Thursday, March 8, 2012

Ben's thoughts on a Retirement Plan for a low-rate world.

Since 2007 I have been a licensed Real Estate Salesperson, and since 2008, I have also been a Real Estate Investor.  More or less from the start of my career in the Real Estate business, I have seen a low rate environment. 

The persistent low rates have caused prices to remain stable, or increase in several markets, despite a tumultuous economic background.  The have allowed homeowners to refinance and take advantage of lower payments or shorter amortizations, and in some cases may have saved homeowners from default (perhaps after a job loss, or layoff). 

If you have read the news at all in the past two years, you've likely seen repeated messages from Mark Carney at the Bank of Canada, warning Canadians to stop gorging on cheap credit, as many Canadians may be leaving themselves vulnerable to shocks when rates inevitably move upwards.  At the same time, you're seeing messaging from Banks and Investment firms claiming that the current crop of Baby Boomers is about to begin retiring (The first of the BB's turns 65 in 2012....  Yikes), and that many of them are entering their retirement years without sufficient savings to live the type of lifestyle they have grown accustomed to in their working years.  In addition, we're now entering into an era of fiscal austerity in Canada, and especially Ontario.  With government programs such as Old Age Security and Canada Pension Plan in a state of constant revision, can you really afford to be complacent with your retirement plans?  The banks and the investment firms all say "Save your money," or "Top up your RRSP" or "Open a TFSA" etc. etc. etc.  But in a low rate, stagnant growth, high risk monetary environment, who feels confident socking 10% of their income away in an RRSP? You could always invest in GIC's, but the paltry 1- 1.5% growth offered in these guaranteed investments will result in a net loss, as we see inflation surging forward at over 2%.  Are you counting on a Pension?  I wouldn't.  Who knows what might happen to that pension you've socked your money into for 20 + years?  Many examples exist TODAY of Pension mismanagement. 

And here's my point.  If you are worried about the risk exposure or lack of growth in your RRSP portfolio, mismanagement of your pension, or cuts to government social assistance for retirees, and you want to explore a different avenue for investment, TAKE CHARGE of your retirement plan.  Look towards Investment Real Estate as a supplementary income for your retirement years.  USE MY EXPERIENCE and THE CURRENT MARKET SITUATION TO YOUR BENEFIT. 

So, why aren't you using today's low rate environment to your advantage?  Leveraging the bank's cheap money and the practical value of real estate to improve your equity position and ultimately build a solid retirement income level is a great plan to supplement your existing RRSP plans, company pension, and government assistance. 

It's too much work, Right?  Wrong.  Managing income properties isn't overly difficult.  As with any investment strategy, there ARE some risks involved in it, obviously, however increasing numbers of young adults are more interested in risk that they can understand and control, rather than risk exposure at the hands of some bureaucrats in the European Union, or the United States Senate.  With my experience, we can get you on a plan to minimize your risk exposure and start building the portfolio that will earn you the income level you desire in your retirement years.  This takes time though, so we should start NOW!!!

Banks are now fighting for your mortgage money, with 5 year fixed rate mortgages at 2.99% as of March 7, 2012, and 10 year fixed rates at 3.99%.  Crazy!  Seize this opportunity. 

Come talk to me today, and I'll show you my Real Estate Investment portfolio, and get you started on the path to passive income in retirement. 

Ben Sage, Sales Representative. RE/MAX a-b Realty Ltd., Brokerage.

No comments:

Post a Comment