Tag: personal finance
Your Parents Didn’t Save For Retirement…Could You Help Them Out?
user 0 Comments Retire Wealthy Tips for Retiree's
Hey individuals I'' m Tae from Financial
financial picture these you can'' t control regardless of just how difficult you try.
nonetheless when it concerns your individual finances you have full control you have.
control over just how much you invest how much you conserve each and every single month if your.
moms and dads place'' t saved well for retirement there can come a factor.
where you need to utilize your own individual financial resources to assist them and also if you'' re. Struggling economically this will not only be challenging almost.
emotionally too so my essential approach if your.
moms and dads sanctuary'' t save adequate for retirement is to obtain into a. strong financial placement this is a very difficult procedure this is an extremely.
challenging conversation for much of us that have a sensation that our parents.
place'' t conserved enough for retirement it'' s also tough to assume about.
nevertheless overlooking it is not gon na make the problem go away by just how hard.
this might be I motivate you to start having these discussions or a minimum of.
start executing some of these strategies early as possible I promise.
you you'' ll thank yourself later thanks individuals for enjoying the video clip please.
allow me understand if any one of you people ever before needed to have these very difficult.
discussions I would love to hear exactly how it went as well as if you have any other ideas.
or strategies that we can carry out in our lives if you appreciate seeing this.
video clip please hit like or register for the network thank you.
How to Become Rich | Retire on $10 a day
user 0 Comments Retire Wealthy
Is it possible in this day and age to become a millionaire? Or perhaps the better question is why would you want to become a millionaire? I mean in media today Millionaires and billionaires for that matter are often not depicted in the best light. Characters like Scrooge McDuck or the always supremely evil C. Montgomery Burns come to mind here. And of course right now in real life we have the ever-present Donald Trump as one of the main poster boys of the super wealthy. So I suppose with that kind of media influence hovering over us our entire lives it’s not surprising that most of us have a fairly negative view of the super wealthy and many really do not want to become a part of it. Especially since the majority of us don’t personally know anyone who’s Super Rich so we don’t have anything to really balance the scales, and that’s all we can really draw upon is what we see in the media.
And that’s really unfortunate because there’s a lot of really great wealthy people out there. But most of them are not in the public eye and even the ones that are in the public eye like Bill Gates don’t get as much media attention as someone like donald Trump does. And as a result there are a lot of misconceptions about millionaires and the wealthy in general. Hey guys, Daniel here from Next Level Life and it recently occurred to me that I’ve been neglecting a huge part of what it takes to have that next level life that we all dream of… because whatever your dream life is, you need to have the finance resources in place first to be able to live it.
So with that in mind I’m going to be starting this new series on my channel covering various topics in the field of personal finance. And as you can see by the title for my first video of the series I wanted to talk about a simple plan that, if stuck to, will practically guarantee your future millionaire status as well as take a moment and really define what a millionaire is and is not. Because believe it or not even for the average American it is possible. No you know what possible is too soft of a claim because it’s more than possible. In fact if you follow a few simple steps it’s almost guaranteed. Don’t believe me? Well hopefully over the course of this video as well as the rest of my personal finance videos that will be coming out soon I’ll be able to convince you. So without further ado, let’s get started. What is a millionaire? A millionaire is simply someone who has a million-dollar positive net worth. Meaning after subtracting debts and other liabilities and expenses they have a million dollars worth of stuff leftover between their cash their house and all their other assets.
That’s really all there is to it. It has nothing to do with how much money you make. It has nothing to do with what type of person you are or how well-known you maybe, it simply means that your assets are valued at least 1 million dollars greater than your liabilities. But how can the average American get to that $1000000 positive net worth in their lifetime? I mean $1000000 that’s 6 zeros, i’d imagine that most of us have never written a check with more than three zeros. Unless of course you bought a new car or house with cash and if that’s the case kudos to you, you may not even need this video because you’re already probably well on your way to that million-dollar net worth. Now I said that if you follow a few simple steps it’s not only possible to reach that million-dollar marker, it’s almost guaranteed.
Let’s find out how. Well I did a few calculations and found out that over the course of the last 40 years the S&P 500 has returned an average of percent per year not including dividends. Now technically speaking past results are no indicator of future returns, but until we see the future returns this is the best we’ve got to go off of. So assuming that over the next 40 years the market does roughly the same as it did since 1978 you could invest $2per month over the next 40 years and become a millionaire. Again assuming no dividends. Now 261 dollars may seem like a lot but when you break it down it’s not even $10 a day, and there are lots of ways to save money. You can cut cable, or go down to a lower internet speed, or not eat out quite as often, or use coupons when you’re shopping for groceries, or you can do none of those things and instead find a way to make a little bit of extra income.
Maybe you start mowing lawns or shovel and driveways on the side, maybe you start selling old clothes that you don’t need anymore online, or if you’re young you might be able to start teaching people how to use social media better. You’d honestly be amazed at how many people would pay you to do that. There’s a ton of options out there, all you have to do is pick the one or maybe few that work out the best for you and start your own Journey on the path to becoming financially independent. Now there’s a couple of things that I want to clear up before ending the video for those of you who are a little bit more Analytical in nature. That percent is the geometric mean rate of return that the S&P 500 has had since 1978 according to Yahoo finance. All I did to get it was go through each year and look at where the market was in September because as of the recording of this video September just ended.
Then I put them all into the Excel spreadsheet and calculated the return. And I think the reason why we hear so many different rate of returns thrown around by Financial gurus is because of the inflation effect. I’ve heard gurus say that you can expect to earn anywhere from 6 to 10% per year in the market. And depending on what time frame and type of average you use any of those numbers could be true. For example if you go from 1978 and use an arithmetic average the average return on the market would be about percent per year. Inflation is generally assumed to be about three to four percent so if you adjust for inflation your realized return would be somewhere in that 6 – 7% range. If you don’t adjust for inflation of course you’re at nearly a 10 percent return. So there you go there’s a simple formula to retiring with the amount of wealth that most of us would consider to be rich.
As found on Youtube
Read MoreHow much do you need to retire
user 0 Comments Retirement Planning
My father retired in 1991 after 39 years as a high school teacher. His pension, along with my mother’s pension and their social security checks, added up to more than they spent every month. Dad never had to ask himself whether he’d saved enough to retire. He simply needed to work enough years to get his pension. In 1991, most people with pension plans had traditional defined benefit pensions, pensions that paid a monthly income until you died. These days, most workers with pension plans have defined contribution plans, such as 401(k) plans. Workers own the money in their retirement accounts. But they have to figure out for themselves whether it’s enough to retire. How much retirement savings you need to retire is going to depend upon how old you are when you retire, how much social security you collect, what additional income you have in retirement, and how much you spend each year. Let’s look at an example of how to calculate retirement saving needs.
Jocelyn is 55 and single. Her annual total salary is $44,000 a year. She plans to retire on her 70th birthday. To estimate how much money she needs to save to retire at 70, Jocelyn first writes down her current annual spending by category. Your own categories may be more or less detailed than hers. Jocelyn goes through her financial records, including her checkbook and her credit card statements for the last year, to figure out how much she spent on what. On the W2 form that her employer sent her at the beginning of the year, she sees that she paid $3,366 in FICA and Medicare taxes. Her state and federal income taxes were $4,000. She contributed $6,000 to her 401(k) retirement savings. She funded her rainy day account years ago and didn’t add to it last year. Jocelyn’s employer currently pays for her medical and disability insurance. Her out-of-pocket medical expenses last year, including medications, were $1,000. Rent, $15,600. Phone and utilities, $2,400. Groceries, $3,600. She spent $1,200 eating out and $1,000 on entertainment and travel. Auto maintenance cost her $1,000, auto insurance, $800, and gas, $1,000. She spent $1,200 on clothing and personal items. Jocelyn spent $600 on gifts and gave $600 to charity.
Her renters insurance and other expenses were $634. Jocelyn now goes through her list and asks herself which expenses are likely to change after she retires. She won’t pay FICA and Medicare taxes after retiring. That’s one big savings. Her state and federal income taxes will be lower. As we’ll see, most of Jocelyn’s retirement income will be her social security benefits. And at Jocelyn’s income level, less than half of her social security will be subject to federal income taxes. After she retires, Jocelyn will no longer contribute to her 401(k) retirement savings account. However, she does plan to set aside $3,000 a year for unexpected expenses.
She will pay $1,500 a year for her Medicare Part B and D coverage. And her out-of-pocket medical expenses will likely increase as she ages. Jocelyn expects most of her other expenses to stay about the same after she retires. Two exceptions are that she’s going to spend less money on gas, since she’ll no longer be driving to work, and she plans to spend more on travel. All together, Jocelyn expects to spend about $37,134 a year after she retires. Jocelyn looks up her projected social security benefits on the Social Security website. If she starts claiming benefits at age 62, she’ll receive $11,700 in today’s dollars each year. If she claims at 67, she’ll get $17,556 a year. And if she waits until 70 to receive Social Security, she’ll receive $22,320 a year.
She’ll get nearly twice the annual income if she claims social security at 70 rather than 62. Jocelyn is healthy. And her mother lived into her 90s. Her biggest financial fear is that she might outlive her savings. Waiting until 70 to claim social security is one of the most cost effective ways to provide additional income in old age. And that’s what Jocelyn decides to do. Jocelyn will spend $37,134 a year in retirement and receive $22,320 in social security benefits. That leaves her with $14,814 to fund out of her retirement savings.
That’s in today’s dollars. When Jocelyn retires in 15 years, everything will cost more because of inflation. Fortunately, social security benefits are indexed to inflation. So her social security income will rise about as fast as her expenses do. However, in 15 years, she will need more than $14,814 to make up the difference between her social security and what she plans to spend. How much more? Over the last 25 years, inflation in the United States has been about 2.5% a year. If that trend continued, Jocelyn’s $14,814 in annual expenses will be about $21,500 in 15 years.
You can calculate that by multiplying 14,814 by 1.025 to the 15th power, which equals 21,455. Alternatively, you can use one of many future inflation calculators available online. Jocelyn decides to be a bit more conservative in her projections. And she assumes that her expenses will go up by 3% a year, not 2.5%. Let’s use an online calculator to see how much $14,814 will grow to in 15 years with 3% inflation. Enter the expected inflation rate of 3% a year for 15 years and a starting amount or a present value of $14,814. With inflation of 3%, Jocelyn will need about $23,000 a year in income beyond her social security when she retires in 15 years. So how much savings will Jocelyn need to provide $23,000 in income when she’s 70? In a video on spending in retirement, I suggest that people apply the RMD spending rule.
That is, each year spend no more from your retirement savings than the required minimum distribution mandated by the IRS. The rule can also be used to estimate how much savings you need to provide a level of income. To do so, look up the RMD withdrawal factor for the age at which you plan to retire. You can find this on RMD calculators such as the one on investor.gov. Or you can look it up on the IRS website. Multiply the annual income you’ll need by the withdrawal factor. And that gives you the amount of savings you’ll need to generate that annual income under the RMD rule. In Jocelyn’s case, let’s keep things simple and assume that her birthday is in January. Her RMD withdrawal factor the year in which she retires, also the year in which she turns 70 and 1/2, will be 27.4.
times $23,000 is $630,200. So Jocelyn’s going to need about $630,000 in savings plus her social security to support her anticipated expenses when she retires. Put differently, the year she retires, Jocelyn’s required minimum distribution will be 3.65% of her retirement savings. And $23,000 is 3.65% of $630,200. So that’s it. Estimate how much you’re going to spend in retirement. Subtract your estimated social security benefits from that, as well as any other income you’re going to have in retirement. And that gives you the expenses that you need to fund through your savings. Adjust these expenses for inflation between now and when you retire. And multiply by your RMD withdrawal factor the year that you retire. This will give you an estimate of how much money you’re going to need when you retire.
Of course, your situation may be more complicated than Jocelyn’s. For example, if you own your home and have a fixed rate mortgage, your mortgage expenses won’t increase with inflation and will end when you pay off your mortgage. So calculate future mortgage expenses separately from your other expenses. Furthermore, if you own your home this gives you additional savings. What if you plan to retire before 70? Required minimum distributions start the year you turn 70 and 1/2. If you are thinking of retiring a few years earlier, I suggest using a withdrawal rate of 33.
That is, multiply the annual expenses you’re going to need to cover from your retirement savings by 33 to get the amount of savings you’ll need. If you are planning to retire many years before you turn 70, you’re probably not watching this video. What if there is no way for you to save enough to fund the retirement you’d like? That’s a tough problem, but not an uncommon one. To have more income in retirement, wait until 70 to claim social security benefits. Also, consider working a few more years before you retire, looking for part time work after you retire, taking in a roommate, or reducing your spending. Planning for retirement is much harder today than when my father was teaching at Mahtomedi High School. The change from traditional defined benefit pensions to 401(k) retirement plans has shifted the responsibility and risk of funding retirements from employers to individuals. You have to decide how much to save, how to invest your savings, and how much you need to retire. This video may help you figure out the minimum you’ll need to retire. But you will continue to bear the risk that your investments do poorly or that you live longer than expected.
So if you possibly can, try to retire with more than the minimum. .
As found on Youtube
Read MoreCan YOU Afford to Retire? | 4% Rule Explained | Safe Withdrawal Rate
user 0 Comments Retire Wealthy
How much money do you think you would need to be able to retire? It’s a question that a lot of people have asked their financial advisers and it’s one that seems to have a different answer for just about every time it’s asked. And the reason for that is simple the amount of money that you need to be able to retire depends entirely on how much money you think you can earn in retirement through interest and dividends and maybe even a part-time job if that’s your thing, and perhaps even more importantly how much money you’re actually going to need to survive in retirement. And that number seems to change each and every time you ask as well because projections of things like medical expenses change as time goes on. And I’m sure those of you who are nearing retirement watching this video know medical expenses just seem to be going through the roof, particularly for retirees. But that doesn’t really help us it doesn’t give us a goal to strive for as we’re going through our working careers. We may not be able to come up with an exact number that we’ll need but can we come up with something that’s at least going to be close? Well today I’m going to talk about something called the 4% rule and how it gives us that goal to shoot for.
I’m also going to be talking about some other factors to keep in mind when you’re using this rule of thumb as well as some situations where you’re going to want to avoid the 4% rule in entirely. Let’s get started. So what is the 4% rule? It’s a rule of thumb that’s used to determine the amount of funds that you will withdraw from a retirement account each year. It’s also sometimes called the safe withdrawal rate because the money you take out usually consists mostly of interest and dividends, and thus your principal either stays the same or goes down a little bit but not too much. In fact in 1994 a financial advisor named William Bengan did an exhaustive study of historical returns in the market focusing heavily on the severe Market crashes of the great Depression and the early 1970s and concluded that even during those hard Times no historical case existed where the safe withdrawal rate exhausted a retirement portfolio in less than 33 years.
And for most of us 33 years would easily cover our retirement. The idea behind the rule is that once you have approximately 25 times your annual expenses saved for retirement you should be able to retire with reasonable certainty that you could survive until death on your savings. Because at that point the amount that you take out for your annual expenses would be approximately 4% of your retirement savings. And when I say 4% of your retirement savings I mean your entire retirement savings anything that’s been earmarked to use only in retirement this includes 401ks IRAs and any other ways you’ve saved a nest egg for retirement.
For example if you had $450,000 in your 401k and $50,000 personal IRA then you would have $500,000 in all of your retirement accounts and your initial withdrawal on the first year retirement would be 4% of that $500,000 or $20,000. So some other factors that you’re going to want to keep in mind when using the 4% rule in addition to keeping an eye on your expenses, is to account for inflation. The 4% rule believe it or not actually allows you to increase the amount you withdraw to keep Pace with inflation. You can account for this either by just setting a flat 2% increase to your withdrawals each year which is the target inflation rate by the Federal Reserve or by just looking to see what the inflation rate was for the current year and adjusting based off of that. Now you might be wondering how this could possibly be I mean if you increase how much you would withdraw to keep up with inflation won’t you eventually run out of money? It’s a legitimate question but as it turns out no.
And it’s because over the long term the market goes up. Now there are a lot of numbers that are thrown around by financial advisors about how much the market actually goes up I’ve heard anything from 6 to 10% a year on average. I’m going to be conservative here and go with the 6% end of the scale. So let’s go back to the example I’ve been using in the video you start off retirement with $500,000 in savings, and in the first year of retirement you withdraw $20,000 or 4% of your savings. And I’m also using a compound interest calculator here, and it assumes that whatever you withdraw is withdrawn right at the start of the year.
So the $20,000 is going to be withdrawn on January 1st of every year. I’m only noting that because it makes it a worst case scenario you were to say withdraw $20,000 over the course of an entire year but you did it in installments of $1,600 each month you would be able to earn interest on the rest of the money that you hadn’t yet withdrawn throughout the rest of the year and thus you’re ending net worth would end up being a little bit higher than it will be in this example. So on January 1st you withdraw $20,000, meaning you only have $480,000 left in your nest egg. But over the course of the year the market goes up by 6% which means the value of your portfolio at December 31st would be $508,800. Now in year two of retirement you increase your withdrawal by 2%. So on January 1st of the second year of your retirement you withdraw $20,400. That brings your portfolio value down from $508,800 to $488,400. But again the market goes up 6%, which by December 31st brings the total value of your portfolio up to $517,704. If you were to continue to calculate this out for 30 years you’re ending net worth would be $787,716.90, almost $300,000 dollars more than what you started with in retirement! But of course this is just a rule of thumb so there are situations where you’re going to want to avoid using this all together.
One of those situations would be if your portfolio consists of a lot more higher risk Investments then say your typical index funds and bonds that are usually in a retirement portfolio. This is because obviously a higher risk investment can go down a lot faster than your typical retirement portfolios, which can be extremely devastating especially early on in retirement. Also this rule of thumb only really works if you stick to it year in and year out. And if you’re not going to be able to do that then you don’t want to use this as your retirement goal, because even violating the rule for one year to splurge on a major purchase can have a severe effect on your retirement savings down the road because the principal from which the interest and dividends that you get to survive is compounded from gets reduced. Let me give you an example of how this works: Say that in addition to taking out the $20,000 your first year in retirement, you decide to treat yourself with a new car and figuring that you’ll be traveling a lot during retirement you want to get one that’s good, big, and comfortable as well as reliable.
So for this example let’s say you get a new Toyota 4Runner for about $35,000. Now I know that you could probably find it for cheaper used, but not everybody likes to buy cars used I know my dad didn’t and besides this is just an example. So you drop $35,000 on a new car and you still have to have money to live so the $20,000 still does come out of your retirement, meaning that you only have $445,000 leftover. Now admittedly the market still does go up about 6% leaving you with a nest egg of $471,700 at the end of the year.
And even if you were to stick to the 4% withdrawal rate for the rest of retirement which, would be 30 years in this example, by the 27th year you would be taking out more than you earned an interest and dividends as well as how much the market went up. And by the 30th year of retirement you would withdraw $35,516, but with interest, dividends, and Market appreciation your portfolio would have only gained $33,209 in value.
And that could put you in a pretty dangerous position should the market go down for a couple years, or if you have some kind of medical emergency. Now I don’t want to make it seem all bad, I mean unless you retired early, after 30 years in retirement you’re probably in your 90s and don’t need the money to last very much longer and even in this example you still do end with $586,000. It could be worse right? However I do want to bring your attention to the difference that this made. This one purchase made your ending net worth that you could have left as inheritance to your children or grandchildren or even donated to charity go from $787,000 all the way down to $586,000, that’s a difference of over $200,000. And all that’s with just one splurge. But that’ll about do it for me I hope you enjoyed the video and if you did or if you learned something be sure to like And subscribe I’ve got a lot more of these Finance coming out in the near future as well as some more book summaries and other fun stuff.
But with that being said, thanks for watching and have a great day. .
As found on Youtube
Read MoreHow to Retire by 40
user 0 Comments Retire Wealthy Tips for Retiree's
Hey everybody welcome in on this snowy snowy Wednesday wherever you’re joining us from let us know where you joining us from today hey everybody welcome in to the investing in real estate show today we’re gonna have some fun talking about how to retire at 40 how to retire by 40 Sean says hello from Brooklyn New York how much snow are you getting out there Sean we get this massive nor’easter once again and once again so the kids are off school just I’m over it I am over it I know there’s gonna be people are there I’m right in here and say they’re there joining us from there out in California and they’re living living large yeah Aaron is running us from Miami Florida there you go Wong from Miami thanks so much rub it in rub it in rub it in everybody so we’re gonna get this show started in just about three minutes South Africa Indianapolis Moses welcome Pottstown you’re getting hit with some snow right now Matthew Bishop Lakeland Florida hey Matthew yeah I guess California you guys are getting hit with some crazy stuff out there today too huh yeah they cancelled school last night I don’t know I you know growing up I don’t ever remember them canceling school like the night before did you guys ever have that growing up it was like he’d wake up and he would sit and listen to the radio and you would wait you know I was in Pennsylvania I would be all be waiting to listen for our school if it was canceled I’d be in one-hour delay a two-hour delay and you were hoping that they would cancel it but I never had the night before they send out a text message letting you know that hey your school was cancelled and that was never the case for me never never did you do all right we’re gonna get started in just a moment here it’s gonna pull up this today we’re gonna talk about how to retire by 40 and we’ll start here in just about one minute one minute one minute Jerome aramid says hey a guy you talked to me more than two weeks you never came back to me you can take care of this later I know you’re alive nobody emailed me the first appointment Jerome who did you talk to on my team let me know and we’ve got some people in from our team right here in the chat thread as well we can Mike you know a lot of times people will send follow-up emails it goes to your spam folder sometimes people when they initially signup for phone calls with our team they put in the wrong phone number and then they later writes it well I put the wrong phone number in and so our team will be calling and they can’t get ahold of you so I apologize for that and Rudy Rudy please check your spam folder please please please because our team is very good about follow-up and we have hundreds of clients around the world so I apologize for that you know because if someone sends you a PDF it might go right to your spam folder and then you’re like oh I never emailed me just check your junk folder and who are you talking to please let us know we’ll make sure we get you all squared away we have a waiting list for people to get on the phone with us for like a few weeks so I don’t ever want anyone to feel like we don’t get proper follow-up from our team that’s very important so I’ve got our team right now who is in our chat thread we’ll go through and make sure that we get you all taken care of so I apologize for that all right so we are live it is it is a.m.
And we’re gonna kick off the show after the show I’m gonna do you know to talk about this article talk about how to retire at 40 and then after the show we’ll kind of open it up for a few minutes of Q&A if that works for all of you and we’ll just kind of answer some real estate questions some of the things you’re struggling with you’re hoping to achieve and we’ll talk we’ll do that all right Forrest wants to knows are still owners software coming out for Morrison fest yes indeed in fact we’ve been working on it for for since like August it’s all custom it’s been a lot of tweaking we want it to just be perfect Peter Cook says I’ve had very good follow-up thank you Peter appreciate it and James Frederico o1r from our team is right in here he says hey Jerome I got you all reach back out to you and take care of you good good good all right so we’re gonna get started here and we’re going to talk about this in a second so first so again at the end of the show we’ll take some QA and we’ll do that as well let me just get this all dialed in we’re recording we got the audio up and running is everything sound ok guys you guys can hear me give me a thumbs up you guys are all good Brandon yes absolutely because some of those beat class properties you’re asking about the verb method absolutely because you know buying those 60 70 thousand dollar homes those the banks love they’re able to do you know easy refinances on those because there’s easy comps to pull in the neighborhood because there’s retail sales so I would stay away from like the 3040 thousand dollar stuff if you want to really do like a solid brr-brr method stuff if that’s what you’re looking for all right sounds good alright so we’re gonna get started all right all right and let’s get this show started all right today on today’s show we’re talking about how to retire by 40 a news article from the mainstream media it’s kind of total garbage that’s today’s show let’s dive into it hey everyone I’m Clayton Morris longtime real estate investor founder of Morris invest if you’re new to the channel thank you so much for joining us and subscribing I hope that you’re a subscriber because there’s where we talk about passive income building legacy wealth for you and your family that’s the goal right and the vehicle that we use is buy and hold real estate but I don’t care about the real estate right I don’t care about the four walls and a roof I just bought 15 houses this week that we’re about to rehab okay I don’t care what they look like because once we get them it doesn’t matter what I’m buying as a tax shelter and that’s what you should be focusing on buying a tax shelter that’s what this show is all about on today’s show I want to talk about how to retire by 40 and I want to preface this by saying that I got this from an email from a listener a viewer of our show who is getting involved in real estate investing Jesse Daley sent me this email and he said hey Clayton I hope you’re doing well man I thought you’d find this article interesting especially how the writer literally doesn’t mention anything about investing in real estate there’s only a one quick mention of a condo adding to net worth and nothing else in this article I’m so happy that your podcast teaches people how to truly invest properly and retire by the age of 40 this they should have interviewed you for this article so thank you Jesse I promised I would give you a shout out here on the show and I want to go into this article so again I have lampooned some of these CNNMoney articles over the past few years have done shows about these things because I just find them ridiculous I find them ridiculous that they’re telling people to invest in their 401k and then that’s the way that you build retirement that’s the way that you’re able to retire by 40 years old I mean how many people are you know you just like a show of hands you’re listening right now how many of you think you could actually retire by 40 years old just with your 401k of course you can it’s ridiculous the average 401k retirement in this country guess what according to Time magazine is 90 thousand dollars can you retire on that no way so I want to go through this article because it’s a lot of fun and Jesse sent it to me so these are tips from CNN money on how to retire by forty three proven tips three proven tips so let’s go Chris reading isn’t your average retiree he said goodbye to his working years at 37 and is now financially independent living his life on his own terms that’s great now he had 4500 dollars in debt and when he started working he got through all of that he finally found a well-paying job working cyber security took out a mortgage bought a condo and financed a BMW okay alright took out a mortgage on a home bought a condo and financed a BMW on our way to success but then he started to wonder is this all there is he finally said I can’t do this for 40 years in his late 20s he started searching for alternatives and he read the book your money your life by Joe da Menendez and Vicki Robin and he said look there’s other ways of becoming financially independent so he then felt that he had enough to live the rest of his life on his savings and investments without having to work again it took two more years of showing up the cubicle for him to be sure than a 37 he finally walked away so what did he do okay here were his strategies here where his strategies for becoming financially independent and retiring at 40 years old number one save more save more okay so his strategy according to the CNN Money article is cut he cut back on going out to dinner and he cut back on buying lattes so he just started saving more really so let me get this straight that’s the way that you can sustain yourself for the rest of your life by retiring at 40 years old from your job it’s just having enough in the bank you think that you’re gonna have if the average 401k retirement is ninety thousand dollars can you really live the lifestyle that you want so now you’re cutting back on dinners in order to save some money you’re not buying coffee so what Natalie and I’ve talked about here on the show repeatedly is the idea of not having to shrink your lifestyle why not find out what your freedom number is using real estate find out what your freedom number is and actually have enough passive income every month coming in the cash flows you’re creating a tax shelter for yourself and enabling you to live the life that you want so you can’t go buy a latte I find that ridiculous you know David Bach wrote about that in his book the automatic millionaire a years ago and look if you’re $40,000 in debt yes maybe not buying a five-dollar coffee every day is probably not a smart strategy you know also if you’re a smoker you know spending ten bucks a day on cigarettes or whatever it’s probably you know not a smart strategy if you want to claw your way out of debt I get that part of it but as a way of sustaining yourself and retiring at forty years old just saving more savers are losers that money in a bank account is doing nothing for you what about buying performing assets that are actually producing cash flow I mean come on so when he says look where people get into trouble with savings that they think they have to use reusable toilet paper and eat chicken broth but real basically you just you’ll never spend zero dollars find a level of living that you’re come with and work on earning more without increasing your expenses so he’s just saying earn more save more cut out lattes and you can retire at 40 I don’t buy that for a second number to earn more okay that’s his second tip earn more great so let’s save more and earn more again a paycheck job the tax code is written for wealthy people the tax code is written for entrepreneurs who own businesses who own real estate that’s what the tax code is written for it’s not written for a w-2 employee so earn more so what he says is your actual jobs only part of your work in order to earn the kind of money where you can live on only half or less of your salary so take that extra money socket away that’s what he’s saying so work harder right work for a paycheck get taxed as like in the highest tax bracket by the federal government right because we know that paycheck employees under the new tax code or hurt the worst he says this career-boosting work can include earning advanced degrees oh that’s great so his other bit of advice on this is go out and spend a hundred thousand dollars on getting an advanced degree so go get your master’s degree that’s only what a hundred thousand dollars that’s only a hundred thousand dollars right just go get it a master’s degree so that’s smart so save more earn more by spending more on getting an advanced degree or certifications and then that way you’ll have people who will look at you more favorably in the office and be able to elevate you higher that’s great so it’s important understand the weak areas and he says look I finding mentors okay that’s good yes definitely finding mentors as a very smart move finding mentors who can help propel you and then number three he says invest more so he says the most powerful mechanism for investment right now it’s built into their job it’s the 401k invest in your 401 K and a two or three percent return contributing at the level where you get the employer match is a must and that’s your biggest benefit and that’s how you can retire by 40 that’s the article unbelievable so okay ridiculous right that’s how you could retire at 40 no no that’s not how you can retire it 40 and that’s not how you could live comfortably and live the life that you want and be able to produce legacy wealth for your family for the rest of your life so he’s now retired he’s living off of savings but he’s got no assets that are actually performing for him for the rest of his life he’s got a V BMW that he bought financed and he has a mortgage on a condo that he lives in he has no performing assets that is not financial intelligence any way you slice it wouldn’t it have made more sense instead of saving that money while he was working for that cybersecurity company to take that money and invest it in real estate by a performing asset that cash flows that’s how you control and move your family forward that’s how you can build true legacy wealth for you and your family but actually taking money and buying a BMW buying a liability remember all you need to remember is if you’re buying liabilities a liability is something that does not produce cashflow now if he bought that BMW and used it as an uber driver that was producing cash flow that’s a different scenario or if he rented out that BMW that’s a different scenario but I love these I love these articles and again this is all sort of couched around the idea of the mainstream media right the mainstream media wants you to believe that a paycheck employer job is the way to go that getting a 401 K having their company sort of automatically do it for you because you’re too dumb to do it yourself have them handle it have them streamline it and that’s how you that’s how you have a strong safety net we’ve been trained to believe that being secure is having a paycheck job you know again I come back to the I keep seeing this commercial and I’m sure so many of you have seen this commercial over the past few weeks I saw it first during the World Series and they continue to run this stupid thing where it shows a couple you know they’re in their late 60’s and they’re sitting there with a how it’s a Merrill Lynch advisor and the Merrill Lynch adviser says well it looks like the plan worked and you’re gonna be able to have that retirement you wanted and I looked at you look on the iPad app that they’re handing to the couple and he’s like honey we did it we can do it we can live that life we wanted retirement and it shows that their income is enough they’re gonna have about seventy thousand dollars to work with like if you look at if you actually look at the numbers on that screen seventy thousand dollars so now they’re almost at retirement and then the next clip it shows them in a boat with their granddaughter right there sailing off into the sunset like some small little boat with their granddaughter and the little girl says aye aye captain you know and she she’s driving the boat so this is their retirement they finally did it right they had a wait till they’re 70 to buy a boat and to be able to sleep in and spend a little bit of time with her grandkids be all because they had their month their money managed by a financial advisor that was taken out big fees and investing in a stock market and not investing in real estate and cash flowing assets so there you go that’s my frustration there you go that’s my my little my little two cents my little rant about these types of mainstream media articles and when you see them on TV just roll your eyes think about it for a second saving more earning more get an advanced degree spend $100,000 on a master’s degree and then use a 401k that’s how you’re able to retire at 40 that is total garbage that is total garbage unless maybe the guy wants to go live in like Thailand by himself with no kids and he wants to live like in a hut somewhere for the rest of his life and he doesn’t care about actually having any income or cash to be able to buy anything or any food or live the life that he wants I find it to be total garbage I’d love to hear your comments and your reactions to this please send them to us and I really thank you so much so that’s gonna do it for that and thank you so much for subscribing to the show I really appreciate it this is the investing in real estate show you can please subscribe share it with your friends and and you know please go out there take action become a real estate investor because I believe it’s the number one way to build wealth we’ll see you next time everyone all right now with that that’s the show so anyone who wanted to get just the shortened version of that but hey now we’re gonna open up this agree to some Q&A here in the show we got so much so I saw so many chat threads coming through here asking questions alright so fire them up here alright alright Joel says I’ve also had an email a few times hit reschedule my call but no response and said ok Joel no worries we’ll get you all straightened out I apologize like if people miss their phone appointments cuz like I said we Deanna with our team we have like calls are booked out I think about two weeks and so if we call them like goes to voicemail and then we’re trying to reschedule it so we really try to make sure we can get on the get on the same get on the same on the same page Jinger I’m sorry again what’s going on Jinger we’ll get to the bottom of this so I’m gonna make a list of anyone who didn’t get a call back so I apologize alright so can you guys tell me Arum says Glen and Nicole from your team have been great awesome ok so we will dial some of the stuff in ginger and I’m sorry I will get some of these people on your on your team to make sure we get it all taken care of thank you guys let’s see all right you know I’m glad you’re not upset no I just you know we if sometimes emails get back and forth and we’re trying to make sure that everyone gets taken care of okay are Tuffle get you back on your property okay let’s the ad tapper says what do you think about joint ventures they have the money I do appraisals marketing and brother does the renovations hey jayvees are great right you need to build a great team for real estate investing that’s very important you have to have a great team to do real estate investing well Kelly just uh Kelly Cheatham says I want to hear more about your program great just booked a call with our team Kelly and Morris invest comm we’re doing some great things and I’m really excited about some of the new properties that that we purchased that we’re about to do we’ve already designed our contractors to dive in and start rehabbing see Charlie 18 says our new Hara Sean wants to know one of the price of the new house is being built our new houses the three-bedroom two-bathroom right around seventy seventy thousand okay Charlie eighteen I’m gonna answer this question how does it LLC save you on your taxes on your rental how does it LLC save you taxes on your rental properties a lot of the stuff I’ve been reading times about pass-through income I never thought I thought that that was taxed the same way as a sole proprietor yes however remember that under the new tax law as a pass-through entity as a pastor entity you’re now getting an additional 20% deduction 20% and remember when you have your your properties in an LLC you’re being taxed as a business and you’re able then to depreciate spread that money over all those other your w-2 income and those other things so I’ve just an all series of videos on understanding tax shelters and remember what you’re buying as a tax shelter so forget about buying real estate you know I have talked about Lane I like for repairs so repairs add to your tax shelter helps mitigate your overall cash flow because remember what you’re buying in the beginning in a 3-stage is a real estate investing right buy own and cashflow what you’re buying in the beginning you’re adding to your net worth so I don’t care about the cashflow necessarily until years later but you’re buying and adding to your net worth you’re creating a tax shelter for yourself you’re able to mitigate your w2 income you’re able to offset all of those things so I would love to hear what you guys thought about today’s show and the article please let me know I’d love to hear you which you you know what you thought about that Kelly are speaking of the computer program Oh Kelly yeah we’re building a personal owner portal for our clients that the software I mean it’s just it’s and make it much easier so that we don’t like our team doesn’t have to send out Purchase Agreements it’ll be right there because we have so many clients it like we’ll have like three or four clients and want the same house and so a little like yeah give you a purchase agreement and it’s kind of like first-come first-serve and then our team has to send out a purchase agreement wait till it’s signed and all that BS so this will make it very easy for them to be able to click right on it and then open up DocuSign and be able to do it and pretty great Ryan Millie says okay what are the mechanics after purchasing one property to purchase another property or two and repeat the process over and over again where does that money come from well ideally it could come from a bank right or it could come from private money it could come from you know we we talked about a company that we work with called fund and grow less you know if you go to our if you go to our website Morris and vest com slash funding you don’t pay them any money until they actually if they get you money zero percent Interest but why would look at okay so let’s just take the mechanics of that to answer your question so I would say you know buying like a sixty seventy thousand dollar rental property and then leveraging that right so maybe putting or or if you have the cash to do that right that ideally if you could come out of the gate you have the cash to purchase your first one free and clear that’s more of a B Class play you know that’s sort of B minus like 60 65 70 K place play that’s kind of maybe you know it’s transitioning up to sort of an a-class neighborhood and it you know coud appraised in a few years at 80 or 75 that’s the play right so buying that if you could buy that with cash right and then refinancing a pull some equity back out of that and then be able to roll that next amount of cash the bank just gave you into your next property into your second property and then into your third property a buddy of mine here in New Jersey started and did that on an eighty thousand dollar property he now has over two thousand units here our DNA and money when he started and he bought that first property that first property allowed him the snowball and all of these other properties and identity jjh yeah unfortunately JJ was said you purchase second property in Indy in November we’ll hopefully get an answer for you an update on where we’re at with the rehab and we’ll also make sure we connect you with the right management team if you’re having some issues you know we work with a 8 different property management teams so what gets you sort it out so just you know email our team you know the team you know our team at Morris invest email us we had a really really really unusually harsh winter that set us back about four or five weeks on construction this year with like a deep freeze we had stuff all the way through Michigan into Indiana down into Pennsylvania where we just had all kinds of problems Ryan you are absolutely welcome thank you so much Sean says you weren’t able to pull cash off the cards they got through funding to grow yeah that’s unfortunate we have literally funny grows enabled our clients to raise over 20 million dollars for purchases of real estate so I’m not sure why that person had an issue they’re very very good at walking you through step by step I just would say reach out to them and make sure that you’re working with them they they have a thing with gold money so basically they use the cards to buy gold and then you transfer the gold into cash it’s like a little bit of a few hoops to jump through but hey it’s 0% interest for a year you know hey beggars can’t be choosers right we were able to get a hundred and seventy six thousand dollars in cash because of them in order to purchase real estate so it’s an amazing strategy so again and you’ll save like five hundred bucks if you go through our website because we’ve asked them to do that for people who watch us and who listen to us so if you go to Morris invest com slash funding check it out it might not be for you if it is great just check them out you know I have a phone call with them Joe Joe wants to know what appliances do you provide actually I don’t do any appliances in our properties now that is to say if we move into some of the b-class properties we some we will sometimes put in a fridge and stove and things like that but far as a washer and dryer we have I made that mistake when I first started in Michigan I bought all appliances and found out that I didn’t need to that it’s commonplace that tenants will provide all of their appliances they will usually typically go down to a local you know like a little scratch and dent company etc or that’s where I bought my first appliances when I had my first condo in Florida I went to a local scratch and dent place they’re brand new that may have like a tiny little little scratchy scratch on the side and you get a great deal on a bundle of appliances so that’s what most client most tenants will do and then they’ll keep them for many many years so you don’t have to worry about it so Daniel wants to know what’s the fee for you guys to do investing for me there is no fee with us at all I know some other companies charge like ten percent all that stuff we don’t do that you’re just buying the house we just you know and try to get it all stabilized for you with property management team and cash flowing so you don’t have any additional fees you own the property free and clear Jimmy says how do you organize your banking system for your real estate business great question Jimmy you know we have a couple of podcast episodes Natalie and I do where we talk about how to run your you know your family business and finances for real estate investing if you want to check out the investing in real estate podcast you can do so and we have some of those episodes you know the short answer is that you want to have bank accounts set up for your taxes you want to have bank accounts set up for your LLC that owns your rental property and personally so I have LLC’s that own my rental properties those LLC’s have their own bank account so when the cash flow from the tenant comes in I Clayton Morris don’t touch that money that goes into the business then I can pull that money out but you can’t commingle money like you don’t if it’s a business that owns your real estate you don’t want that money coming in to your personal bank account that’s called commingling that’s illegal the IRS does not look favorably upon that so you want to do everything aboveboard making sure that everything is flowing the way that it should Bobby yes what’s the best way to start a property management team no cash but at the time and looking to help investors well I would say to start a property management company takes about a hundred and fifty thousand dollars I know this to be the case so right away to be spending one hundred and fifty thousand dollars to set everything up okay you’re gonna need you’re gonna need to pay for software things like rent manager appFolio those types of things you’re gonna want to hire an accountant you’re gonna want to hire an office manager you’re gonna need to hire leasing agent you also need to get a brokerage right you need to have a brokerage license to make sure that you can manage property so all those things cost some money so to start a property management company that’s what about that’s what it roughly costs and then about if you have more than 100 properties the rule of thumb is for every hundred properties or so you’re gonna want to add another human being to your to your company to facilitate those properties that came to me as a friend of mine who ran his own property management company those are the exact numbers that he used James wants so what’s the area oh it’s just on the website to find the gold funding option so just go to Morris and Vess comm slash funding it’s sort of a hidden page because we don’t like promote it but it’s there if you sign up like I said you’ll save 500 bucks once they get you the money you don’t pay anything until they get you the cards Peter said spoke briefly with your guy Justin have a self-directed IRA I was interested that was a month ago he was going to keep an eye out for a property and haven’t heard back Peter I will follow up with Justin or you can just you know feel free to reach out to Justin as well from our team because we we can set up a whole dashboard for you for the self direction so I’ll make sure that Justin gets back to you Peter I’ll have our team make sure we go through this comment thread to take care of it okay how can you cash out on a $40,000 property well so $40,000 homes are tricky because banks are lazy or appraisers are lazy so a bank is going to hire an appraiser to go in and they’re going to those types of properties they’re being sold every day to investors like I might buy thirty of them right but guess what they’re all off market so they’re not being sold on a multiple listing service like you buy a house for a hundred thousand right with a realtor and so when an appraiser goes to pull comps in order to appraise the property they don’t have any comps to work with the only cops they have are ones that are on the MLS the ones that they end up pulling end up being ones that are like foreclosures or pre rehab so you might have a forty thousand dollar house and you know it’s worth forty forty three forty two but they might appraise it at twenty because the only thing they could find that sold recently on that street was a foreclosure that’s not been rehabbed yet so you can’t you kind of at a crapshoot if you’re planning to do a refinance here’s my suggestion it’s just move up into those sixty sixty-five seventy thousand dollar homes and then you’re putting like you know then you’re able to pull almost like the full equity out of that house or close to it if the bank then cuts you a check for fifty fifty five great then you can roll that into your next property so I just would say told code don’t try to go super cheap if you’re planning on doing a refinance banks are lazy and you’re frankly just at the mercy of these banks you know I can pull up sales disclosures with hundreds of sales where the house is selling for forty three forty five but guess what the appraiser will not look at that and so then you’re at the mercy of like a foreclosure that’s on the Multiple Listing Service and unfortunately it’s it’s just difficult now we’ve had people who’ve done refinances on forty thousand dollar homes and you know like one of our clients recently bought one for forty three it appraised for fifty five but again it’s a crapshoot he could have just as easily had the appraiser come back and say you know well we think that house is worth twenty two so remember what you’re buying is cash flow when you’re buying that low and you’re trying for that high of are a lie you’re you’re sort of like the investor that’s buying 50 properties like that they don’t care about ever refinancing they just want the ROI they want the cash flow I hope that makes sense sure our Lara says I’ve got a shooter I think I missed it sorry zip past it Ahmad it’s kind of invest the United States if I’m not a US citizen yes you can you know just book a call with our team we have people I mean we have a lot of investors Canada and New Zealand all over the world who invest with us do I see Florida getting to California prices within 10 years seeing a lot of new construction and price hikes there in Tampa yeah a lot of those coastal areas you know Tampa those types of places Clearwater Miami of course I don’t see them getting to California craziness you wanted let me tell you a California story the reason it’s ridiculous so like the same house that I might do in Michigan or Indiana and then our clients would buy maybe like a 3-bedroom 1-bath in the $50,000 range right well there was a 3-bedroom 1-bath last week on the market in the bay area for $900,000 and guess what it was condemned it’s a condemned house selling for $900,000 in the bay area that’s California it’s crazy absolutely crazy Mario says I was thinking about buying houses in my name under a HELOC on my primary residence and then when I get to three to five houses to a portfolio loan and all three to five and an LLC is that okay yeah I mean but why would you need to buy them if you’re using a HELOC to buy them just buy them in an LLC now you know there’s no reason you should buy them in your own name at all ever buy them buy them in an LLC if you’re using the HELOC it doesn’t matter how you use the he lock key lock is cash right you could go out and buy a boat if you wanted to with your he lock the bank doesn’t care you’re just writing a check from your he lock so why not buy them in your own name now I’ve started buy them in an LLC today you’re using the he lock on your primary residence it doesn’t matter the bank doesn’t care what you’re doing with that money you just have to pay it back but I to me having a HELOC is one of the killer strategies I love a key lock on my primary residence I use it to buy properties all day long Michele says what are your thoughts on using quicken loans to buy a house I’ve never done it you know hey if you can get good rates and good terms from a bank to buy to buy a house great go for it I don’t see why not video teaching can you recommend a bank for a HELOC on a New Jersey property lakeland la ke Lakeland Bank we love them they’re fantastic smh ninja on the funding Grove fees no notice he you’re refinancing very quickly so you’re gonna refinance very very quickly by that fifty sixty thousand dollar home and then get it into a long-term 30-year note and you pay off the you pay off the zero interest credit cards and then you recycle them so that’s what fund and grow does they recycle and get you more zero percent and then you can just rinse and repeat that’s why it’s a great strategy so you’re not keeping those cards for you know with like you bought a house on a credit card for twenty years you’re refinancing it within that first twelve eighteen months and yes you can quit claim deed you can move a property to an LLC Kevin wants to know thoughts on an umbrella insurance versus LLC well that’s well I say you have both I mean I would definitely have insurance and also have your properties in a limited liability company the reason you have your properties in a limited liability company is so that people will come after you personally that’s the key right you don’t want people if tenant slips and falls because a handrail wasn’t fixed on your one property and this happened to a buddy of mine in Philadelphia he has a property and a girl was drinking one night she came home to the condo she slipped outside because the sidewalk had like this much of a differential and sued him fortunately you know he had insurance but fortunately the case got dismissed or dwindled down where he only had to pay like seventeen thousand can’t come out of pocket seventeen thousand to pay for this girl slipping and falling at his property because he had the property at his own name so don’t put properties in your own name if you don’t need to there’s no reason to forest so to have a bank you recommend for refine 50k rentals I guess it just depends yeah I mean there’s a couple you know State Farm actually the insurance company has a refinance program a national program Northpoint Bank all one word with an e at the end North Point also has a refinance program they’re a national company as well you could look into them Daniel says how do you tell if a property is a B or C class that’s a great question I’ve got a whole video series here on our YouTube channel about how to understand that so you can if you want to look that up right here on the channel it goes more deeply into that but the short answer is an a-class neighborhood I like to avoid an 8 class neighborhood or those two you know two hundred three hundred thousand dollar homes two-car garages maybe they have a swimming pool they’re in the best neighborhoods I stay away from those as an investment property because you’re gonna have the most moving parts that break you’re gonna have the most entitled tenants that cause the biggest headaches and cause you the biggest problems so garage door openers that break garbage disposals that break multiple heating and air systems that break you know avoid those those also have the most volatility those tend to be the areas where those in a big recession lose their job the a-class neighborhoods we saw that across the country right these a class neighborhoods where people lost their jobs and all these houses went into foreclosure and people couldn’t pay their rent or the value plummeted significantly so let’s say they’re renting it from you for $3,000 a month in an a-class neighborhood and everyone loses their job all around that a class neighborhood now the rent is you know you’re gonna have to go down like 20 2022 hundred a month or even 1800 a month we saw that in Manhattan right people renting Manhattan apartments for thirty five hundred bucks a month the recession hits and guess what all these Wall Street people lose their jobs etc and those went down significantly you could rent a place in Manhattan for eighteen hundred a month instead of the 35 that you could before the recession but guess what those C class neighborhoods say the same those C and B class neighborhoods roughly stayed the same it’s consistent cash flow those are the people that tend not to lose their jobs those are the people that are working blue-collar b-class is kind of moving towards an a-class it has better schools slightly lower ROI but I’ve been buying a lot more B class properties lately personally because you know when you get to a point of having find enough cash flow you really want to start thinking about buying those more expensive B class because you’re creating more of a tax shelter for yourself you’re creating that bigger spread that bigger tax shelter and you’re adding to your net worth more significantly so but C and B are my favorites so I’ve been a lot of C and I’m starting to buy a lot more B yeah lisa says that’s why I like condos no outside maintenance but then I don’t like the associations right I do not like HOA fees and I’ve got a whole video on HOAs because HOAs honestly you’re sort of at the mercy of these people I mean you’re literally at the mercy of these people and you never know when they’re going to decide to change the bylaws and make it so that you can’t rent the place or they’re gonna hit you with a big roof assessment you’re gonna have to pay you know $5,000 for a new roof on the property you have no control over that so homeowners associations I’m not a fan of Daniel we don’t we don’t have a number for you to call us because we want to be able to schedule it with you so just go to our website click on the schedule a consultation button you literally answer like eight questions like your first name last name best email address to get a hold of you make sure you type in your phone number correctly and then we just ask you a few quick questions like how many properties do you currently have what are your goals and then you pick on the calendar the time that you want to schedule a call with us it’s very simple so it’s up to you you know that you got the kids from to p.m.
We don’t write so we want you to pick the time that best serves your needs it’ll go on your calendar we’ll send you an email reminder about ten minutes before your call and we’ll jump on the phone with you and talk to you for like thirty minutes Chad boys wants to know how is Capp West you know I heard good things about them years ago but then I think I heard things kind of fell off and I haven’t really actually heard many people using them so I don’t know I’ve never used cap West what if you want to live duplex a class neighborhood your thoughts well Rodney I mean some few if you want to live in the property that’s up to you right because that’s a different animal than investing in a property but if you want to live in a duplex than in a class neighborhood great you buy it I would rent out the other side so that they’re paying your mortgage that’s an investment right that’s an investment property in a class neighborhood so you know go for it you know just a matter of whether if you’re in an a class neighborhood are you likely to have a higher turnover on the rent because people want to have their own single-family home they might not necessarily want to split a house with somebody if they’re in a class neighborhood you know when I was younger I was fine kind of having a shared wall with somebody but now that I’ve got three kids and I’m an adult there’s no way I want to share a wall with somebody else you know I want my own place I want my own yard what do I think about a land trust well it’s funny you mention that as our tax accountant thinks that they are a total mistake so I do not do anything in the land trust sam says I spoke to Glenn a few minutes ago awesome
As found on Youtube
Read MoreHow To Retire Early? (Young And Rich: Is It Possible?)
user 0 Comments Retire Wealthy
Hey, what’s up? John Sonmez here from simpleprogrammer.com. Tired of pushy recruiters sending you LinkedIn requests for jobs you have no interest in? Tired of blasting out resumes into the dark? If so, you should check out Hired.com. Hired.com flips job searching on its head by having top employers like Facebook come to you after you fill out one simple application. You also get your own job coach to help you on your next job search. If you haven’t checked it out, I highly recommend you at least fill out the application. Just go to Hired.com/simpleprogrammer. When you get hired with Hired, you’ll get double the normal sign-on bonus for using that link. Today we’re going to be talking about real estate.
Yes. I have done some videos on real estate. Some of you are like, “What the heck? Why is this guy talking about real estate?” Well, I’ve done fairly well in the real estate realm. If you’re interested, you can always check out my playlist on real estate investment and investment in general. I’m not going to go into all the details here, but occasionally I like to answer a few real estate questions on this channel. I got one here from Jonathan and he says, “I’m 21 and set a goal that I want to retire by 40 to 45.” Cool. “With 20K of passive rental property income.” Man, that’s awesome. I like that. I love that goal. That’s a good goal. “Currently saving money to buy my first property and hopefully, when I get a web development job I can speed up the process. My question is how do I plan for this goal?” This is good.
So, 21, Jonathan is 21 and he’s thinking this way and he’s got this plan by 40 to 45 to make 20K of passive income from rental properties. I love this. This is great. “Thanks for everything you do and have a beautiful day.” I am having a beautiful day. Thank you, Jonathan. “P.S. I was thinking of buying a duplex and live in one and I rent out the other one so basically the tenant pays my mortgage.” So, okay, there’s a lot of ways to approach this. I think Jonathan has got his head screwed on right. Well, I’ll start with the last, the P.S. of renting out a duplex and living in one side. I think that’s a great idea. This is a fantastic thing. More people should do this. A lot of you young people out there that are thinking about renting or buying a house, consider buying a duplex and renting out one side and if you find the right deal which—it’s out there, you could actually have the renters pay your rent.
You see what I’m saying? You could actually live for totally free by having a duplex and renting out one side. I’m not going to say it’s going to be super easy. I’m not going to say that those deals are everywhere. It depends on where you’re at. You’re not going to find that deal in California or New York, San Francisco, not going to happen, but if you’re in the Midwest you might be able to find that deal. I’ve seen it before. I think that’s a great idea, but let’s talk about the plan. 21, you want to retire by 40 to 45. You want to get 20K of passive real estate income. It’s not going to be easy, but it’s certainly doable. What you need to do is you need to calculate backwards where you need to be and have a real solid plan for this.
I can give you a general outline, but I haven’t run the numbers so I can’t tell you exactly. There are going to be some factors in here, but you actually need to take a spreadsheet and actually need to calculate this and figure this out. It’s going to be fairly complex, but you don’t have to be super detailed. You can kind of ballpark this, but you do need a spreadsheet. You can get some rough answers here, but calculate this out, 20K of passive income from real estate. Let’s say 45. What does your gross need to be? You’re going to have expenses, you’re going to have rents, I mean you’re going to have property management, you’re going to have a bunch of things here. That can give you an idea of what kind of wrench you need to be pulling in. It’s not going to be a 20K wrench, you’re not just getting 20K. It might be like 30 or 40K a month of rents. In order to get 40K a month of rent how many properties do you need and how much will those properties cost? How can you divide that over time and put inflation into the equation a little bit here over that period of time? Work backwards and make a spreadsheet and run some scenarios.
This is going to take time and some planning. Like I said, you can rough ballpark it. If I were just going to give you what I think would probably work for you, it also depends on how big your budget is. How much money are you investing every year? How much money do you have to invest every year. If you can put 10K down onto a rental property every year that’s different than, “Hey, I’ve got 50K to invest in real estate every year.” That’s different. Or 100K. Those are all different scenarios. What you’re planning based on your current scenario might—there may not be—there might be this gap and you might be like, “Well, how do I get there?” It might not be apparent.
You might have to do some other things. You might need to make more money in your job or start a side business in order to fuel that. I had to do that to reach some of my real estate goals. Think about that and calculate that out. I’ll give you kind of a rough timeline, a rough plan that I would have if I were you which would be something like—and this was the plan I initially developed when I was doing this which would be to buy one property every year, regardless. The nice thing I like about this plan is that it’s scalable.
The size of the property depends—is dependent upon how much money that you have in that year. When I first started in real estate investment when I was close to your age, I think I bought my first house at 19, but I really started doing investments around 21 and started this plan of buying one house per year. I think the first house that I bought I was able to put $10,000 down. It was like a $100,000 house or $120,000 house. The next year it was probably about the same and then probably like the third or fourth year I had more money. I was able to put $20,000 or $30,000 down. I got to the point where I was buying properties and I was putting about $20, $30, $40,000 down every year on a property when I buy it. Some of that was because of the real estate that I was already making me money. Some of it was because I was making more money in my job and I had businesses and side things going on which helped me to do that. That’s the kind of plan that I would—it’s not going to happen magically. I think that’s the key thing. You actually have to have a solid plan for this and you can run these numbers and calculate this out.
There’s actually a really good book that I recommend called The Millionaire Real Estate Investor. I think that’s by Garry Keller, the founder of Keller Williams if I recall correctly. I don’t recommend very many real estate books, simply because a lot of them are crap. The reason why I’m really going to recommend that book to you is because it has these charts that show you—it gives you a realistic expectation over 20 years what the value of a property is likely to be, how much money you’re likely to make from it, cashflow and all that. Again, it’s as complex equation. You’re not going to be able to nail this down perfectly, but at least if you run the numbers and you do the best job that you can, you can have a ballpark idea and you can always adjust the plan. You’ve got to have—you’ve got to know where you are and where you need to go in order to reach these goals. I’ll also recommend for you—I have a course that I created called Simple Real Estate Investing for Software Developers.
You can check that out here. If you buy that course, obviously it has a money back guarantee on it, but that’s going to help you to give you the basics of everything I know about investing. Just to give you a background, I have about 26 rental properties. They are all paid off. I started investing when I was 19. I kind of know what I’m talking about here. I don’t give a lot of bull shit advice about this. I give you exactly—practical advice on how to get started and how to do this.
The reason why I created the course, even though it might not seem like it goes along with a lot of my other content, it was just simply because I was tired of so many people giving BS real estate advice and doing all these kind of scamming, no money down, speculative moves that just doesn’t make sense. You need some kind of practical advice so that’s what I put together there. Go check that out. This is good. I think you’ve got a good plan here. You just need to develop the plan further and it’s going to be very dependent on your individual factors and—I think you have information though to say, “Okay, can you do this in 45—by the time you’re 45?” absolutely! I believe that you can. It’s not going to be easy, it’s going to be hard to do. 20K is a pretty big number but it’s certainly possible, but you’re going to have to start moving now, which it seems like you’re going to do, and you have to have a plan and it’s going to take a lot of work and a lot of effort and you got to find good deals in order to be able to do this in that time frame.
All right, I hope that is helpful to you. If you have a question for me, you can email me at [email protected]. Don’t forget to click the subscribe button if you haven’t already. Click that Subscribe. Click the bell to make sure you don’t miss any videos especially if you like the real estate stuff because, hey, those videos might not show up and then you’d miss it and then you wouldn’t find out the secret to life and how to make millions of dollars. All right, I’ll talk to you next time. Take care .
As found on Youtube
Read More7 Core Elements of Retirement Planning
user 0 Comments Retirement Planning
Everyone bill Lessman here for money evolution calm in today’s video I’m gonna be talking about what I call the seven core elements of retirement planning so if you’re somebody that wants to get more serious about the planning that you’re doing for retirement then I think you’re really going to enjoy this video now if you’ve watched any of my other videos maybe on my blog or my youtube channel or Facebook page then you probably have already heard me talk a little bit about some of these seven core elements individually what I plan to do in this video is really bring them all together really show how each of these seven core elements are all interrelated and hopefully at the end of this video you’re going to have some information to help you make some more well-informed decisions about your own retirement but real quick before I get into the presentation I wanted to draw your attention to a free guide that I put together it’s the seven core elements of retirement planning guide and in this I have all of the information or a lot of the information that I’m going to cover here in today’s video plus there’s some great worksheets that you can complete on your own to really help you get a good start towards putting together some of this planning for yourself so to get access to that guide I’m going to put a link right below this video if you click on that link it’ll take you to a page just put your email address in there and we’ll go ahead and send you out that guide I’ll wait here and I’ll see everyone back here as we get into presentation okay so welcome back so if you’re starting to do some planning for your retirement whether retirements may be coming up in the next year or two or even if retirements still a few years off into the future you probably realize already that there’s a lot of different aspects of your retirement and that’s what we’re gonna be talking about here so let’s take a look at these seven core elements so number one on the list is we need to understand how much your retirement could cost and what we call identify your gap the second thing on the list is we need to know where to save money obviously there’s lots of choices there’s Roth IRAs there’s 401k plans traditional accounts so we need to know where to save the money based on your own personal situation and your own individual tax situation we also need to talk about Social Security obviously that’s going to be a big component for many of you watching this video is when to collect Social Security how to coordinate your Social Security benefits with your spouse if you’re married so that’s very important health care that actually may be what I think is one of the most underestimated or overlooked retirement expenses that’s out there and there’s a lot of information that you need to understand about health care so we’re gonna talk about that a little bit here we also need to look at 401k plans so you might have a 401k you might have a 403b plan at work or some other employer sponsored retirement plans we need to know how to best take advantage of that 401k plan there’s a lot of features that a lot of people may not fully be aware of that could be inside your 401k plan so how to take advantage of that is certainly very important we need to create a plan for income so if you’ve been investing for your lifetime and while you’re working you were in what we call the retirement accumulation phase once you go into retirement we need to think differently we need to look at how to plan for withdrawals on your portfolio we need to look at things much much differently for that and then finally the last item on the list is investments choosing the investments that are gonna fit within your individual retirement plans and to help you achieve what your retirement goals are unfortunately this item here that we list as number seven on the list is oftentimes the one that people look at first in fact if you turn on the business channel you look at CNBC or you open up the Wall Street Journal or read pretty much any financial publication if you flip through the pages a lot of the discussion a lot of the advertisements are all pushing you towards certain investments they’re talking about returns and the performance of this fund versus that fund they’re talk about mutual funds they’re talking about annuities exchange-traded funds they may be talking about costs you know in looking at low-cost options and they would have you believe that really this is the most important thing that you need to be thinking about regarding your retirement and certainly the investments are absolutely very very important but we want to look at these investments after we’ve already addressed these other seven core elements and if we start here with investments a lot of times we can kind of get distracted we can get thrown off course a little bit because we really haven’t put into thought here how those investments are gonna fit within your your own individual retirement plan but once we’ve addressed those seven core elements and we start choosing investments now we have a clear vision for what we need those investments to do and what we want them to do to create your plan for income and to create the retirement lifestyle that you want so we’re gonna get into each one of these here in a little bit more detail and I’m gonna again start to show you how each one of these seven core elements are gonna be interrelated with one another okay so let’s start right here in the middle what we want to do here with this very first core element is we want to try to understand how much your retirement is going to cost or could cost and we also want to identify how much of a gap you have between where you want to be for those retirement goals versus where you are today and what I like to refer to here what I like to think about is begin with the end in mind so here’s your retirement and what I want you to do is start thinking about what it is that you think your retirement is going to look like for example what will your housing situation be do you plan to stay in your current house do you plan to downsize homes do you plan to spend winter someplace warm you also want to think about the things that you want to do in retirement so you can have a lot of free time you’re not gonna have to go to work anymore so think about the hobbies that you plan to do you plan to play golf every day or do you like to travel and start thinking about how much some of those expenses are going to be and you also want to look and see okay so basically what is your current situation how much are you saving for your retirement how much money do you already have saved for retirement and what we want to look at here and I think this is very important that a lot of people may tend to overlook essentially is that we have a trade-off basically we have our lifestyle that we have today versus that lifestyle that we want to have in retirement and if we think about this for a second here if we spend all of our money today we don’t save anything for retirement we’re gonna have a great lifestyle here today but that retirements not going to look very good contrary to that we could be saving a whole bunch of money for retirement putting away all kinds of money but that may be sacrificing that lifestyle that we have here today so I want you to think about that a little bit in terms of what are you trading off and I think there’s a lot of people because they haven’t maybe done some of these calculations they could be in a position where they’re saving almost too much money for the retirement they’re really sacrificing and giving up a lot of things today and there’s a couple of different categories of this there’s there’s things that of course we have our money that we’re saving so if we save more money today that’s less money that we can have for the future for that retirement but we also have time as well and so what I mean by that is we may be working ourselves putting all kinds of stress on our on our health on our situation by maybe working a whole bunch we’re saving a lot of money for retirement but we’re really sacrificing that quality of life here today and so be thinking about all of these different aspects not just the financial aspect of how much you’re saving but think about that think about like I said your health – and are you taking care of your yourself from a health standpoint as well because by the time we get to this retirement we want to have healthy bodies we want to be able to go out and do those things be able to play golf in and live that retirement lifestyle so again this is at the very center of these seven core elements and everything else is going to be interrelated to what this retirement gap is actually going to be and and how that’s going to affect that future retirement lifestyle okay so now that you’ve hopefully uncovered what this retirement gap is and you’ve really kind of gotten an idea of what your retirement cash flow is going to be and cash flow is something that we refer to a lot here on some of the videos that we do but really it is the lifeblood of not only your retirement situation but also your current financial situation it’s basically money coming in versus money going out and almost everything else on this list here is going to in some way or another affect cash flow the other thing that I want to talk about here before I start getting into each one of these seven core elements and a little bit more detail are taxes now when I created the seven more elements I thought a lot about how to include taxes should that be its own separate element and what I ultimately decided was that taxes are certainly very important and it’s a big part of what we do here in terms of some of our planning but what we’re going to talk about is we started looking at these seven core elements as we’re gonna look at how taxes are going to influence a lot of these different categories here okay so let’s start right off the bat and let’s talk about where to save money and obviously we have lots of choices we have Roth accounts like Roth IRAs you even have Roth’s 401k plans now and you have traditional accounts and and for retirement savings those are probably two of the most primary areas and basically that’s a big decision for a lot of us and what we really need to uncover is what is our tax situation likely going to be in the future versus what is that tax situation going to be today and again it goes right back here to this cash flow and understanding what those gaps are and what does our current situation today versus what is that situation going to be in the future so the Roth is going to be favorable if we think we’re going to be in a higher tax bracket in retirement than we are today and the traditional account is going to be more favorable if we think we’re going to be in a lower tax bracket in the future so we want to look at that the other thing we want to take a look at and I’ve actually got a entire video on our YouTube channel where I talk about this is investments for retirement in non retirement accounts and I go into a whole huge explanation as to why I think that is really just wasting a lot of money when it comes to to taxes there so again uncovering what those gaps are is going to help us to figure out where should we be saving money what’s going to be the most optimal for that future cash flow situation and for our current tax situation let’s look over here to Social Security again that’s going to be a very big component we could take Social Security benefits as early as age 62 or we could delay Social Security benefits to as late as age 70 and basically there’s a lot of decisions to make there again it’s going to come back to understanding that cash flow so there’s a lot of be out there talking about how to maximize social security benefits there’s even some calculators that you might be able to find out on the web what often times is missing from some of those calculators is how that decision as to when to collect Social Security is going to impact that cash flow situation and contrary how that’s going to affect your tax situation as well so we need to look at that and there’s also gonna be a coordination of benefits that you need to take into consideration if you’re married and you have a spouse because you might decide that one of you collects Social Security benefits early to get a little bit of cash flow coming in but maybe the other spouse is going to wait and delay those Social Security benefits whether or not you’re going to be working in retirement is also going to impact that and impact the potential taxes that you’re going to have on Social Security health care I talked about this here a few moments ago where health care I think is one of the most underestimated expenses in fact according to a recent survey or study by fidelity investments they determined that an average couple retiring this year that 65 years old could expect to spend two hundred and forty five thousand dollars on health care related costs over their retirement lifetime so that is a huge number a quarter of a million dollars just to cover and fund our health care and that does not include by the way any potential nursing home expenses or long-term care expenses so that’s a big deal we also need to consider health care for any of you that may be planning to retire before Medicare that starts at age 65 so you need to look at how your maybe employer benefits if you have any that are going to continue into retirement how that’s going to come into play or if you have to go out into the exchanges and go out into the Affordable Care Act in fact actually according to the Kaiser Family Foundation they put together some great research on this health care stuff but they actually said that a 64 year old couple could expect to spend about seventeen thousand dollars a year on their health care premiums for a policy that kicks in before Medicare starts and that still leaves them with about a sixty six hundred dollar out-of-pocket expense that they could have in addition to that $17,000 so that is by no means a top-of-the-line gold playing effect that’s actually a silver plan kind of in the middle there but you can see if you want to retire prior to age 65 that that can start to get pretty expensive the other thing here too again taxes are going to also influence your health care as well because your Medicare premiums are going to be largely dependent on what your taxable income what that adjustable gross income is for the year so the higher that is the more likely you are to be paying on your Medicare premium so again understanding that cash flow and understanding what that future cash flow is going to help you hopefully make some better decisions regarding healthcare as well your 401k plan is going to be another one of these seven core elements that you’re going to want to optimize unfortunately in my opinion I think a lot of 401k plans have really kind of watered down some of their investment options here over the last several years but there’s a couple of things that you can still do to hopefully optimize or maximize some of the benefits that you have on your 401k plan so one of those things is you can go all the way up to eighteen thousand dollars a year in contributions if you’re under 50 years old and if you’re 50 years old or older that number can be as high as twenty four thousand dollars a year and most people probably just understand that these are the limitations of the 401k plan but some 401k plans in fact more and more are offering this feature you may have access to an after-tax savings account within your company sponsored retirement plans and that could allow you to go all the way up to as much as fifty four thousand dollars a year in total retirement account contributions and that’s going to be a combination of your contributions plus any employer match that you might be getting can be as high as fifty four thousand dollars so that can allow you to extend even further some of the contributions that you’re making inside the 401k the other thing that a lot of 401k plans are offering now is something called a self-directed account and that is an option that you could have inside your 401k plan that could give you access to literally thousands of additional investment options that are not of the main 401k menu so again not every 401k plan is gonna have these features but you want to definitely look into it and see if that’s something now your self-directed account that may not be for everybody either because there’s going to be a little bit more research and a little bit more due diligence that you’re going to have to do on choosing investments but it could be a great option for somebody to get some additional resources in that 401k plan and then the last thing what will the second the last thing we want to talk about here are planning for income and again we talked about this a little bit earlier that you’re in a much different stage of life once you start going into retirement and you’re gonna start withdrawing or taking money out of some of these investment accounts and something we call the sequence of return starts to become a very important factor so if you think about it like this you know the market obviously is going to go up and down over time and when you are in the retirement accumulation stage of your investing as the market was maybe going through these these these motions as the market was maybe going down you were continuously hopefully making new investments into those accounts as the market was dropping and but the opposite happens though when you go into retirement if we go through a downturn and you’re withdrawing money out of those portfolios that’s going to have a very negative effect or can potentially have a very negative effect so we definitely need to take that into account but what we need to do before we do that is we need to understand what this cash flow is and understand where those gaps are so once we understand where those holes are in your financial plan and we know that in certain years you need to take a certain amount of money out of your retirement accounts then we can plan for that accordingly and sometimes what we do is we use what we call a bucket strategy and we just usually divide the portfolio into three buckets and we want to have some cash reserves maybe one to two years worth of cash needs in a very liquid very safe bucket so that when you do need to take money out you’re not having to withdraw money from volatile investments that could be invested in the stock market you also may want to have kind of this mid-range thing maybe three to four years or three to five years worth of money that’s in a my liquid bucket that’s still going to be on the more conservative side and maybe some of those investments are going to pay some dividends or some interest to help you refill that that first bucket and then finally over here is your long-term bucket and that’s gonna be investments that are gonna hopefully keep up with inflation provide you with some growth that hopefully if you’re in retirement for what could be 20 years or maybe 30 years in length that you’ve got some growth vehicles there but we want to think and break down this down so that you have a plan for income and keep in mind that if you don’t have a plan for income the government has one for you it’s called the required minimum distribution rules and so you may know that after you turn 70 and a half you need to start taking mandatory distributions every year from your IRA accounts in your 401k plans as part of this RMD so having your own plan is usually going to be better than reverting back to the government’s plan and then finally we talked about this earlier the last thing that we want to look at is the investments that we select and again once we’ve answered all of these other issues we’ve looked at the six other core elements then actually choosing the investments becomes pretty easy because now we know what investments are gonna fit into our buckets as an example which investments are going to be able to provide that income or those distribution needs which ones are going to be appropriate for your tax situation that are gonna you know help you you know plan for your Social Security your health care and all of that and then we can start looking at different investments that are going to fit into that retirement plan okay so there you have it those are the seven core elements of retirement planning and hopefully you’ve gotten some great information here out of watching the video here today and hopefully you’ve gotten a pretty good idea of how these seven core elements are all interrelated to each other and how making a decision about one item such as social security or healthcare or choosing investments why that doesn’t necessarily live in a vacuum and how maybe tweaking something over here might have an influence on something over there and so really bringing everything back to cash flow is really very critical so you understand how you know making a change in one category of your retirement planning you know might impact something else so again hopefully you’ve already downloaded the guide take your time look through some of the information in there we try to be very thorough with some of that we’ve got again some great worksheets that are gonna help you really get a good start on putting together some of these retirement plans and certainly think about what you want that retirement to look like also – for some of you you may want a little bit more help and of course we do that we offer a comprehensive cash flow based financial plan that can take a look at this and we will address not only your cash flow today but what that cash flow is likely to be in the future based on what you’re currently doing and we can also start to look at each one of these seven core elements and look at how each one of those is going to help you achieve those retirement goals and even if retirement still a little bit more often in the future if you’ve been saving money or maybe you’ve been putting off some of the planning that you’ve been doing again this is something that can help put you on a good track towards making you better well informed about getting retirement planning done
As found on Youtube
Read More
Recent Comments