When it comes to financial planning for retirement income, the possibility of not having enough money to retire comfortably due to stock market volatility is a very real fear, so we wanted to illustrate how Mexico real estate can offer a better way to invest money for ongoing investment income from a safe, highly stable vacation rental market.
Before we get into more detail about that, let’s talk about how much you might actually need to retire comfortably. Do you know? According to Fisher Investments, the truth is that it’s very challenging for any investment advisor to accurately predict home much money investors will need for retirement income, simply because ongoing medical advancements are steadily increasing both the quantity and quality of life, well into our golden years. Also, at least half of us can expect to live much longer than the average life expectancy, so the bottom line is that a paltry 5-7% return just isn’t going to cut it if you want to ensure that your retirement will be enjoyable.
“[Stock market] returns vary greatly from year to year”, wrote Fisher Investments UK. “Miscalculating withdrawals during market downturns can substantially decrease the probability of maintaining your principal”.
CNBC Says “Gut Check Correction” Looming
Here’s how it works – if your financial portfolio is down 20% and you take a 10% distribution, you will need about a 39% gain just to get back to the portfolio’s initial value. This means that stable returns are a non-negotiable keystone of rethinking retirement, but in the first month of 2018 alone, we saw dozens of financial analysts say that a stock market correction is coming. Although we saw the beginning of that correction in early February, it can and will happen again… And next time it could always be much worse (remember 2008?).
“Jim Paulsen, chief investment strategist at The Leuthold Group, has grown cautious and sees 2018 getting hit with a ‘very scary’ pullback”, wrote CNBC. “Paulsen is convinced the odds of a deeper and deeper pullback grows each day”.
With the stock market jumping around all over the place and offering no protection from inflation, more investors than ever before are turning to alternative investments like Mexico real estate instead because it offers a hedge against inflation, stable annual return on investment of 8-14% and obtain steady retirement income.
“Sudden changes in volatility and monetary policy could spark an ‘interesting’ period for stock markets in the next couple of years”, Barclays CEO Jes Stanley told CNBC. “Financial conditions are somewhat reminiscent of the run-up to the global financial crash of 2008”.
Since the financial analysts who manage the world’s top funds have all said a major correction is coming, it just makes sense to diversify some of your investment portfolio into income producing property like profitable, well-managed vacation home rentals. This strategy allows investors to begin enjoying income, appreciation, and of course, owning a great place to vacation.
Another option is to buy real estate with IRA accounts, which increases your long-term return on investment by creating a tax shelter for all retirement income the investment property generates. Most importantly, buying property in an IRA account still provides all the other benefits of real estate investing, including stability, protection from stock market volatility and a hedge against inflation.
Best Place to Buy Property in Mexico?
Although there are popular vacation destinations and expat communities in many areas of the country, the real estate market in the Riviera Maya region is one of the most dynamic places to buy property anywhere in the entire world, not just in Mexico. Situated along the Mexican Caribbean Sea and stretching south from Cancun for more than 80 miles along the best beaches in the world, Riviera Maya real estate includes places like downtown Playa del Carmen, Cozumel, Puerto Aventuras and Tulum.
“A building boom has increased the number of luxury rooms in Mexico by 33 percent since 2011”, wrote Bloomberg. “Average daily rates increased 43 percent over the same period”.
Despite the Riviera Maya’s superior beauty, modern infrastructure, high safety rating, friendly locals and thriving international vibe, real estate here is still 1/4 to 1/3 the price that you could find in other beach communities. In short, the real estate market in Mexico’s Riviera Maya offers better value and better appreciation, making it easier to buy low and sell high to bring in at least three to four times the return on investment you could find elsewhere.
What do you think about investing in real estate to counter the effects of market volatility? Share your opinion in the comments!
Read Turnkey Real Estate Offers Stability as Stock Market Correction Looms and learn more about how income producing property like vacation homes can take the uncertainty out of investing for retirement.