Today I thought I would write about investing for retirement. I didn’t invest by doing anything difficult or brilliant, but I am pleased with my outcome at this point.
When I started teaching I was fortunate to have a wise investment counselor who told me “cash is trash,” and taught me to invest the maximum I could from my income into a 403 B. I did this faithfully for the 20+ years I worked as an educator. I invested in moderately conservative funds. Some years they grew a little, one year they lost about half of what I had invested. I left the money in the market, and eventually all that money was regained. The long and short of it was that at the end of my career I basically had the money I had invested, without too much gain.
Interest rates are extremely low right now for investors. I have come to the age when I must think about withdrawing the money I invested. In the program I have I can pull out a guaranteed sum each month, and at the end of 15 years the principal is gone. I say guaranteed because even if the market dips to below that amount I am still guaranteed that amount of money for 15 years.
My husband is a realtor, and he wasn’t very excited about that investment. Vince convinced me now to invest in real estate instead. I opened up a self-directed IRA and transferred the money from my 403B account. Then we made a cash offer on a beautifully restored home in an older part of Visalia, CA.
The process was simple, if not a little strange. We couldn’t have anything to do with the purchasing process including writing the check to hold the property. Because of regulations Vince’s sister had to do that. We also can’t rent to anyone to whom we are related ie. kids. The entire process from writing the offer to closing took three weeks. The income will be about the same, and at the end of 15 years I will still have income, AND I will still own the house free and clear.
There are many ways to invest as you prepare for retirement. Stocks have been pretty good for me in spite of the extreme dip in the market. We have also bought and sold a few pieces of property over the years we’ve been married, and some of those have made money, and some have broken even. The difference between buying property and owning stocks are many, but here are a couple.
First stocks are liquid. You can cash them in for money in just a few days, and spend the money. Houses and land are not so easily exchanged for money – usually. A house that is priced right, in a good neighborhood, and is clean may sell in a few days, as did the one we purchased, or in a bad market, it may sit for a few years.
We have two beautiful pieces of property that have been for sale for several years. We bought them at the right time, split the land, and by the time the county had processed the split, the property had dropped in value. At this point if it sells it will sell for half of what the other two pieces sold for 4 years ago. Nonetheless, the two pieces that we did sell just about paid for the cost of splitting the property, and we do still have two pieces of property that some day will be worth something.
Second, houses and land retain some value, you can lose everything in the stock market. We did have a guarantee for our stocks, but in the end the money would be entirely gone. That will not be the case with our property.
Similarly, you can invest in the wrong stocks, and you can invest in the wrong land. If you invest in the wrong land, and say the soil is found to have cancer producing chemicals in it, there is nothing you can do about it. No one will buy it.
The moral of this story is that you have to be wise and careful with how you spend your money all your life if you want to live comfortably. I think you have to work hard, and spend as though you won’t have millions of dollars later to pay it back. Most people don’t have. I also think you have to be faithful to God and give away part of your income. The Christian church calls it a tithe, or tenth. Research shows that people do better financially if they give away 1/10 of their income to charities outside of their immediate families. To me it is a way of expressing gratitude, and humility, realizing that my existence in this world was not caused by me, and I am extremely fortunate to be here.
Some people seem extremely lucky, almost like they win the lottery – everything seems to turn rosy for them. Other people appear extremely unlucky. They buy the property that has cancer growing in the garden. Most people can expect to be somewhere in between.
How are you preparing or have you prepared for retirement?
Here are some pictures of our new rental.
If you live in Spain, you probably don’t want to rent it, but if you live in Visalia, and know someone who might be interested, the rental company is