A Discussion of Retirement

02/03/2007

Recently many people have contacted me, wondering if real estate investment might be for them. These individuals share a few common characteristics:

1. They’re between 40 and 55 years old.

2. They have cash or available home-equity to invest of between $25K and $100K.

3. They have limited real estate investment experience.

4. They know they need to plan for their future retirement.

5. They have all, but given up on OR just plain, don’t trust the stock market!

How to fund our retirement is a serious question for many of us baby-boomers. Where do we turn? Well, we certainly can’t rely on the government to support us, although a huge percentage of boomers have no other retirement plan in sight. That is scary! Still others are betting their retirement on a crapshoot we call the stock market. I hear you now, yes but I’m diversified in mutual funds so I will be ok, right? I have just three words for those of you blindly handing your hard earned money over to a mutual fund company and hoping for the best – Stock Market Crash.

It happened in October ’87 and again just a few years ago when the high-tech bubble burst. You know it’s going to happen again. What if it happens during your retirement? What will you do when the market is panicking? Will you sell at the low price just to save what’s left of your savings like everyone else, or will you have the courage (and the time) to risk all you have and stay the course. What will you do for income while the stock market regains its losses? Will the government safety net programs still be a viable option for you while you wait for the recovery? All of these are important questions to be asked.

So what is the answer? I believe it’s Real Estate. The fact is, that most really rich people hold the majority of their wealth in Real Estate. Most of the middle class hold their wealth in their home and in what’s left in the stock market via mutual funds, most of which is in their RRSP. My theory is that if you want to know something about money, talk to someone who has a lot of it. If you want to accumulate money for your retirement, why not do what the people with the money do. If it works for them it stands to reason it will work for you and I.

I firmly believe that real estate is by far the best investment you can have - why?

1. It has the absolute best cash-on-cash returns.

2. It is a real asset - you can touch and feel its value, unlike paper assets which can vanish literally overnight, as we saw in 1987). 3. Banks are happy to loan you money to buy it. 4. The power of leverage can be used to produce unrivalled returns, with very low risk. 5. With a little know-how and not much money, real estate can become a reality for you or anyone.

Till next month this is Rob Thompson saying, “Good Luck and Good Investing”!

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