Should You Buy Mutual Funds or Real Estate?

Should You Buy Mutual Funds or Real Estate?

Of course every individual's financial circumstances vary, but here are a few considerations that can be helpful in deciding where to invest your assets. If you’d like to discuss how these and other factors can weigh into making a decision, please email or call and we can chat for a few minutes about your hypothetical situation.

First of all, when I refer to mutual funds what I’m really alluding to is anything related to investable securities preferably highly liquid investments such as open-ended mutual funds, ETF’s, separately managed accounts etc. While referring to real estate what I’m speaking of is real property, investment property commercial/residential, or vacation homes.

I like to broadly consider both vehicles when developing income and investment plans for professionals. There are some key things to keep in mind though that may help you weigh your options. Here are just 3:

1. Liquidity: If liquidity is important real estate is most likely not going to suit your needs. With investable securities remember ‘T+3.’ That means most investment vehicles we are referring to here have a secondary market that can always provide liquidity. So if you decide to sell your holdings this happens on your ‘trade date’ (usually the day after your request) and the trade is settled within 3 days. (T+3) Check’s in the mail.

2. Long term time horizon: Book ending liquidity well is time horizon considerations. “Don’t wait to buy real estate. Buy real estate and wait.” If you are looking for income now with a goal of clearing a profit over your real expenses and are willing to hold the investment for a long period of time, this may be a good option. For a real ‘total’ return on your investment in real estate you will likely need to hold it for a long time. Make sure that this fits in with your total investment portfolio allocation.

3. Ownership Costs vs. Real Investment Return: Ongoing costs related to the property have to be analyzed in comparison with other investment vehicles. You will have taxes, water and sewer expenses, recycling and insurance to consider. Make sure to really ‘run the numbers’ to find what your actual return on your investment will be. Remember these expenses are incurred whether you have a paying tenant or not. You may be able to transfer some of these expenses to the tenant but it may reduce what you can charge in rent.

Real estate has its benefits and you may decide you would prefer a more ‘hands-off’ investment approach. If ‘hands-off’ is appealing perhaps a management company could be employed to manage the property. Include that expense in your analysis of ROI because of its effect on your bottom line.

Real estate may be a good fit for your portfolio but it’s imperative to consider the ancillary considerations.

Another consideration that I consider even more important is, will you have a mortgage or will you purchase the property with cash?

I’ll address this question in my next post.

Regards,

Brandon Archibald, The Ivy League Advisory Group, LLC --- Author & Wealth Manager

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www.TheIvyAG.com

P.S. For assistance evaluating how much real estate vs. mutual funds you should own in your portfolio, discuss this in detail with your accountant and advisor or schedule a few minutes here to chat with me.

All written content is for information purposes only.  It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.  Opinions expressed herein are solely those of “The Ivy League Advisory Group, LLC”, and our editorial staff.  Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness.  All information and ideas should be discussed in detail with your individual adviser or qualified professional before making any financial decisions.

2 Fatal Financial Mistakes Doctors Make

2 Fatal Financial Mistakes Doctors Make

According to the US Department of Labor, 9 out of the top 10 top earners call themselves doctors. What’s concerning is that almost half of doctors surveyed* say they are behind in their retirement planning.

Why is that?

I've surveyed our physician clients and I see several common reasons, one is that Doctors don’t receive any financial planning education in medical school yet they are perceived and are under pressure to be perceived as ‘successful’. Generally people equate success to having a lot of money.

Unfortunately, without the proper tools and the proper advice money does not beget money.

Here are 2 fatal mistakes doctors make with their finances:

#1) Getting bad advice

As previously stated doctors are known for being ’successful’ so they are often the target of investment schemes. Sometimes they simply take the advice of their peers which can result in poor outcomes. Specialists in medicine are referred to when there are cases that require specialized care. Every physician has financial needs specific to their industry and lifestyle. It’s just as important that financial advice is obtained from the right specialists because their cases require special care.

#2) Under utilizing the potential of your taxes

Being that physicians are some of the highest earners they in turn pay some of the highest taxes. I’ve found that this generally means they are paying much higher tax rates than they need to because they have an accountant, an insurance agent, an attorney and sometimes a financial advisor, none of who communicate.

What if your advisor doesn't review your tax returns or your estate plan? How can you be sure these components of your financial plan are being leveraged for your benefit?

To maximize the potential of your tax position you need to work with a planner who works together with all your financial professionals to get the greatest amount of efficiency.

Regards,

Brandon Archibald, The Ivy League Advisory Group, LLC --- Author

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P.S. You can also obtain other valuable resources here: www.TheIvyAG.com

P.S.S. To learn 10 ways to better leverage your financial planning, obtain your own FREE copy of my report “Exclusively for Physicians: The Ultimate Strategy for Keeping More of What You Earn” Simply send a request to BArchibald@theivyag.com

All written content is for information purposes only.  It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.  Opinions expressed herein are solely those of “The Ivy League Advisory Group, LLC”, and our editorial staff.  Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness.  All information and ideas should be discussed in detail with your individual adviser or qualified professional before making any financial decisions.

* 2014 AMA Insurance Agency Report on Employed Physicians' Retirement Preparedness

What are bank CD's paying?

What Are Bank CD's Paying?

How much are CD’s paying? Believe it or not, today’s average CD rates are 0.28%!

Without a doubt, investors are looking for safe places to earn money. Wild swings in the global equity markets are most likely here to stay.

In the eighties and early nineties banks paid a respectable amount of interest. Safe savings rates have declined ever since. By keeping interest rates low, the federal reserve drove investors to look elsewhere for higher rates of return.

That isn’t always a conservative move which is why so much money stays in traditionally ‘safe’ savings vehicles.

But can we call the bank a ‘safe’ savings vehicle?

What if it cost you money to save your money in the bank? Would you be comfortable with that?

If you remember that taxes must be paid on interest you make from bank accounts and the rising cost of inflation against our dollar, your bank CD’s are yielding a negative return. In essence we would be paying the bank to hold onto our money.

If you're looking for alternatives that are sensitive to your conservative needs and sensitive to your approach to investing consider a brief conversation where we can share some strategies that are available and may be beneficial for you.

Regards,

Brandon Archibald, The Ivy League Advisory Group, LLC --- Author

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P.S. If you are weighing your options and are looking for a second opinion, schedule 9 minutes here at no cost or obligation to discuss the potential pro's and con's of paying off your mortgage.

P.P.S. Visit our website here to download a free copy of my report on ''Underutilized Income Shelters"

All written content is for information purposes only.  It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.  Opinions expressed herein are solely those of “The Ivy League Advisory Group, LLC”, and our editorial staff.  Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness.  All information and ideas should be discussed in detail with your individual adviser or qualified professional before making any financial decisions.

Should I pay my mortgage off?

Should I pay my mortgage off?

I'm often asked, "Should I pay off my mortgage." My answer is always different.Why? There are a number of variables that go into making such an important decision.

A good exercise is to ask yourself questions, such as the following to assist you in the weighing out the pro's and con's.

• Is my interest rate 4% or lower?
• Do I have any other debt besides my mortgage?
• How much have you saved for retirement?

Keep in mind every situation is different, much care should be made in arriving at a decision to pay your mortgage off or not. This is not a specific recommendation, but should be viewed as an exercise to consider your circumstances. 

Lets take the first question:

Is my interest rate 4% or lower? 

What is this mortgage really costing you? Chances are your borrowing money for your mortgage at a ridiculously cheap rate. Consider also: If you are deducting interest on your tax return, you are effectively paying even less to borrow this money because of the tax deduction.

Think like a banker. Banks are very conservative about letting go of their cash. They make money on the spread between what they loan out, minus what they pay you on deposits. If you are getting a tax deduction on your mortgage interest and you can make more money on your investments (your spread,) putting your investments to work could be more prudent than paying off your mortgage.

Lets talk about some ways you can position your investments so you can be objective like a bank with regard to risk.

Weigh your options, be careful not to make financial decisions based on emotion.

Regards,

Brandon Archibald, The Ivy League Advisory Group, LLC --- Author

Click here for my Facebook, LinkedIn, Youtube

P.S. If you are weighing your options and are looking for a second opinion, schedule 9 minutes here at no cost or obligation to discuss the potential pro's and con's of paying off your mortgage.

P.P.S. Visit our website here to download a free copy of my report on 'Underutilized Income Shelters"

P.P.P.S. Simplify your financial life. See how we are successfully assisting others streamline their life. 

All written content is for information purposes only.  It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.  Opinions expressed herein are solely those of “The Ivy League Advisory Group, LLC”, and our editorial staff.  Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness.  All information and ideas should be discussed in detail with your individual adviser or qualified professional before making any financial decisions.