Investing in Real Estate for Retirement

Updated : Nov 08, 2019 in Articles

Investing in Real Estate for Retirement


Today we’re going to discuss whether investing
in real estate should be part of your retirement income plan. There are many potential advantages to investing
in real estate. The first one is obvious. It’s the income advantage of investing in
real estate. You can use the income to supplement your
other retirement income sources like social security pension or even withdrawals from
your retirement account. Another advantage of investing in real estate
would be the appreciation or growth potential of investing in real estate. But remember, not all investments are created
equally, so you want to be sure you are clear about your objectives, whether that’s to invest
for income purposes or for growth purposes. Oftentimes these two things can be mutually exclusive. Another less obvious advantage of investing
in real estate is the tax advantage. Whether it’s to reduce the amount of your
current income from a tax perspective through depreciation, or to shelter some of the potential
growth from long term capital gains, there are many different tax advantages of investing
in real estate. This is why it’s so important to work with
qualified financial advisor as well as a real estate agent and a tax advisor to understand
what the role is of investing in real estate within the broader context of your financial plan. Another less obvious advantage of investing
in real estate is the ability to use leverage or to borrow or finance a portion of the purchase
of the real estate. It’s different from most investments, where
you have to invest all of your capital to buy stocks or bonds – but with real estate
you can actually carry a loan or mortgage to enhance some of your returns. And finally, investing in real estate offers
you the ability to diversify your investments. Real estate as an asset class just like stocks
and bonds, and these different asset classes will behave differently in various and different
market environments. So this allows you to spread your risk out
into many different places. Now if any of these advantages makes sense
to you, you’ll want to look at different ways to invest in real estate. There are two primary ways. There’s direct investments – going out and
purchasing, say, a residential piece of property and being the manager and the owner of that property. Or there are indirect ways to invest like
through financial instruments like REITs – real estate investment trusts. If you need any help understanding the role
that real estate plays in your overall retirement income plan, please contact us at PureFinancial.com. Thank you.

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