What to Know About Real Estate Investments for Retirement Income

Written by William O. Kresge

If retirement is right around the corner for you, it’s important to ensure that you have enough money to last you through your golden years. Would-be retirees often resort to stock trading and other sidelines to help build retirement funds in a relatively short period of time. This can be especially useful for those who may not have as much saved throughout the years. After all, there’s simply no way of knowing how much you really need. That’s why Becky Wilcox recommends establishing a passive source of income to let you continue earning even during retirement.

One type of investment to consider for reaping passive income is real estate. Entrepreneur Magazine lists some key advantages to investing in real estate, such as lower levels of volatility and better tax benefits. However, while it isn’t too complex to comprehend, real estate investments still require a certain level of knowledge, skill, intuition, and confidence. Fortunately, there are many traditional and online resources available, as well as seminars you can attend.

In fact, the real estate sector offers several different investment opportunities that are great for retirees. Consider these options:

Direct Ownership

When it comes to real estate investments, owning actual property is most likely the first thing that comes to mind. You can opt for short-term and long-term rentals on rooms and studio units, or go for something bigger like renting out a whole apartment building or office space. This route can provide you a lucrative business if you are financially prepared.

In this regard, it’s important to be well informed about your options so you can make better investment decisions. To help you with this process, Yoreevo’s James McGrath suggests taking advantage of a real estate agent’s services. Because an agent is tasked to work solely in your best interests, they can give informed opinions on your investment decisions and help you identify potential issues with a property. They can even negotiate the best possible deal on the property for you. Perhaps more importantly, real estate agents are paid through a commission from listing agents, so their services will not cost you any extra cash.

Real Estate Investment Trusts (REITs)

A REIT refers to a company that finances income-producing real properties. Many of these companies specialize in specific sectors, like healthcare and corporate real estate. These are made available for investors through initial public offerings (IPOs).

When you buy into REITs, you essentially make money as a shareholder through an IPO. The Street emphasizes REITs’ income-centric approach, noting that 90% of the revenues generated by REITs is regularly distributed to shareholders. The annuity-like income streams from this type of investment makes REITs a good option for retirees.

Tax Lien Certificates

Last but not least, tax lien certificates are a special form of real estate investment.The Balance’s guide to tax lien certificates warns that it can be a little more complicated than owning real estate stocks. However, it can be suited for certain investors, especially those who don’t want to deal with properties directly.

This is how it works: When real estate owners fail to pay their property tax bills, the government can place a tax lien against the property. The lien certificates can then be sold to investors through public auctions. When you successfully win a bid, you pay the tax office the required amount specified on the certificate. With this, you reserve the right to claim the same amount from the homeowner, plus interest. The property owners are given a certain period of time to pay the debt, but if they fail to do so, you then have the rights to the property.

Retirement can be daunting, especially if you haven’t figured out a steady source of income to replace your job. But with enough time and effort to research on real estate options, you can more confidently make investment decisions for your golden years.

How to Invest in the Stock Market for Retirement

Written by Becky Wilcox

It’s never too late to invest in the stock market for retirement– even if you are retiring soon or are already retired. Investing in the stock market has proven to be one of the best methods used in accumulating wealth– even in the short term. Stocks are assets known to trounce any other type of investment available.

When reaching retirement age, it’s understandable to be concerned about your financial status. Consider investing in stocks as a means to offset your post-retirement expenses. Before you begin investing, it’s important to understand how the stock market works and what you can expect.

Understand the Market

You cannot venture into this industry without understanding some basic information about how it operates. With a little research, you can become familiar with the language used in the industry so that you are not lost when stock jargon is used. Begin with the simple terms such as a stockbroker, money market, futures, forwards, and market fluctuations, and then expand from there. Keep in mind that on some days, trading is not available. For example, it’s good to know the Stock Market Holidays 2019 schedule and plan for days when the stock market is closed.

Profit Expectations

Profit earned from stock market investments can vary. Your broker can point you towards the safest investments with the best likelihood of short-term gains. Depending on your age, it may be prudent to include some 20-year investments in your portfolio as well. However, most of your investments should target returns after three to ten years.

Understand Risks

Investing in the money market is like investing in any other industry. It is possible to incur losses, especially if various factors don’t work in your favor. So don’t invest all your savings into the stock market just in case something goes wrong or there is another global recession.

Understand Diversification

Be sure to spread your investments over multiple entities and industries. It’s generally considered a bad idea to invest in a single company. It’s also not advisable to invest in the same industry, because the same issue could affect every company. The best strategy is to consider investing in several companies in different business sectors. For example, you could consider a technology company, a real estate company, a banking/financial company and a manufacturing company. Investing in a diverse group of entities will provide sufficient security for your investment. In case one industry declines, you will still have your other investments intact.

Invest in What You Know

One of the most important principles to incorporate into your investment plan is to invest in a company that you know. It’s hard to predict the success of a business if you don’t understand their business model. A good rule of thumb is: If you cannot explain what a company does in a single sentence, avoid investing in that company.

Take Advantage of Stock Volatility

High volatility rates characterize the stock market. Market volatility is the tendency of the market to either rise or fall sharply when responding to several variables in the market. The higher the volatility, the riskier is the market. Have a backup plan just in case the market takes a downturn by taking advantage of favorable fluctuations. For example, you can consider selling some of your stocks if they rise sharply before they bounce back down. You can make some profits in this period of uncertainty, and your broker should be able to offer you solid advice.

It’s Never Too Late to Start Investing

Investing in the stock market is a great way to accumulate wealth after retirement. You don’t have to wait decades before seeing a profit from your investment. Many options can offer returns in less than five years. If you are about to retire, or even if you are already retired, it’s not too late to learn how the stock market works and start investing.

Should You Continue to Invest After Retirement?

Written by Becky Wilcox

How much money is enough for retirement? Although that’s a common enough question, the answer may surprise you. Any number you come up with for your lifestyle will be something of an educated guess. In other words, it’s unlikely to be accurate. While it would be wonderful to establish a figure that defines a comfortable retirement, there is one problem with coming up with anything close to an accurate reckoning: the goal post keeps moving. Some variables that confound any calculation is that the rate of inflation, the cost of living, and confidence in the social security system keeps changing. In addition, with medical science making rapid advances every year, your chances of longevity keeps improving.

It’s unrealistic to simply hope to stockpile enough money to live out your retirement years. Rather than hoping you won’t outlive your money, it makes more sense to continue to generate passive income during your retirement years. Some investment vehicles that would be a good option for continuing to invest in your retirement years include precious metals, real estate investment trusts, dividend-paying stocks, US Treasury notes and bonds and Treasury inflation-protected securities.

Gold Bullion

When you invest in gold bullion, you’ll be joining a trend that has become increasingly popular during the last decade as the US debt has increased at an alarming rate. With the US national debt rising by an average of $3.8 billion a day and government borrowing at the rate of $5 billion every single business day, faith in the stability of the US dollar has been shaken. Consequently, gold is seen as a hedge against hard economic times.

People who are interested in gold bullion find it easy to buy and sell gold and appreciate the accuracy with which gold content can be verified after purchase. They believe that investing in gold has significant upsides in an uncertain economy.

Real Estate Investment Trusts

When you buy Real Estate Investment Trusts (REITs), you make money as a shareholder. REITs make money by purchasing property and then renting, leasing, and selling them. REITs are made available to the public through IPOs, or initial public offerings. After your purchase, you will be pleased to observe that 90% of a REIT’s taxable income is regularly distributed to shareholders like you.

Dividend-Paying Stocks

When you buy stocks, you will receive dividend payments. The best way to make money from your investments in stocks is to find companies that have developed an excellent reputation for increasing their dividend payments every year. These companies will continue to pump money into your bank account year after year. And, of course, as you add more shares to your portfolio, the more money you’ll make.

Municipal Bonds

When you buy municipal bonds, usually refer to as “munis,” you are lending a government entity money. A muni, then, is a debt obligation issued by a government entity to fund its diverse projects. In exchange for your loan contribution, you will receive a fixed number of interest payouts over a predetermined schedule.

U.S. Treasury Notes and Bonds

When you buy U.S. Treasury notes and bonds, you will be paid interest on a discount bond upon maturity. This is a bond that you can buy for less than its face value. You will then be paid the full value of your bond when it matures.

Treasury Inflated Protected Securities

When you buy Treasury inflated-protected securities, otherwise known as TIPS, you will benefit from inflation protection. The primary disadvantage of TIPS is that you will earn a lower interest rate than if you were to buy other types of government securities or if you were to buy credit securities. In addition, your tax bill will be higher.

In conclusion, you should continue to invest in your retirement years. Although you might expect to only spend a third of your retirement savings to cover your living expenses, this evaluation may not be accurate. In reality, much of your savings will be used to cover costs that you had not anticipated. For instance, the rise in the cost of medical expenses may be much higher than you could have predicted.