Investment Advice: Why Retirement Funds are Critical Today

If you think that it would probably be a good idea to consider investing for retirement while you are still young, you are on the right track. Nowadays more and more financial experts claim that the social security fund is not going to last enough so that your generation starts collecting. If this ever becomes reality, then you would better consider several alternative sources of income. By investing for retirement you will make sure that you will be able to take care of yourself and enjoy your golden years.

If you are like most people, you may find that investing in retirement funds is something you postpone easily from one day to the next. It may often seem to you that there are more pressing matters on which to spend your money. However, you must put this one on your top priorities and start setting aside money as soon as possible. The first step in this direction can be a consultation with your financial advisors, who will be able to inform you about the benefits behind different scenarios adjusted to your needs. Your financial consultant will also explain to you the advantage of investing in a retirement fund early, so that you can potentially end up with some extra dollars in your account as a result of compound interests.
After having a talk with your financial advisor the only thing left to do is decide exactly how to invest your money. Given the fact that it may take you ages to contrast and compare all the existing investing options and try to figure out how they work, ask for the help of a broker instead. He or she is the best qualified person to assist you in choosing the best methods to invest in retirement funds, so don’t waste your time and go schedule your appointment.
Besides consulting a broker, you can also do your own research at the library, reading the newspapers or on the Internet. Soon you will learn many more arguments for investing in retirement funds, and also some of the safest things in which to put your money and make a good profit. When investing for retirement you will find out that you don’t need to limit yourself to dealing with local banks only, as there are plenty of online options as well. Taking a look at those sites which compare the market rates will help you make up your mind about investing only in those retirement funds which suit your needs and wants.

Copyright © 2007 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

6 REASONS for Investing in Florida Real Estate Investment Property NOW

I invite you to take the next few minutes to learn the truth about the real estate market, how it compares to other methods of building assets and why it is such a lucrative form of investing. Many potential investors will say, ‘I need to get into the Florida Investment Property market’, especially taking into account current stock market fluctuations and the HOT market for investment properties, but simply don’t know the facts about Orlando property investing and how to use sale and leaseback method of property management.

When is the last time your financial advisor or stockbroker tried to convince you that moving a portion of your assets into the Florida Investment Property market might be a good idea? Never Right? The ‘why’ is simple. They don’t earn commissions when you buy Florida Investment Property. It is also likely that you have probably never had an ‘apples to apples’ comparison of stocks versus Florida Investment Property quite like the one you will see here.

Reason 1:

Leverage: Banks will not typically loan money to buy stocks. Banks will however, compete fiercely to loan money to buy Florida Investment Property. Your first question should be, ‘why is that’? It has to do with risk management, which we will discuss later. The fact that banks want to loan you money to buy Florida Investment Property creates a situation which we will call LEVERAGE.

Let’s assume that you have $10,000 to put into some type of investment. If you choose to buy $10,000 worth of stocks, you will own exactly $10,000 worth of stocks. Pretty straight-forward. However, suppose you choose to invest that $10,000 into Florida Investment Property using a 90% mortgage (which in many cases can go up to 95-100% mortgages in today’s market), you will own $100,000 worth of Florida Investment Property. If both of your investments were to appreciate by 10%, your actual gain with your stocks would be $1000 where your actual gain with Florida Investment Property would be $10,000. That equates to an actual 10% return on investment vs. a 100% return on investment. That’s what we call leverage.

Leverage: Florida Real Estate vs. Stocks

The traditional argument against Florida Investment Property Investing (mainly from Stock Brokers) has always been ‘I can get an average of 10% from stocks with little effort so why would I invest in Orlando Investment Property that only appreciates 6-7% per year’? This point-of-view is not taking leverage into account.

If you take the above statement to be true and compare the REAL numbers, the stock investment gained 10% of the initial $10,000 value (or $1000) and the Orlando Investment Property investment gained 6% of the initial $100,000 value (or $6000). That is still an actual return of 10% versus 60%. It is not hard to see which investment provides a greater immediate return on investment. Additionally. these numbers do not take into account any income from your property during the course of the year, or the substantial tax advantages to owning property, which we will discuss later.

Reason 2:

Value: As we mentioned previously, if you invest $10,000 into purchasing stocks, you own $10,000 worth of stocks (a fairly obvious point). If you invest $10,000 into purchasing Orlando Investment Property using the leverage of a 90% mortgage, you own $100,000 worth of Orlando Investment Property right? Well, only if you paid retail for your property. Any savvy investor will tell you that there are excellent deals to be had in Orlando Investment Property, you just have to find them.

What if you purchased a $100,000 property that happened to be worth $110,000 the day you bought it? Does it happen? The answer is yes, all the time. If you have your eyes open and are willing to ‘go through the numbers’ to find good deals, they are all around you. You may be asking yourself, why would anybody sell a $110,000 property for $100,000?

Value: Making money when you buy.

The reasons are endless as to why a quick sale is desired, but just to name a few: job relocation, divorce, an estate is being settled or maybe a current appraisal on the property simply wasn’t done prior to selling. By ‘finding this deal’ you have accomplished two things.

You have added $10,000 to your asset column in the form of equity.

You have created additional LEVERAGE for yourself as the value of your property increases (a 6-10% gain on $110,000 is better than a 6-10% gain on $100,000!) Remember, you make money in Orlando Investment Property when you buy, not when you sell.

Reason 3:

Control: Let’s take our assumption one step further. When you buy your $10,000 worth of stocks, what can you do to increase its value? If we follow the previous assumption, you have invested $10,000 using a 90% mortgage to purchase a $100,000 property that has an actual value of $110,000 because you ‘found a good deal’. So what can you do to further increase the value of your new $110,000 property?

It is amazing what a cleanup, a little landscaping and a paint job can do to increase the value of a property. Only a few hundred dollars well spent can result in huge value gains in Orlando Investment Property. Your $110,000 property with a little effort could easily be worth $115,000, $120,000 or more virtually overnight! Do you have to do any of this work yourself? Absolutely not! If you like to do that sort of thing then have at it, but if not, simply hire it done and accept a little lower net gain.

Reason 4:

Superior Tax Position: The tax code in the United States is geared to reward Investors who make housing and other property available to the population. When you invest in stocks, you are taxed at some of the highest rates in the tax code. When you invest in Orlando Investment Property, you put yourself in one of the best tax positions in the business world. Remember the wealthy that hold substantial portions of their assets in Orlando Investment Property? Tax advantages are one of the main reasons this is true.

Continuing with the above example, let’s say that you have completed your ‘deal’ with the $10,000 invested with a 90% mortgage to purchase the $100,000 property that appraised for $110,000 (because you ‘found a good deal’), which you improved to say, $115,000 by spending another $1000 on cleanup etc. Assume that one year passes and the Orlando Investment Property market grew by 6%, your property would now be worth $122,000. So far, so good right? If you are like most people, you may want to spend some of your hard earned money.

Let’s do the numbers. You have a mortgage at current rates that started at $90,000 and after a year worth of payments (the majority of which are tax deductible) you still owe approximately $89,000. However, your property is now worth approximately $122,000. If you were to refinance at 90% once again, you would take out a new mortgage of approximately $110,000. This will leave you with approximately $21,000 in cash in your pocket. Now, the BIG question; do you have to pay tax on that money? Absolutely Not! You have not sold the property or realized a ‘capital gain’. You have simply borrowed money from yourself. You are able to do what you wish with that money, free from any tax whatsoever. Obviously, a good strategy might be to purchase two more properties just like your first deal!

Also, we have not taken into account the fact that ALL of your interest payments on this property are tax deductible. In addition, you are also able to depreciate the property itself and all of its contents for additional tax advantages if you choose to do so.

Let’s be fair and compare the Orlando Investment Property tax position with the stock scenario. Assume that the $10,000 initial stock investment grew by 10% in the first year, creating a gain of $1000 and you wish to access it. If you draw it out, you will pay from 20-28% (or higher) in capital gains tax in order to have access to this money. This reduces your net gain to $800 (actual 8%) or less, depending on your tax situation. Compare that to Orlando Investment Property and you are beginning to get the picture.

Reason 5:

Limit Your Exposure To Risk

Risk Management: Do you remember at the top when we said that banks would compete fiercely to loan you money on Orlando Investment Property? The answer to the ‘why’ is very simple. Low Risk. Banks incur little if any risk when loaning money on Orlando Investment Property due to the steady, solid growth rate of the property market, as well as the fact that if you default on your payments they will simply sell the property to somebody else. This is in direct contrast to the volatile stock market, which can vary daily with sharp increases and decreases in value. Furthermore, banks realize that a property isn’t going anywhere, whereas many investors know all too well about .com and other types of companies that were there yesterday and gone today.

This is all not to say that Orlando Investment Property markets don’t go down from time to time, however the dips are much less dramatic than that which can take place in the stock market, proven out by the banks’ willingness to loan money on property.

Reason 6:

Protecting your peace of mind.

Finally, Now that we understand the value of leverage and risk management we realize that a 6% Orlando Investment Property gain ‘beats the pants off’ a 10% stock gain in actual return on investment by a wide margin (approximately 50%, not taking into account several factors that can increase this number such as tax advantages, income on property etc.) Owning good, solid Orlando Investment Property allows you to sleep at night, or go on an extended vacation without worrying about your asset column. This is directly opposed to holding a substantial percentage of your assets in stocks.

5 Common Arguments When Investing In Tax Liens

Today, tax liens are among the best investment options any American can take. News articles and websites both praise and criticize this type of investment.

For you to be ahead of the pack, here are some of the advantages and disadvantages commonly associated in tax lien investing.

Argument No. 1
Pros – It offers a high rate of return of 18 to 24 percent return per year, depending on the state. Other states can offer as high as 36 percent.

Cons – Don’t forget your homework. If you purchased a lien on an area with noisy neighbors or frequent environmental problems, you may not benefit from your investments at all.

Argument No. 2
Pros – If the previous taxpayer – the one who owned the house – fails to reclaim his house after two years, the local government can now award the house to the tax lien investor, plus his investment and the rate of return. Although most redemption periods last for two years, it varies from county to county.

Cons – Assuming the taxpayer reclaim the house, the lien on the home will be lifted. Though you can recover your investment, you cannot own the house anymore. Also, if you own the house after the taxpayer defaulted, the risk of regarding home and lot titles can even get you into trouble.

Argument No. 3
Pros – Similar to U.S. Treasury Bonds/Bills, tax liens are guaranteed by the government. Investments like stocks are not guaranteed though in case the company defaults. Options, futures and foreign exchange have the highest risk where you can lose money in a blink of an eye.

Cons – Be sure to invest only in prime and well-researched tax lien homes that you know. Otherwise, earnings could turn into losses.

Argument No. 4
Pros – Tired of monitoring your investment on the tickers of Dow Jones, S&P 500 or at NASDAQ? Stock market investors almost lose their mind during the crash of 2008, and many others went bankrupt in an instant.

Investing in tax liens is a different story. There is nothing to worry about the daily, monthly or annual performance. No need to tune in to the business channel and watch the reds on the ticker.

Cons – Be adept in state and local laws regarding tax lien home sales. If misunderstood, the written print can be a complicated paperwork in the future.

Argument No. 5
Pros – According to Forbes Magazine, approximately $426 billion in state and local tax on real estate is owed in the United States each year. These opportunities in investing could be overwhelmingly huge.

Cons – States like New York only sell tax liens and tax deed sale to large, corporate investors. This excludes individual investors out of the game. Look for a state that gives equal investing opportunities. Even better, there are several websites teaching prospective investors on how to buy tax liens online.

Now, you can deal with the world of investing. Don’t forget to enjoy the adventure, as well as the earnings you will make during the process.