Most folks, when pondering their retirement assets, attempt to determine how much is required to last through the non-working years. They go through mental gyrations estimating the amount required to be saved each month and the future rate of investment returns and inflation. They think they have a great plan, and then reality punches them in the mouth! I’m sure nobody’s projections factored a 23% downturn in their stock values and double-digit inflation in 2022. And since they didn’t (how could they know?), they are now adding working years to their plan, or worse yet, contemplating returning to the workforce if they recently retired. Their pools of assets simply are no longer large enough to not run dry in their lifetime.
Real estate investors, on the other hand, look at this scenario in an entirely different way. They purchase properties over time, maybe one a year or one every other year. The more they hold, the more their net monthly income increases, allowing them to purchase more properties as the years progress. In addition to the value of the underlying assets increasing over time, their tenants are covering their mortgage payments. In 20 or 30 years, the mortgages are entirely paid off – they own a portfolio of income producing properties free and clear! They will review their holdings one day and determine that the river of income is more than enough for them to give up the daily grind. They can golf, or travel or just hang out with the grandkids, safe with the knowledge that they cannot outlast their rivers which adjust upward as rents increase yearly with inflation. And perhaps best of all, they know that they will pass along a money-making machine to their heirs, allowing tuitions to be paid, vacations to be had and early retirement to be well within reach.
Look at the problem differently, think Rivers not Pools
