OFTEN, some of the best real estate investments may be those you make on your own, such as purchasing your own home, vacation properties or investment properties ranging from vacant land to apartment buildings and office buildings. But, real estate investments are also available through the financial markets. These include real estate investment trusts (REITs) and partnership investments ranging from small “private placements” to larger nationally syndicated and publicly traded partnerships.
The era of the real estate tax shelter ended in the mid-1980s, but some of the current partnerships provide some tax-shelter elements. More important today, though, is an evaluation of a project’s potential for financial success and its liquidity. If you invest in a partnership, be prepared for the additional delay and complication that a partnership Schedule K-1 may add to your own tax return. Usually, private placements are only available to qualified investors who meet certain financial criteria.
Real estate investments incur unique risks of liquidity, transferability, fluctuating values and other matters that should be reviewed and considered carefully before investing.
Don’t succumb to investing in real estate due to market pressure or trend- it’s what others are doing. Remember what’s happening now with the foreclosure market and what happened a few years back: the bust and bomb of the real estate market.
401(k)s
One of the most important strategies to retirement planning, and probably the most common among middle class, is the contributions made through an employer-sponsored 401(k). Typically, you contribute your own money to a tax-deferred program while your company matches such contribution to a certain limit. If you fail to save a dollar, then your company match goes away, too. The golden dictum dictates a contribution, at least, up to the company match. That’s free money to hold on to.
Other investments
There is, of course, a vast array of other investments. They include gold, silver and precious metals, as well as art, antiques and collectibles of all kinds. In general, these investments carry greater risk than typical stock and bond portfolios, are less liquid, and may require larger transaction costs to buy and sell. Reliable information regarding these types of investments may also be more difficult to obtain.
In some cases, you can acquire publicly traded stocks that will, to some extent, track the appreciation of such items – for instance, stock in a mining company. At one time, conventional investment portfolio theory dictated that you maintain a small portion of your portfolio in gold or related investments. This is no longer the case. Having noted the negative aspects, it is also important to point out that many individuals have enjoyed spectacular investment returns from these types of investments. This may often be particularly true for individuals who have more knowledge of certain asset types than the general public.
The key to investing is that you only invest in something you understand. Know the person and the company you’re dealing with. Know the market, the long and short term prospects compared to your current financial situation.
After all, it’s your hard-earned money at stake; don’t simply give it away to a hard-thought scam. There are aplenty of those and I’ve personally witnessed so much of them in different forms.
* * *
Evangeline is a California registered tax preparer, a legal document assistant for the general public, and a freelance paralegal offering assistance to various attorneys. She can be reached at her office at 2451 Colorado Blvd. #2, Eagle Rock, CA 90041 or at her marketing location inside the Eagle Rock Plaza. Her phone number is (323) 550-1869 or you can check her website at: www.evangelinegiron.net. She is a member of the court-endorsed California Association of Legal Document Assistant (CALDA) and an Associate Member (Non-attorney) of the LA County Bar Association (LACBA).
(Advertising Supplement)
| < Prev | Next > |
|---|
