Retirement Investing: Stock Market vs. Real Estate

RETIREMENT INVESTING: With the average American focused on short term growth through stocks for the majority of their investments, the volatility of the stock market can bring this investment strategy crashing down in a short period of time. To place a hedge against loses and inflation, investing in real assets such as real estate can be a much more profitable approach. Self-directed retirement plans used as a vehicle to invest in real estate allow you to control your own investments and pave the way for long-term, sustainable growth. STOCK MARKET VS. REAL ESTATE PERCENTAGE OF AMERICANS INVESTING IN STOCKS FAST AND FURIOUS: AN AVERAGE PORTFOLIO FOR GROWTH (from April of each year 1999-2013) 67% 65% 62% 62% 60% 61% 62% 61% 62% 57% 56% 54% 53% 25% 58% 70% 52% bonds stocks (both foreign and domestic) short-term investments GROWTH INVESTING 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 A collection of investments with earnings projections expected "via individual stock, mutual fund, 401(k) or IRA to exceed market standards overa given amount of time. BY THE NUMBERS: RECESSION OF 2008 JOBS ADDED OR LOST KEY 1st Quarter '07 January 2007 – March 2009 2nd Quarter '07 3rd Quarter '07 500,000 4th Quarter '07 1st Quarter '08 -500,000 2nd Quarter '08 -1.000.000 3rd Quarter '08 -1,500,000 4th Quarter '08 -2,000,000 1st Quarter '09 -2,500,000 -3,000,000 '07 '08 60, NATIONAL UNEMPLOYMENT RATE (%) GROSS DOMESTIC PRODUCT (%) January 2007 – March 2009 January 2007 – March 2009 8.7% 3.1% 2.7% 2.0% 7.3% 1.4% ,2% 6.1% 5.6% *07 '08 '09 5.0% 5.1% 4.6% 4.7% 4.4% -1.9% -2.7% -5.4% '07 '08 TT 60, -8.2% STOCK MARKET CRASH: DOW JONES INDUSTRIAL AVERAGE January 2007 – March 2009 NOV 2007 Treasury Secretary launches "Superfund" to purchase toxic debt MAR 2008 Federal Reserve bails out Bear Stearns (the first and Freddie casualty of the subprime mortgage crisis) JAN 2007 Dow hits 12,000+ JUL 2008 Fannie Mae 15,000 Mac bailed out OCT 2008 •Congress passes $700 billion bailout bill •Dow drops 800 points to under 10,000 (first time since 2004) 12,500 AUG 2007 Federal Reserve recognizes bank liquidity problem, starts selling reserves of Treasuries and accepts subprime mortgages from banks as collateral DEC 2008 Dow down nearly 34% for the year 10,000 SEPT 2008 •Lehman Brothers declares bankruptcy •Money market funds lose $144billion •Senate votes no on bank bailout bill, Dow falls 777.68 points (largest single day drop in history) | 7,500 NOV 2008 •Big 3 automakers ask for bailout •Dow falls to 7,552.29, a new low MAR 2009 Dow dips to 6,500 (its true market bottom) 5,000 MAY 20, '07 JAN '08 JAN MAR JUL SEP NOV '07 MAR MAY JUL SEP NOV JAN MAR 20, HOW DID THE CRASH OF 2008 EFFECT 401(k)s? *07 60, 60, 0, 0, 20, (measured from Jan 2008 to Jan 2009) 401(k) Account Value Percentage Lost $200,000+ 25% $100,000 - $200,000 21% $50,000 - $100,000 15% $10,000 - $50,000 0% < $10,000 up to 43% DO AMERICANS TRUST THE STOCK MARKET? IT'S A MARATHON, NOT A SPRINT U.S. Investors' Feelings about Investing Their Own Money in the Stock Market (poll taken 6/14-7/14) In April 2014, Americans Felt Real Estate was the Best Long-Term Investment 1% No Opinion 11% Extremely Nervous 16% 7% Bonds Not at All Nervous 38% Real Estate 34% 30% Somewhat Nervous Stocks/ Mutual Funds 38% A Little Nervous 18% 7% Savings Accounts/CDs Gold CRUNCHING THE NUMBERS: REAL ESTATE VS. STOCKS Real Estate 24 126% GAIN Gross rent for a typical $100,000 home = $1,000/month (subtract 25% for expenses i.e. taxes and property management) REAL ESTATE 9% ANNUALLY Real Estate gains over a 14 year period (September 10, 1999 – September 9, 2013) *Only cash flow represented Annual net rent of $9,000 multiplied by 14 equals a $126,000, 126% gain ($9,000/year or 9% annually) Net rent = $750/month or a $9,000/year STOCKS 15,063 Stock Market Stocks gain over 14 year period (September 10, 1999 – September 9, 2013) 10,462 44% GAIN Dow Jones Industrial Average grew from 10,462 to 15,063 (44% gain) O3.14% ANNUALLY A $100,000 investment would have produced a $44,000, 44% gain ($3,142/year or 3.14% annually) Sources: Gallup.com, Ibbotson Associates, Bureau of Labor Statistics, CNN Money, Employee Benefit Research Institute, Bureau of Economic Analysis, Safeguard Advisors Copyright © 2014 Safeguard SAFEGUARD IRA & 401k Advisors www.ira123.com Infographic designed by Mad Fish SEO