Just because you've stopped working doesn't mean you have to stop earning. From bonds to stocks, there are countless investments you can make today that can generate passive income for your future, retired self.
However, among the many investments to fund your golden years, real estate could be one of the best additions to your portfolio. There are three reasons why you should consider investing in real estate for your retirement.
How Real Estate Investments Benefit Your Retirement
1. Reliable passive income
You may need a set withdrawal rate for other investments, such as following the 4% rule. The withdrawal rate is essentially you selling your investment a small percentage at a time over a few decades before you've withdrawn it all. The problem with this is you're setting yourself a countdown timer depending on how much you have to start withdrawing.
On the other hand, owning and renting a property is like using a stopwatch: it counts up without a ceiling. Earning rental income will go on as long as tenants are on your property, which can last more than a few decades.
2. Leverage rising appreciation
Depending on where your property is located, the value of your real estate investment can climb over the years. This could be due to increased interest in the area or the improved economic state of the country.
Take real estate investing in the Philippines, for instance. The country is currently experiencing a property boom that reaches Cebu and Clark. Provincial cities are set to become centers of growth and innovation.
Additionally, a 2019 real estate market review found that almost 61% of property seekers want to buy instead of rent. This underscores the fact that the Philippines is currently a prime location for real estate investments.
3. Control over your returns
When you buy shares of a stock, how the company performs is out of your control. The dividends you receive are toss-ups. However, when you invest in real estate, you have more control over how much you can expect to earn.
The best way to increase your expected returns is by renovating and upgrading the property. Giving an old, undervalued property a fresh coat of paint and fixes can breathe new life into it and boost its overall value. You also control how competitively you intend to charge for your rent.
What You Should Know Before Investing in Real Estate
Since real estate has a higher financial barrier to entry than other investment options for retirement, you need to do your research beforehand. Anyone can buy stocks, but if you're unfamiliar with the ins and outs of property buying, you may spend more than you can afford.
You can always reach out to real estate financial experts who can guide you in your investments at any stage in your life.
A Golden Investment for Your Golden Years
Given all its benefits, it's easy to see why real estate is a good investment and a great addition to a diverse portfolio. Since you have control over how much rent to charge, you can keep adjusting it yearly to adapt to inflation. Investing in a well-located property with great potential demand will allow you to reap higher and higher returns over the years.
If you're looking to set yourself up for a life of financial freedom and comfort, consider working with reputable real estate brokers to help you achieve your goals.