Originally Posted: September 1st, 2010
I often ask myself, what will be the next driver for this economy? If people can no longer count on their homes for equity growth, and the stock market is no longer a “buy and hold” long term strategy, how will average Americans grow and accumulate real wealth?
On the heels of bad news for both the housing market and the stock market, it is evident that these two wealth generators cannot be a dependable source for Americans. According to Bloomberg, Aug. 25, 2010 — “Sales of U.S. new homes unexpectedly dropped in July to the lowest level on record, signaling that even with cheaper prices and reduced borrowing costs the housing market is retreating.” I believe housing will get worse, which does not bode well for the ability for homeowners to rely on their homes to generate wealth. As far as the stock market, I have limited hope for appreciation as I pointed out in my previous blog entitled “Will the stock market get you to the finish line?”
Many Americans are feeling the need for higher than average returns in order to reach their retirement, savings or college tuition goals. There is a new vehicle available for retirement funds called the Self-Directed IRA. This essentially allows you to move cash out of your 401K or IRA, and roll it into an account that you control. You can get involved with almost any type of investment such as a business, investment real estate, lending money secured to real property or purchasing interests of an LLC which owns real estate also known as group investing. There are several companies offering these investments such as Guidant Financial, or IRA Financial Group. Your financial advisor should be able to provide more information.
If you want to take advantage of the group investing opportunities in commercial real estate, but don’t have the expertise of buying and managing commercial real estate, a real estate investment group may be the solution for you. The sponsor company such as ours, will buy or develop a property and then allow investors to buy into the company (thus joining the group) typically from $50,000 to $500,000 per investor. I am in the business of acquiring resort market real estate for my investors. I have very seasoned real estate partners providing access to attractive insider real estate deals. And, yes, I invest alongside my investors in each deal.
The point is that unless Americans start to look outside the box to generate higher than average returns in areas that provide controlled risk, along with strong upside, accumulating wealth in this climate is going to be very difficult.