May 22nd, 2019 2:44 AM by Eric Willner
Radio Show Notes 5/21/19 Monday: Saving vs. Investing? (Part 2) Real Estate is The Answer! Here are 4 Tools For You, Plus 1 Bonus Tool
By Eric Willner, Host of America’s longest running Radio Show about Real Estate
Read a summary of the show below or
Saving vs. Investing? That’s the question. Part 2. And yes, Real Estate is still the No. 1 Answer. And once again The Real Estate Show is going to show you why! Yesterday we showed you how among oldest Americans, one in five dies broke. For those who died at a younger age, the numbers were even worse. That’s why understanding Saving vs. Investing is critical, and why the biggest financial worry for anyone saving for retirement is “Will I outlive my savings and die broke?” at the end of the article (and show), I’m going to give you a simple tool to see the dramatic differences a few percentage points can make with compounding.
There of been many surveys, a lot of research, and countless studies that point to dismally low levels of retirement savings, and anemic rate of savings, which is why most American households have a reason to be concerned. Most Americans do NOT understand the distinction between Saving vs. Investing. That could be a fatal mistake for your retirement. So here are some tools to help.
1. Real Estate
I knew you wouldn’t be surprised that I said Real Estate is the number one tool. That’s because it is! Not only is more wealth created in this country through real estate, but retirees usually end up with more equity in their real estate then in their retirement plans. And, those with no real estate, often end up with nothing. So I highly recommend that you seriously take a look at acquiring and owning your own home in anyway possible. If you already own your own home, then start buying investment property.
If you want more proof, recall yesterday’s report on Saving vs. Investing, and how so many Americans die broke and the analysis by the Employee Benefits Research Institute which was based on data from the university of Michigan’s Health and Retirement Study. It concluded that of those 85 years old or older, roughly 1 and five had no assets, other than a house. Other than a house! Yes, that’s right, nothing except for their home! Real Estate was their only forced savings. And an investment. Were it not for real estate, they would have died it absolutely broke. It was the forced savings, and the fact that real estate is a great “automatic” investment, that they had anything at all. I especially hope that this puts a magnifying glass on why owning real estate is not only the path to homeownership, but it is also the path to a better retirement.
Too many Americans give up before they really start because of false beliefs about their own abilities or because of an early misstep that might have affected their credit. Maybe they even tried,and were turned down and some might never try again. For many people the credit game seems stacked against them. Especially in this country where credit is often more important then cash itself. So giving up is not the answer. No matter what your credit history was, today is the first day of the rest of your life. Plus, there are now established and proven ways to restore your credit to worthy levels.
A mortgage is said to be the highest form of credit. So having a mortgage and paying it on time is critical and helps to build your credit up. But what happens if you can’t get a mortgage in the first place? That’s where www.90DayFreshStart.com can really help. 90DayFreshStart.com says yes when banks say no. What’s even better, is it through in-house financing sources, you can establish non-traditional credit reporting of your monthly payments, thus building credit in a new and acceptable way. Check it out.
1. A Retirement Account
A retirement account can be very beneficial in two ways. First, it is part of a systematic plan to put money away and invest it for the future. Second, it allows you to eliminate one of the biggest drags on an investment, which is taxes. A retirement account such is an IRA or a Roth IRA allows you to defer taxes during the growth of your investment. In the case of a traditional IRA, you can deduct your annual contribution from from your income and pay no taxes on it while it grows, and only pay taxes on the withdrawls. For someone who starts out early, a Roth IRA may be better, because although contributions are with after-tax dollars, once in the account they grow tax-deferred, and can be withdrawn tax-free. Avoiding taxes where possible, will dramatically increase your results and your retirement.
1. Bonus 5th Tool: Compounding Returns
I’ve heard it said over the years, that Albert Einstein said compounding was the eighth wonder of the world. Regardless of whether he said it or not, compounding is a powerful tool for a retirement plan. It is calculated on the initial principle, which also includes all of the accumulated interest of previous periods of a deposit. You can think of it as “interest on interest” and it will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount. I will not get into how compounding works, but I will provide a website tool below, where you can look at the effects calculated for you.
In the show, I showed an example using an IRA account which allows tax deferral during growth. With an initial annual investment of $5000 (the maximum allowed for a traditional Ira), and regular annual deposit of $5000 per year during a person’s Typical 40 year career, they will have contributed $200,000. If you only saved that money and deposited in a 1% savings account, the interest added would be $44,432, for a total of $244,432 at Retirement. If instead, you were able to get an 8% return, while investing in real estate, the same $200,000 contribution would become 1,295,283, A difference of $1,050,851!! Here is the tool for you to play with:
Like I said yesterday, most people have very low financial assets at the end of their life and have been bumping along with low assets throughout most of their careers and into retirement. It doesn’t have to be that way! Together we can change that! And yes, I am definitely going to talk real estate. That’s because real estate is by far, the best solution to this problem. And it starts with homeownership. And that’s why I am going to keep referring to our special website www.90dayfreshstart.com – regardless of credit scores, or down payments. Go check that website out now, And tune back in again tomorrow for a continuation of this week’s incredibly important topic: Saving vs. Investing.
Do these things, and transform your retirement years into the income source you dreamed of. Find out more on today’s episode and learn more about Real Estate Investing and learn HOW by listening to The Real Estate Show with Eric Willner , Live every weekday morning at 8 o’clock (EST) on Florida’s Money Talk Radio station WSBR AM740, FM 96.9, and FM 103.9. You can also hear us on the free apps: iHeart Radio and TuneIn. Recorded Rebroadcasts are available 24/7 on Facebook. Please share our Facebook updates.
Also listen to the rebroadcasts on demand on Facebook.com/TheRealEstateShow
Then check out these EXTRA cool resources:
90DayFreshStart.com for The Steps to Homeownership for Everyone
TimeToFixMyCredit.com for Financial Education and Credit Improvement
AutomaticLandlord.com for Landlording and Real Estate Investment
MackBuysHouses.com for a fast cash offer on Real Estate
MackSellsHouses.com for great deals on Real Estate Investments
MackBargainHouseHunters.com to Partner on Real Estate Deals
Eric Willner is the Host and Founder of The Real Estate Show, an informative show about how to buy, own, and improve real estate the right way. You can reach Eric Willner at Eric@Ericwillner.com or 888-595-7779.
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