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Why Real Estate is a Great Investment for your Retirement Plan

Written by on August 7, 2020 in Investing with 0 Comments

Picture by David McBee from Pexels – CC0 License

Picture by Mauricio Feldman-Abe from Pixabay – CC0 License

Retirement is coming for all of us at some point in our lives. At least we hope it is. After all, it's unlikely you or anyone else wants to work forever, particularly when you're older and become quickly fatigued.  You've probably heard of the FIRE (financial independence retire early) movement capturing the hearts of many. For others, who are married to their jobs, they prefer the FIOR (financial independence optional retirement) option instead.  Whichever movement you feel inclined to follow, it's true that a lot of people are actively planning towards accruing a dream retirement. Where their debts are paid off, and they have the time and money to indulge in all their favorite things, such as exploring the world or spending all their free time with their grandchildren.

Preparing for retirement is about realizing that there's more to life as you get older. We're often so sucked into the here, and now, we spend most of our energy and money working for the present. But something has to give and be set aside for the future. Because if it's not, you won't be able to fund the retirement you deserve.  According to Northwestern Mutual Planning and Progress Study 2019, worryingly, 15% of Americans have no savings or investments for retirement. Meaning, unless they begin saving soon, they could really begin to struggle when their retirement years kick in.  Sustainable wealth takes time to build, to experience the benefits of compound interest, and increase value. But it'll be completely worth it when you're ready to retire from work. Besides paying off debts, such as student debt, mortgages, and credit cards, it's smart to place your cash in areas where it can work for you.

Whether you're adding to existing investments, or you're a newcomer to investing who is hoping to start building up your assets and investments. It's essential to remember one thing – always diversify your portfolio. Which essentially means, don't plow all of your money into one investment, as you could risk losing it all.  Instead, explore other investment opportunities. Different markets fluctuate over time. With a diverse portfolio, your other investments shall hopefully absorb any losses experienced elsewhere in your portfolio.  Ideas for investments include antiques. Putting money in savings accounts that yield a high return, investing in precious metals such as gold. Or perhaps stocks and shares.

Real estate, in particular, is an excellent sector to invest in. It's proven time and time again; its robust nature can bounce back from economic turmoil. For more reasons why real estate is where you should put some of your money for retirement, below are seven.

Regular Income

Whether residential or commercial, providing you have a large deposit and stable income. Plus, potentially some experience buying and leasing out properties, banks are likely to lend you money towards your chosen real estate.  Once you have your property and secure a rental agreement with an individual interested in using your property, you can instantly begin earning an income from that property. While subsequently paying down the mortgage. Moreover, as the property appreciates steadily over time, the amount you can charge will rise, too, leading to more income for you.

Tax Benefits

There are numerous tax deductions and breaks that make real estate investment worthwhile. For instance, you can minus the expenses you incur to purchase, maintain, and manage the property. For a guide to real estate ira investing from experts that help individuals accrue a financially fulfilling future in their old age, with real estate, look at the company Accuplan. Furthermore, due to property depreciating throughout its life, you can also add on years of deductions that shall also shed your taxed income.

Increase Net Worth

While owning a property, you gradually pay down the mortgage and build equity. As your wealth rises, your potential to buy more property increases. By accumulating more houses, you will again be able to create more income from rentals.

Decrease Portfolio Volatility

Residential and commercial properties alike, tend to have little to no correlation with other investments, which can be quite volatile. Real estate is a stable investment that can provide an excellent return, without too much risk.

Financial Security

Beyond having a fallback fund for emergencies, it's essential to have investments that can provide you with peace of mind and financial security. With a rental property, in particular, it's owners secure a regular income. And as mentioned above, as the value of the property increases, the rental income shall too.

Predict the Forecasted Market Value

There are plenty of detailed online sources about the history of an area's properties and its historical sale prices. And so you shall be able to see a property's sale value over time.  Plus, you can also do primary research and visit to get a feel for an area you'll be buying in. Great neighborhoods, with houses that are hardly ever up for sale, and excellent schools close by. Additionally, access to public transport routes, and low crime rates, shall always be in demand, particularly with families, couples, and the elderly.  With an abundance of resources available online. Plus, the potential to conduct in-person research before you purchase a property. You can gain a good picture of whether a house or commercial building is likely to be a good investment. This means you can make an informed decision on your purchase, leading us to the next point.

You are the Boss

Some people love managing properties so much that they make a living out of buying and flipping or renting out properties. One of the best things about managing properties is you're self-employed and work when you want to. Meaning you decide when and where to conduct research, source housing auctions, survey properties, etc. If you enjoy sourcing, buying, and managing real estate, you may even want to keep it going when you retire.

In conclusion, real estate is a significant investment to make for retirement. So long as you apply the research and effort it takes to attain properties. You shall have a better chance of accruing real estate that will provide a lucrative return on your investment.  However, as with all investments, you must also prepare for the worst. The housing market is excellent at bouncing back from dire global situations and downturns in the economy. But, in other scenarios, the property's value could be decreased indefinitely.  Suppose you're still interested in investing in real estate but are unsure whether you'll enjoy sourcing and purchasing homes. You could instead consider investing in stocks with a business that primarily focuses on real estate.

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