• The question is not at what age I want to retire, it’s at what income? -George Foreman

    It’s no secret that I am not only a mortgage agent, but also a real estate investor. Prior to the 2009 crash, like millions of other people I only invested in mutual funds or stocks, however that all changed after the crash – my eyes were opened!

    ID-100196800When it came to mutual funds, I realized that I was literally throwing my money away with all the MER (management expense ratio) fees I was paying – it was good money to get bad advice and invest in bad stocks, with minimal if any returns.

    I started to look around and question everything. I sought out people who were making money in stocks, bonds, real estate and other means and realized that if I wanted to reach my #retirement goals, I would have to take a serious look at real estate.

    I started by doing thorough research – as I’m a numbers girl.

    I analyzed every type of investing vehicle and came to the conclusion that only real estate would figure into my retirement goals.

    I remember going to my monthly investment group meeting (not real estate but stock investing), about a year ago and trying to show these guys who had been investing in the stock market for well over 25 years, a different way to grow their money through investing in real estate.

    I did a presentation on various methods of investing – everything from purchasing property to investing in 2nd mortgages and was shocked when most if not all turned me down. I was shocked because these guys are all about growth and diversification but they could not see the forest beyond the trees, when it came to real estate. Although, I am happy to say that 2 out of the group of 20 did come on board and have commented on how much they are not only enjoying this aspect of investing but can already see how much they will gain from their investments.

    Let’s Look at the Numbers

    I am a firm believer in diversification but that can be done in real estate as well. For instance, in most cities across Canada, the market is appreciating between 5-7%/year and the returns on a single family home can be upwards of 15-24% conservatively a year. The longer you hold onto the home, the greater your returns.

    Let’s look at a comparison between the S&P 500 index and an investment in real estate, over a 10 year period. The S&P 500 index, delivered a whopping 3.71% over the last 10 years? That is not the annual rate of return, but the total return over the 10 year period.

    Now if you look at the same 10 year period of investing in real estate – based on the avg. house price in Canada (and we all know where that has been going – up, up, up!), the returns were a whopping 232%.

    Let’s look at it this another way – if you invested $10,000 in the same index, you would have earned $371. However, that same $10,000 invested in real estate over the 10 year period, would have earned you $23,200.

    Diversification in real estate can be anywhere from single family homes, multi-family homes, mixed-use and commercial to name a few. Returns will vary but you will always gain in real estate as you are paying down the mortgage, getting appreciation, earning monthly cash flow and adding to your portfolio one by one.

    Education, diversification and research are the keys to successful investing.

    Don’t wait, the sooner you get started, the sooner you will start to enjoy the benefits and get off the investment roller coaster!

    The lesson is to not put your eggs into only one basket. Keep asking yourself, “The question is not at what age I want to retire, it’s at what income?” Investing in real estate will provide you with the answer to that question well beyond your retirement goals!

    Need help to get started? Our Real Estate and Mortgage Team can help you get started on the road to reaching your retirement goals!

    To your Wealth!

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