Let’s conduct an experiment.
Call your investment advisor and open an IRA or 401k. Then take $9000 out of your savings account and give it to him or her to invest.
When you get back to work, go to all of your co-workers and tell them you just opened this great IRA, and you’d like them to contribute to it.
What do you think the response will be?
My guess is either laughter or a rude remark.
Now, let’s change strategies. Take that same $9000 and use it as a down payment on a $300,000 duplex. Move in, and ask your tenant to help fund your retirement by paying rent.
The tenant will agree to this.
Move out of the duplex a few years later and get another tenant for the other unit. Ask that tenant to contribute to your retirement by paying rent, and he or she will also agree.
After 30 years have passed, if your property never goes up in value, your duplex, which is the equivalent of your IRA, will have $300,000 in it. Your only contribution will have been the initial $9000 down payment.
Of course, this does not include any positive cash flow, tax savings, or potential appreciation you may have realized.
And what if you had put that $9000 in your IRA and never invested another dime? Using Warren Buffet’s 7 percent annual return guideline, after 30 years you would have $68,510.30.
Unless, of course, you convert your IRA to a self-directed IRA and use it to buy real estate, which is a whole other topic.
Seems to me real estate is still a pretty good investment.
Call me today to find out how you can start getting other people to fund your retirement.