A 2 aspects of the strategy retirees for the sake of security of cash flows: non-traded real estate investment trusts and annuities

In today’s investment community, to find a decent cash flow is just as easy to find as Black Friday shopping mall parking spaces. A typical parking place higher cash flow including junk bonds, bank and utility stocks, listed real estate investment trusts and fixed index annuities (FIAS), to name a few. All but the Foreign Investment Advisory Service related to the very high short-term risk capital, because they trade on the open market, and by short-term investor sentiment and market-related “fear and greed” cycle. So let us focus on the moment of my strategy FIAS and non-real estate investment trusts traded:

Annuity, in a nutshell

First of all, how FIAS lifetime cash flow? They are designed, once you start the cash flow to pay your monthly check no matter how long you live life. For example, there is a popular annuity 60-year-old male can purchase $ 100,000, began collecting payment and other life year, then promised $ 4,800 per year. There are many attractive features in the FIA. First, you can collection, even if your account balance is zero, so if you live a long time, your income increases internal rate of return. Most are designed with a bad stock market did not fall (watch rider fee though). Finally, unlike the pension, if you pass away prematurely, your heirs receive the remaining accumulated value (if any).

So, what’s wrong annuity? Most of the 4.8%, cash flow is the main, but not the return of income. Therefore, it is a self-liquidation assets. If you have a desire to give money to someone else that one day this might not be a great fit.

Than the individual annuity

At risk by taking a few better choices of non-stock market, there may be a choice. Through a combination of public, non-traded REIT or Delaware Statutory Trust (DST), and is designed for maximum growth along the FIA, it is possible to pull at least 6% annual cash flow, and increase your original the potential value of an investment. Let’s take a look at this.

First of all, if my 60-year-old client to invest in some of his public, non-listed real estate investment trust, or DST, as well as auditing, committees production could generate monthly cash flow of 4%. It depends on how you look at real estate,You may be attracted to a group of assets by the centralized management of multi-family apartments, medical offices and / or self-storage units in the country, located in the growing market. Make sure your investments audited financial leverage, exit strategy, the company’s history, and so on. Now, suppose you get this rate of return, can also assume that inflation will lead to appreciation and rental opportunities. In my analysis, I with 2.5% a year. The rest of the

Investment may be placed in a FIA proposal of participation in S & P 500 year gain without any loss. Volatile market miracles of this type of product, such as self-socks and parachute pants were style.By take free withdrawal allowance for this product, we have seen the kind of market, you can liquidate this over the years to provide all the test L 6 % is expected in the original investment cash flow. I figured that to me, this annuity will be exhausted within 14 years, but 14 years during my original investment in the REIT may have risen more than enough now worth more than the original total investment.

Bottom line

There is a combination of REIT and the FIA ​​to generate growth, cash flow and security of many inherent risks. These are relatively illiquid investments, real estate may suffer due to unforeseen market trends, over-leveraged, and poor exit strategy. In addition, the cost of real estate investment trusts may unlisted high – up to 15% when the price per share, including sales fees and other organizational costs. SKS annuity must go through the insurance company and the interest included in the audit. FIAS pay lifelong cash flow does not share these same risks. So investors really want to know they are buying into.

However, for those of us who like the security of real estate and FIAS, this strategy may generate more cash flow and cash flow legacy assets ratio index design life of a typical fixed annuity.