Simply Junior

I recently read this headline and thought is this a true statement? After pondering the question “Why is it smart to buy real estate now” I concluded that in fact this is a true statement. Here are the reasons why.

1. Prices of most homes have dropped significantly and in some areas as much as 75%. What this means is the only direction for prices going forward is up. Will prices of homes drop lower, perhaps, but just like trying to time the stock market, it is difficult to time the real estate market.

Here in California and specifically in Contra Costa County (where I live), prices data shows we hit the bottom in 2008 and have been going up ever since. Inventories in certain price ranges have dropped and we are seeing days on market decreasing to less than three months.

That doesn’t mean that we will see home prices skyrocket to unrealistic levels as we had in the mid 2000′s. But what it does mean, those in the know and are buying homes now.

2. Interest rates are the lowest they will ever be. They can’t and won’t stay in the 4% to 5% range forever and the prediction is that interest rates will start to go up on 2011. Looking back to 2003 thru 2007 interest rates were in the 6.25% range and actually crept close to 7%. At that time, everyone was excited because just a few years prior to this time period interest rates were up to 8.5%. So when the rates dropped under 7%, it caused a big stir in the market. So rates in the 4% range are unprecedented and should be taken advantage of right now.

Real Estate is an asset and a valuable one which savvy investors understand. There are investors in our area in California that are buying blocks of homes. It was unheard of to find homes in the $200K range, but there were plenty to go around over the past year to year and a half. These investors may rent them now, but look to reap the fortunes in the future – and probably not the too distant future – when prices go back up.

This is also a fantastic opportunity for the first time home buyer. You can get so much more home for your money and in areas that may have been out of reach for many.

If you are on the fence waiting for the right time, this may be the right time.

People think it is really hard to find the best retirement plans. Actually, the truth is, it is not hard at all. It is very easy. A good retirement plan is something that ensures financial security. It is as simple as that. How do you define financial security? By the time you retire, you should have built quit a nest egg that you don’t have to depend on either your friends or the government for your daily needs. Sounds simple, right?

Before we discuss further about retirement plans, I need to ask you a question. Are you in charge of your money? Do you have the freedom to invest your money wherever you want or are you still dependant on your employer to make all these decisions? The answer to these questions decides how your post retirement life will be.

Unfortunately, a lot of people do not put their retirement funds to good use. The funds remain dormant in their traditional accounts due to two important reasons. Here they are.

1. A lot of people are unaware of the fact that they can do something with their retirement funds. You can actually opt for a self directed IRA (individual retirement account) and invest your retirement funds whichever way you want and make lots of profit. A lot of people are not aware of this at all.

2. People think that they lack the financial acumen to be able to make the right investment decisions. They think of options like the stock market and they are wary of the fact that they could lose their money by the thousands by investing in a volatile market. So, they decide to play safe by earning a tiny little interest on their retirement funds.

Like I already said, the best retirement plans are the ones that give you financial freedom. How do you get financial freedom? Simple – by getting higher returns on your investment, you can safely build a nest egg for your post retirement life. How do you get higher returns? Again, the answer is simple – by investing wisely. How do you invest wisely? Now, this is a very important question. Let us take a detailed look at the answer now.

To invest wisely and to pick the right retirement plans, you need to have freedom. In other words, you should be in charge of your own money, not your employer. With traditional retirement accounts like 401Ks, you are always dependent on your employer.

Whatever money you have in your account continues to give you very small returns. To change all this and to get higher returns, you should opt for self directed IRA (individual retirement account). Why should you do that? Let us see.

A self directed IRA, as the name suggests, is truly self directed. You are in charge of your retirement money and you have plenty of investment options as well. Some of the options include stocks, real estate, mortgages, franchises, and partnerships.

If you are knowledgeable about the stock market, you can invest your money there, if you have good business acumen, you can get a franchise, or if you want steady returns, you can go for real estate as well. Of late, a lot of people have invested in real estate as it is both safe and gives high returns.

Now that you know all these details, choosing the best retirement plans does not look like that big a deal, does it?

So, get started today and plan your retirement life the right way.

Pick the right investment option, get steady returns, and enjoy complete financial freedom in your post retirement life.

Don’t delay. Visit my website today to discover investment opportunities.

For generations, Americans have been told they would have financial stability in their ‘golden’ years with social security. In addition, we were told to invest money in the stock market for a positive growth. Conventional wisdom now tells us that social security will not be there even for the Baby Boomers. Will the stock market be a good alternative?

On January 14, 2000, the stock market closed at 11,723 points. Ten years later, in the summer of 2010, the stock market is right around 10,000 points, meaning that if you had invested 10 years ago, you’ve lost money in the market. But what is the future of the stock market?

From CNBC.com: “The Dow Jones Industrial Average will lose about half of its value over the next couple of years as it follows a Nikkei-like pattern of several sharp rallies in an overall decline”, according to Charles Nenner, founder and president of Charles Nenner research. “Stocks are currently in a bear-market rally, and looking at charts and past trends, unemployment and leading indicators suggest the Dow will drop to 5,000 in the next two to two-and-a-half years”, Nenner told CNBC in an e-mail.

Deflation will arrive, along with a sharp double-dip recession, pushing the Dow lower, although, like the Japanese market, stocks will see several jumps of 30 percent to 40 percent, he said. “Things look really bad for the next 10 years,” Nenner said.”

The bottom line is that no one really knows what the stock market is going to do during the next ten year though indicators point towards a decline. Gold is hot right now, but will it continue to grow during periods of inflation? Given the uncertainty of the market, why would anyone invest in stocks anytime soon?

The answer is to invest your retirement account in a safe Savings Account that offers you a guaranteed interest rate. A Safe Savings Account is similar to a bank CD or a Annuity in that you safely invest money for a guaranteed interest rate. It is better than a CD or Annuity in that Safe Savings Accounts offer a higher interest rates than CD, TBills, or Mutual Funds without all the money gobbling fees of an Annuity.

You cannot create a financial plan unless you have a guaranteed interest rate. A safe Savings Account is the only retirement vehicle that will allow you to calculate your earnings to the penny! Anything else is just financial guessing; and in these uncertain times, taking chances just doesn’t make any sense.

You ask – when will this thing turn around? Well lets consider a few things here. First how long did it take us to get into this position? Folks it took at least 8 year to get into this position, and some say even longer. Well it may take us as long to get out of it as it took to get into it.

I do not think that things will stabilize until late 2010 or late 2011. It will take at least 3 years for things to stabilize. If you have investments in real estate in Chicago and the greater Chicago land area you must realize that it will take at least 2 or 3 more years for the real estate market to stabilize.

Let look at it!

Inflation is at a 27 year high, while personal income is down 1.6%. Unemployment is 9.5%, housing prices are decreasing over most of the country, foreclosures are very high and expected to climb even higher – the second wave of ARM’s are expected to hit very soon. Defaults on commercial mortgages are increasing, the stock market is not doing well. Pension Plans are taking a heavy hit, many folks have experienced over 30% plus loss of their pension plan funds and are worried about their future.

Even inflation is creeping up and bothersome – gas prices are going up, food prices are going up.

Banks have more properties on their hands then they can handle because of Bank REO’s and foreclosures. Real estate investors are buying Bank REO’s and foreclosures and sell them at wholesale prices for profits. It is however still difficult for the average wage earner to buy a house today because of the credit crunch.

Even though there are great buys in real estate today in Chicago and other cities across this country, the people most able to buy are real estate investors with cash. Chicago homes for sale are not moving like they did 3 or 4 years ago – inventory of homes in Chicago are at 20,399 in July, 2009.

Real estate or stocks, where are you better off? This is probably one of the hottest issues that have confronted a lot of stakeholders amid the recent debacles that hit major economies. In fact, there is now an emerging trend to veer away from stocks amid the recent release of a report which indicates that the estimate 10 year return based on US equities index is almost zilch. The logical follow-up question is – if stocks won’t work, what will?

The issues involved have been extensively assessed and seriously studied by stakeholders and in the end, it left them with more questions than answers. But many people agree on one thing – either you go for stocks investment or put your funds in some other investment instruments altogether. People are ignoring the possibility of establishing a balance among potential investment options. For those belonging to the working class, this other investment instruments include real estate. However, for entrepreneurs, it will always be business, regardless of the prevailing business climate.

This either-or approach in assessing our options for income generation indicates a one-track perception of real estate. You have to understand that when we look at real estate as an investment alternative, we are actually looking at either the physical investment on a property and REITs, which is basically a security.

But then, the bigger issues remains unanswered – would we have been better off investing in stocks or real estate?

Going by the performance of the stock market based on the most recent market report that was released, stock investors were not generally lucky. If we look at the 20-year time frame and discounting the bias of selecting a random 10-year window leading to the market bottom as end date, estimates set the earnings of stock investors at a low 1.87% annually. This paltry earning is directly attributed to the predominance of emotional investing and the high incidence of buying when stock prices are high and selling when prices are down.

Estate investors are also not doing well, lately, albeit not as worse as stock investors. In a related census of property managers and owners, less than half of the respondents reported profit from their investments. About 16% of the respondents broke even while 27% reported to have incurred losses of varying amounts from their respective real estate investments. The results of the study showed that more than half of the respondents ended on the negative range in their investments. What is significant about this study is that it was conducted before the onset of the sub-prime crisis. With the major fallouts in real estate markets in the past couple of years, it is safe to assume that the overall prospects in the real estate market may have gone from bad to worse.

With this grim assessment, are we ready to declare that neither option presents good earning potential? It is not wise for us to make our judgment based on a snapshot of one particular instance in the real estate market. You have to look at the bigger picture and see how things stand on the longer term.

There is a general consensus among stockholders to give more preference to real estate over stocks. When things are down, most investors believe that they are better off holding on to tangible assets. Though the value of the real estate properties are market dictated, between the two, it presents a better prospect as proven by past experiences. What is needed right now is for investors to dig deep in their “trenches” and wait it out until the financial storm finally blows over. At the end of the day, sound management of your finances will ultimately determine your overall performance regardless of the economic condition.