Early last month I wrote a piece about growing capital and creating solid cash flow, much of it sheltered, while experiencing no appreciation whatsoever. The bottom line was surprising to many. Their capital nearly quintupled — while simultaneously creating reliable retirement income. Regardless of whether the capital grows by a factor of four or five, or less, the result will be far more palatable than a 40% loss a few years before your scheduled retirement, which is what’s happened to so many good people.
BawldGuy Axiom: Figuring return on disappearing capital is oxymoronic. Treating appreciation as anything but a luxury is akin to walkin’ in an unmapped minefield.
If you’re a real estate investor with property in places like San Diego or Palo Alto, California — you know what I’m talkin’ about — painfully so. Those who’ve moved their capital and/or equity to places like Texas — Dallas/Fort Worth MetroPlex and Austin are my favorites — have not only stopped hemorrhaging investment capital, but have actually enjoyed rent increases the last 12 months. No, really. Increases.
Let’s make your own Back To The Future movie.
Whether on your own or through a 401k/IRA of some sort, you were pretty happy at one time with your mutual funds. I say mutual funds cuz that’s what well over 80% of folks do according to multiple Wall Street analysts. Over the last 20 years BEFORE the meltdown, those poor people were ‘enjoying’ returns of just under 4.5% annually — hardly retirement numbers, unless the plan was to retire at 86.
To add insult to injury their kinda sorta growing stock portfolio then took a hit of 40% — virtually overnight.
Go ahead now and hop into the DeLorean. Get it up to 88 mph and land in 1994 or so.
Take the same $50-60,000 you had back then and get the duplex in the post linked to above. Instead of having approximately $150,000 post meltdown, you’d have about $250,000 AND $1,500-2,000 in monthly income, much of it tax sheltered.
Think about that.
Now think about where you’d like to be in the next 16 years or so. Remember the main theme here: The duplex investor started with less than $55,000 and ended up with an equity of $250,000 — PLUS a sweet annual income, much of which won’t be taxable for over a decade into his retirement.
You have a self-directed IRA? A Roth maybe? You can get this done there too. And if it is a Roth, you can grab the cash flow sans income tax as it comes in, as long as you’ve followed the rules regarding age, etc.
Readers: It’s all about adapting to the curve balls life throws our way. Those who make the strategic and tactical adjustments in a timely manner will not only survive, they’ll thrive. It’s all about having a Plan and doing things on Purpose.
Sound familiar?
You may contact me at 619 889-7100 as I’m in need of my daily fix. Have a good one.
Related posts:
- The Coming New World Of Lending — Back To The Future
- Brown and Brown Back In San Diego and Starring In Getting Outa Dodge
- You Can’t Go Back In Time, So You Better Get It Right Today — Retirement Income
- Some End Of The Year Thoughts For Current and Future Real Estate Investors
- Back To What Matters — Retirement Is About Income — The Basics
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