Tuesday, October 19, 2010

How to build retirement income for life?

New economy impact - we know salary going to increase, services and goods price going to increase faster than previous year. Policy can not be changed but we can plan and take advantage of this to invest for future, especially build up retirement income. One of the way is invest in REIT.
Several reasons why buy REITs:
1. Low interest rate - with current interest rate for FD around 3%, the return from REIT is better. For instant, with $10,000 invest in REIT, one can earn passive income of about $800 per year, as compare to deposit in bank to get around $300 per year.

2. Property is an appreciating asset
Before you buying any REIT, ask yourself if you have holding power when market deteriorate like what we have gone through in 2008. If you have holding power and do not sell during the downturn, you will almost inevitably lose money on it. After 2008, property price did rise and stabilize. In fact, any market downturn is a good opportunity, we expect few years later similar to 2008 will happen again.

3. Assets beat playing the market
The asset always be there, even the market downturn or financial crisis in 2008, if you do not sell it, you will not lose money. REIT is an asset like property which provide more liquidity, hence the price will move up and down, it's the nature for stock market, don't fear when market down.

4. Market conditions don’t matter
Investor with long term objective should be less concerned about the market's movement up or down. Anyway, property will always appreciate in value, compare to deposit in FD, you will not enjoy benefit of capital appreciation and advantage of inflation. Of course, if you want to speculate, REIT is not the right investment tools.

5. Property keeps on giving
Of course, these asset can be given to someone you love or your family. Parent who want to save money for their children's future may start to invest some money on monthly or quarterly basis. This is very best way for buying an asset and inheritance to their children.

Read more:  Malaysia REIT

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