| The sad truth is that only 1 out of 20
Americans is financially independent when they reach retirement. The rest
are dependent on family, friends, or charities, and millions exist at the
poverty level… literally waiting around to die.
If you plan on spending all your money when you
make it and retiring on your social security, you need to wake up from
your dreams! Social security is designed to merely provide a
supplement to your investments and retirement plan. If Social Security is
all you’ve got, you are either going to have to continue working well
past normal retirement age, or be living a very meager lifestyle.
You deserve more than that, and you can have it…
with some financial discipline and planning.
Why not just put your money in a mattress or safe
deposit box? Because inflation will kill you. It will eat away at you
money’s value, actually making you poorer and poorer with each day that
goes by.
For those of you who need some explanation,
inflation is simply the general trend of prices to rise over time. Think
back to 25 or 30 years ago. You could buy a nice new car for $5,000. A
hamburger for 20 cents. An average new house for $25,000. You
certainly can’t do that today. While the prices of some items are
actually coming down (computers, for example), the overall trend is up.
This means that over time your money will buy you
less and less. For example, if inflation is running at 4% per year, you
need to earn 4% on your money just to break even, more if you want to
build wealth. You want to invest in things that not only give you a good
return, but that also go up in value over time (appreciate).
Another reason to invest in Alexandria real estate is
tax advantages. Most of us are being taxed from all angles. We ARE NOT
talking about cheating the government or not paying taxes that are legally
due.
However, prudent real estate investors will always
structure their investments in order to legally pay the lowest amount of
tax. This includes tax-free investments, tax credits (as in depreciation),
and tax deferral (as in most retirement plans).
Many people invest for cash flow. A common goal is
to create a “money machine” that will eventually replace you as the
primary income earner. This means that instead of you working for money,
your money works for you!
Smart investing will put you in the position where
someday your investments will earn more money each year than you do
working at your job. At that point you can retire and do what ever you
want, or continue to work and really sock away the dough – and build up
some serious wealth!
The main reasons for investing are:
-
Appreciation
-
Tax Advantages
-
Cash Flow
-
Retirement
Or stated another way, a great investment should
have the following qualities:
-
Beats (or benefits from) inflation.
-
Gives you tax advantages.
-
Provides growth or cash flow.
-
Helps your overall retirement plan.
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