Episode 68: Stock Market Crash and Real Estate Investing


Stock Market Crash and Real Estate Investing

In this episode I am joined in the studio with my wife Nic from http://www.rapwithnic.com about the stock market decline and real estate investing.  The recent sudden decline in the stock market is just a recent example of why I am not a big fan of the stock market.

Volatility Everywhere

Now, don’t get me wrong.  I understand that the real estate market is not perfect either.  But what I am saying is that the real estate market is more stable and is less volatile than the stock market.  Typically, the real estate market is on about a 10 to 20 year cycle between up and down times. That’s a lot better than losing all the gains over a year in one or two days.

Take Control of Your Retirement

I don’t like that fact that we have been “brainwashed” into thinking that our IRA or 401 is going to be sufficient to support us during retirement.  The lack of returns of these accounts combined with an all time low saving level of American family spells danger in the later years.  Several good cash flowing rental properties with sufficient equity could general sufficient income to last a long time.

What about Inflation??

Most retirement plans leave inflation out of the equation.  The fact is, they have to otherwise you;d freak out because you’re actually losing money.

inflation-dollar-graph-from-1913-2010Inflation doubles about every 10 years.  So, it would take twice the amount of money to retire in 10 years.  If your retirement funds are only generating a 3% return per year, or 30% in ten years, you are left with a 20% deficit.

Rentals adjust with inflation.  By periodically raising rents your rental income will stay current with inflation or at least be a lot closer than a retirement fund that is barely showing a return to begin with.  Most landlords that I know are generating a return of at least 10% with many of them seen nearly twice that.  If you are seeing a 10% return that adjusts with inflation, you are truly on your way to a solid retirement.

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