This protects you significantly in an inflationary economy.
(3) Real estate investments can be tax free income. Because of some of the tax benefits of depreciation much of your passive rental cash flow can be virtually tax free. Taxes are your biggest expense so it’s imperative to cut the taxes you pay down. You can also invest in real estate in your own retirement account (IRA, 401k, etc) and have 100% of the gains tax free. Most people do not know that you can do this, even though you have been allowed to do this for 30 years. It’s called a self-directed retirement account.
(4) Cash flow from rental real estate can create a passive income stream so that you never have to deplete your principal balances and can help you retire off of cash flow. You will never again have to worry about depleting your principal balance if the cash flow from your real estate investments is above your monthly expenses. Once this happens you are truly financially free. You can only attain this when you invest in assets like real estate that allow you to have a high enough return on investment to beat out inflation.
But how do you invest in real estate safely? Isn’t it risky? Most people do not know how to invest in real estate correctly. There are tons of real estate courses, books, online resources and more that will help you to learn how to do this correctly. There are also companies out there that can help you invest, that already have the experience, have a team in place and have access to investments with the risk mitigated already.
The key to your future stability is your ability to learn new investment options, how to mitigate the risks of those investments, control those investments and most importantly your ability to increase your financial education. By financial education I mean educating yourself on how to invest correctly (NOT CD’s, Mutual Funds or Stocks that you do not have control over), educating yourself on how to reduce taxes, educate yourself on budgeting your money and putting a set financial plan with attainable goals. Most American’s spend 40+ hours a week working, but less than one hour per month reviewing their financial position, plan and goals. Does that not sound backwards? It’s because financial education is not taught in schools so you have to take it upon yourself to educate yourself. People are taught how to make money in their fields but not how to set up a financial plan and how to protect their money. So get educated, take action, invest in the right asset classes to protect yourself and assure your future. Your future financial stability is dependent on it.