Profit-Squeezing, Rhetorical, Mumbo-Jumbo SpecialistsOctober 17th, 2012 by The JetSetter Team | Comments Off on Profit-Squeezing, Rhetorical, Mumbo-Jumbo Specialists
The Jetsetter Show staff stayed late after work last night in order to watch the presidential debate on the swanky television set in the break room. We had sincere intentions of making it through the entire thing, but at about the ten minute mark most of us began to experience dry heaves. At the twenty minutes the room was clear. Apparently everyone suddenly had something better to do.
The basic problem is that, regardless of who picks up the coveted 270 electoral votes on Super Tuesday, we’re going to be stuck with a Commander-in-Chief who is a question-avoiding rhetorical mumbo jumbo specialist. Oh, to be sure, Mr. Obama would be a much worse choice but the truth of the matter is that you shouldn’t rely on either of these jokers to catapult your net worth into “impressive” category.
In other words, how are you ever going to afford all those month-long tropical retreats to luxurious destinations whilst living in the country of negative interest rates? That’s right. We said negative interest rates. By the time you take the reality of double-digit inflation into account, you’d have to be earning near 15% on your money in order to make any forward progress at all.
Where are you going to make that kind of dough? The stock market? Please, we just lost our lunch once, don’t make us relive the experience.
To reach the level of passive income you need to become a carefree globe-trotter usually means one thing – income property investment. In order to understand why this kind of real estate investing works so well, you have but to grasp a single concept – leverage. Beautiful, sweet, profit-squeezing leverage. It’s the big difference between a financially independent portfolio and one that limps along powered by mutual funds.
How about a quick illustration of leverage? Let’s consider two scenarios.
Scenario #1) You have $100,000 in cash and buy a bunch of stock in your favorite mutual fund. To profit, you sit and wait for it to appreciate.
Scenario #2) You have $100,000 in cash but rather than plunking it all down to buy a $100,000 house, you leverage your investment into a purchase of 5 houses that cost a hundred grand apiece. How do you do this? You put 20 percent of your cash into each deal and borrow the rest from your favorite bank.
The bottom line is this: real estate is the only asset that routinely allows investors to borrow the majority of the purchase price. (Top image: Flickr | Tax Credits)
The Jetsetter Show Team