How to Keep the Goose Alive, FOREVER: Sunday Morning Thoughts 31 March 2013

Let’s recap last week’s post about a steady income flow during retirement.  To keep the goose alive and producing golden eggs, you must have at least one stream of steady income into the goose, also known as your retirement account, or life savings.  Please understand retirement does not mean you quit your lifestyle, but that you no longer go to a job/work/run your business.

But all play and less business/work can lead to poverty.

We all live on a fixed income, regardless of retirement status.  We make a budget of fudget, encounter surprise expenditures, and maximize the money we have.  So working on your retirement before you retire is the ideal, but everyone always puts it off until later.  Set up your retirement account, also known as your golden goose, to continue to have an income when you have gone into retirement.

How do you keep an income, when you are no longer working?

Have your non-earned streams of income continue to work for you, such as private lending.  With a private lending contract the work is minimal.  The deals literally come to you.

You examine each deal to ensure it will give you the return you are looking for, and for the period of time you wish to be involved.  Remember; never place all of your eggs (investment money) into one basket.  Diversify your types of lending investments.  You can invest in a few SFR’s, a few small and/or large multifamily units, offices, and businesses either start-ups or businesses which are already generating a steady income.

The only way the goose will remain alive is to feed it a steady income.  If you live off of the money you put away without adding to it, it will eventually run out, become depleted, and the end result is  a dead goose, and no more golden eggs.

But, the goose can live forever, if you plan for it.

So how do you make your goose live forever?

Private lending is one way.  But, before you dive in, get an education on private lending first.  We have an on demand webinar and will be adding two more educational webinars soon.

Ask questions, we will answer your questions.  So take a moment, bookmark our Facebook webinar page and watch Private Lending 101 at your leisure.  Private Lending 102 and 103 coming soon.  May your goose live long and give you prosperity.

Related articles

• The Golden Goose Must Never Die: Sunday Morning Thoughts 24 March 2013 (backedbyrealestate.com)
• At 70 1/2, withdrawal from qualified retirement accounts a must (jsonline.com)
• Should I Take Money Out of My Retirement Account to Pay Off Credit Card Debt? (turbotax.intuit.com)
• Retire before 40? Some folks say it can be done (usatoday.com)

 

The Golden Goose Must Never Die: Sunday Morning Thoughts 24 March 2013

1 in 3 Americans cannot retire comfortably.  With that in consideration, when you retire you no longer have the same income as when you worked, so saving for your retirement is crucial while you are still working.  But, once you retire, you no longer have an earned income.  You will be living off of your investments, and if you are not adding to your investments while living on the investments then you are hoping to not out live your money.

Most people out live their money, and if you do a reverse mortgage you may out live that as well.

So what can you do to protect your retirement future?

The simple answer, the goose must never die.

So how do you live off of what you set aside for the future and still increase or at the least replenish your investment.

One way is to become a private lender and live off of the interest payments you receive.  This way you still have a retirement investment which will still grow, and wantfully you will not outlive.

Related articles

• The American Retirement Asset Crisis Is Upon Us (247wallst.com)
• America Isn’t Ready For Its Future (businessinsider.com)
• Why Americans Can’t Afford The Future: Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) (etfdailynews.com)
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Are You Gambling with Your Retirement?: Sunday Morning Thoughts 04 November 2012

Gambling while in retirement is not the same as gambling with your retirement.  

When you enter the field of stock market investing, i.e. with a 401k, Keough, IRA, etc. the first person placed in front of you is an adviser.  They help you create a retirement model that may or may not work.  Most models look at the upside of saving and not the down side of the economy.

If you only know that your retirement will be a certain amount of money by the time you retire, and the estimated probability of having a comfortable retirement is at least 95% then you may want to ask more questions.

Occasionally the retirement models only tell of the shiny side of the coin.

But taking charge of your retirement and investing it ‘willy- nilly’, is not any better.  A balanced portfolio may prove to be better than having one in all aggressive investments, or on the flip side, in too conservative of investments.

Too aggressive opens your investment to high risk, and too conservative may not yield decent returns.

Finding the right balance for you tolerance level and growth strategy may prove to be what will get you to your retirement safely and comfortably, without the thought of outliving your money.

A few things to consider:

• How much do you want to live off of yearly? $70,000+-
• How long do you think you will live?   Many people are making it over the 100 mark these days, just ask Willard Scott.
• What type of savings do you currently have?
• Do you have an IRA, 401k Keogh, if not will you begin to save and open one and when will you open it?
• How much will/are you putting away currently?

Here’s a retirement calculator to get you started.

http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp

Keeping these tips in mind may aid in the reaping of the rewards on your investment. 

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Real Estate Retirement Investing Part 2: Sunday Morning Thoughts 09 September 2012

Retirement (Photo credit: Wikipedia)

Instead of wracking your brain over how long your retirement will last, why not give a lot of thought to understanding how you can use other non-conventional investments to make your money for retirement work for you.

Everyone either understands or pretends to understand how their 401k works. 401ks have been an investment vehicle for a long time, but there are many options for your 401k investment.

You can invest aggressively, moderately, or very cautiously, but will you still be able to have returns that will be viable when you retire?

Not necessarily.

You have to consider all of your fund options, and a diverse account is normally the best route.

What about if you are already in retirement, and your account is not going to last you for much longer and your greatest fear is out living your money?

No one should be afraid to live.

Precautions before your money runs out is best, whether you are safe guarding what you have, or you are trying to make what you have grow larger; sound investments are your key to living in a happier state of being, without the worry of your money running to low or out altogether.

Diversifying your portfolio to include real estate investments may prove to be a great option for growing and/or maintaining your retirement nest egg.

Being a private lender, also known as being the bank, is a way of earning interest without the risk of owning a property.

As a private lender you are investing in the vision of someone else, but only the vision is backed by real property, something tangible, sellable, and if calculations are done properly can also be profitable.

So even if a borrower defaults on the loan you have given them, you will still have an asset that you can resale or keep for yourself as an investment.  Of course, you will already know from the documentation given to you in the initial evaluation of the loan, if the property is worth equal or more than your initial investment.

Retirement does not have to be bleak future/present if prepared for and maintained properly.

Related articles

• Real Estate Retirement Investing Part 1: Sunday Morning Thoughts 02 September 2012 (backedbyrealestate.com)
• Real Estate Retirement Investing Part 2: Sunday Morning Thoughts 09 September 2012 (backedbyrealestate.com)
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• Residential and Comercial Real Estate Investing: Sunday Morning Thoughts 5 August 2012 (backedbyrealestate.com)

Real Estate Retirement Investing Part 1: Sunday Morning Thoughts 02 September 2012

With the recent economic downturn many people have seen their retirement almost go up in smoke. From 401k to savings accounts to buying stocks and bonds, this recession-depression has taken its toll on all investments. Many people who have already entered into retirement have noticed the sharp decrease in the money they use to have.

Racking their brains with, how long will my funds last? Can I sustain my lifestyle?

So how do you recoup your retirement in a down turn economy?

The easy answer, make better investments.

Money market and 401k accounts depend on a fund manager to make decisions for you for a certain type of product. So if the fund is invested in for instance, green energy or emerging markets then that’s the only type of investment the fund is allowed to invest in, without regard of market performance.

So if another type of investment would prove to be more lucrative for you, the fund manager is not allowed to change the investment strategy but is bound to the specific type of fund investments.

So, you will never receive a call telling you that there is a better investment on the horizon. This is why many funds can be poorly producing funds when compared to individuals who invest in stocks on their own.
But what about investing in real estate?

Some people believe that real estate investing is a thing of the past and has seen its prime, but as long as there are people on earth, real estate will always remain a sound investment.

Related articles

• What’s Your Investing Strategy: Sunday Morning Thoughts 19 August 2012 (backedbyrealestate.com)
• What Is A 401k Retirement Plan? (answers.com)
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A Closer Look at Using a Self Directed IRA to invest in Real Estate

For many investors using a self directed IRA to invest in real estate seems a little scary.  People may think to themselves what about my retirement?  What if the deal goes south?  If the deal goes south how can I get my money back?

Those questions are perfectly normal to ask, especially since the stock market beat up many IRAs, 401ks, annuities, and other investments.  In addition to the stock market taking a negative toll on investments in general, people wonder if real estate is a viable option for their nest egg; since many once thriving markets and sub markets are presently plagued with upside down mortgages, causing negative equity, and resales selling for a considerable amount less than the once high asking price.

One thing most new investors learn quickly is buy low sell high.  Or maybe if you buy high you can short the stock.  Well the same type of thought can be applied to real estate.

When the market was high many free and clear owners sold their properties for the highest possible price.  Just when they thought the price had gone much higher than they expected, the purchase price went a little higher.  Sub prime lending was also a factor, people were able to buy more house than they could afford in the future reset to principal and interest payments.

The then buyers and lenders did not think the bubble would rupture, but it did.

Now with a housing glut in many prime areas, plus commercial real estate to soon take a tumble due to stricter lending practices, this would be the time to implement the strategy of buying low and hold for appreciation.

Shorting is an option as well in real estate; this practice is known as a short sale.  Although you did not purchase the property when it was a high price or market peak, some one else did.

In a short sale the lender would accept less than owed provided the property is sold to an uninvolved third party.

Meaning the seller may not keep the property nor have a relative or friend purchase the property for them.  The original purchaser must server all ties to the property.  Many lenders are now coming to the negotiation table of short sale a little easier now this could be due to being overwhelmed with foreclosures and more foreclosures on the horizon.

In a real estate buyers market the strategy of holding for appreciation is a very good option.  So if you lend on a current income producing property now then in 3-5years the property would be worth more than now, provided the area is a stable, or stable and emerging area.  A property is considered income producing if after all debt service and maintenance is subtract from the gross income does the property have a brisk cash flow.

So if the deal goes south the property is your collateral.  You have the option to sell the note, sell the property or hold the investment.  Remember you need to receive detailed information on any venture if you decide to invest.

Please subscribe so you many receive the eBook about cycles (it’s only 6pages but is packed with a lot of information) it may help you in your understanding of events to come.

Using your IRA to invest in Real Estate: Sunday Morning Thoughts 25 July 2010

Since 1974 a self directed IRA could be used to invest in real estate.  Some people are under the misconception that they cannot use their self directed IRA to invest in real estate.  An investment in real estate using a self directed IRA is a good way to increase return on investment, especially in a volatile stock market.

Using your self directed IRA is not the same as taking a loan from the IRA account.  Banks are not allowed to give loans from an IRA.

An IRA account also cannot be used to invest in collectibles such as:

• Artwork:  So you will not be able to purchase a Picasso or Rembrandt

• Rugs:  You will not be allowed to invest in the Persian rug from your vacation to NY or any where else

• Antiques:  The Ming dynasty Urn

• Metals, except for certain types of bullion

• Gems: Although Diamonds, rubies, emeralds, and sapphires are nice     but not in this case

• Stamps:   Purchasing the first stamp ever made gives you bragging    rights but funding cannot come from your IRA

• Coins, except certain minting by the US Treasury

• Alcoholic beverages: 1787 Chateau Lafite, leave it in the cellars of others if you were thinking about purchasing it from your self directed IRA

For more information on collectibles, go to the IRS website for publication 590.

Taking active use of a self directed IRA instead of leaving it to the topsy turvy stock market can be a lucrative option in our current economy.

Of course not all investments are guaranteed to have a positive return, but in the current real estate market the possibility of a positive return is more likely, especially from the stand point of being a private lender.

A private lender creates a loan to a person or entity with the property as collateral; in effect you become the bank.

As a private lender it is not your concern to pay property taxes, insurance, etc.  as with owning the property.  This would only become your concern if you were to foreclose on the property.  Even in a foreclosure you would still benefit by either selling the property or keeping it for cash flow to add to your self directed IRA account.

When deciding to use your IRA to become a private lender, remember not all custodians are created equal.  IRA laws do not prohibit investing in real estate but trustees are not required to offer real estate as an option.  Some custodians do not allow usage of an IRA for real estate investment.

For more information about investing in real estate using your IRA email or call us we will also send an e-book on cycles.  Everything has a cycle, this e-book explains how you can use this information in investing among other things.  For tax questions please call the IRS (800) 829-1040 or visit their website http://www.irs.gov/retirement/article/0,,id=111413,00.html#return