Around 28% percent of Americans in their 60s have less than $50,000 saved for retirement. It is NEVER too early to start thinking about how you’ll take care of yourself and your family in your golden years.
But it does mean you have to start. Here are six real estate and personal finance strategies that will help your money make money, giving you financial success for years to come.
1. Homebuying
We’ll start with perhaps the most obvious option.
If you are currently renting property somewhere where real estate is hot (and wow are they hot, with home prices growing 15% in November of 2020 compared to 2019), then you are losing money. How, you ask?
Because for each year you rent you aren’t building equity. There are immediate cost trade-offs, such as paying for housing repairs, but owning a home and taking care of it will long-term earn that investment back and then some.
2. Rental Property Investments
Rental properties can include homes, duplexes, townhouses, condos; anything that people can live in.
Once you have a renter, you will continually receive a passive monthly income. Better yet, you’ll also receive tax benefits that help ease the cost of a mortgage.
This is an investment property strategy to consider effective if you or someone you know is a handyman. You’ll be in charge of repairs, so do your due diligence in finding a good tenant.
3. Mutual Funds
Mutual funds are investment programs that utilize diversified holdings, such as stocks and bonds, to earn you money. They’re run by professionals and overall pretty hands-off.
You invest money, it is diversified by the pros, and year over year you see an average rate of return. Over the course of 30+ years, that average nears 7%. Pretty solid and pretty easy to manage.
4. Invest in a LIRP
What is LIRP? LIRP stands for “life insurance retirement plan”.
Unlike term life insurance, which only provides a lump sum at the time of someone’s passing, LIRP’s provide more meaningful growth. These come through multiple payments in the form of dividends.
In addition, LIRPs aren’t tied to any market and thus are great to have during downward market trends. You can even use the cash value of this policy to fund your retirement.
They also have a guaranteed rate of return, unlike other market-based accounts. These funds can be accessed at any age without taking a percentage deduction on withdrawals.
Of note, you must qualify for life insurance in order to invest in a LIRP. They cost notably more than term life insurance plans, of which the tax-free interest is then saved and shared with you and ultimately your beneficiary.
5. Property Flipping
This real estate investment strategy revolves around having renovation skills (or know someone who can help you without charging you an arm and a leg).
House flipping is where you purchase a worn home, usually dated in its aesthetics, and then update and upgrade it to make it more appealing for the market. The ‘flip’ is you purchase it, fix it up, and sell it at a profit.
When flipping, it’s important to have a good inspector come out before buying the home. Unexpected issues may increase your costs and therefore lower your overall return on investment.
6. Real Estate Investment Trusts
This real estate investment strategy involves owning commercial real estate without actually owning physical space. You purchase shares representing ownership of a real estate firm or company, and then you share in their profits.
These trusts are required by law to distribute 90% of annual profits, making them great for investors seeking passive income.
Personal Finance Strategies
Consider these personal finance strategies and determine what works best for you. While some can prove more lucrative in the short term (like house flipping) they also require a bit more work than a LIRP or a mutual fund.
If you like this content and want to learn more about investment opportunities, check out our other blog posts.
