The Dynamic Duo of Proven Investment Strategies

Real Estate and Index Funds for Financial Success!

The Dynamic Duo of Proven Investment Strategies
Photo by Mathieu Stern / Unsplash

Real Estate and Index Funds for Financial Success

Growing up, one of my favorite cartoons was Batman, the Animated Series.  It starts with just Batman, but eventually, Robin comes along, and they are forever known as the "Dynamic Duo."  I want to talk about the historically proven investment philosophies of real estate investing and index funds.  

Now I know what some of you are thinking.  "But Nate, what about royalties, gold, crypto mining, being an influencer, monetizing youtube, and of course, NFTs."  As of writing this, we know what's happened to crypto and NFTs.  The house of cards they were built on crumbled regarding "investing" in them.  Gold can be a great hedge occasionally but historically doesn't outperform S&P 500 by a wide margin.  Being an influencer, monetizing youtube or TikToks is new and can be an excellent way to earn income.  The never-ending journey of content creation can be somewhat passive, but your eggs are kind of in one basket.

Could you not hear me crash your dreams?  If you want to build great content that you can monetize, then do it.  They can make great money! Today I will talk about historically proven investments.

Index Funds = Portfolio income

First, I'm going to talk about index funds.  I'm genuinely hoping you read my blog to the end, but if you have ADHD like me, I want you to read this one before moving on because I think pretty much everyone can do this investing, AND it is the simplest.

The goal of investing in index funds is to one day hopefully build it up significantly enough to where you can live off the portion of the growth investments indefinitely.  If, for simplicity, you didn't have any other income like from real Estate, pension, or social security, the amount you would need would be your yearly expense multiplied by 25.  For example, if your annual costs equaled $40k, you would need $1M in index funds or investment ($40k x 25).  Why 25? Because studies have shown that you can live off 4% of your portfolio indefinitely.

How you grow this investment typically looks like investing in tax advantage accounts into a fund that historically generates anywhere between 9.7% to 11% growth.  Then allows your money to multiply the more you contribute to it and the longer it stays there.

Real Estate = Passive Income

Now real Estate.  This one is last because it can be complicated, especially if you want outsized returns that real Estate can give you.  

The simplest to invest is to do what I said above, "Real Estate' which is investing in an index fund like VTSAX.  Why? Because index funds invest in a wide range of companies.  Those companies can be anything: technology, real Estate, and crypto companies.  So by investing in index funds, you expose yourself to a wide array of industries including real Estate, as long as they perform high enough to be in the index.

But let's say you take the next step.  You want to own an actual property that generates this magical passive income.  Then read on.  

Real Estate has proven to be an excellent investment when you buy and hold a property and rent it out.  I'm not talking about fixing and flipping or wholesaling. At the same time, that does require finding houses and selling them for a profit. It's more like earned income where you must do it, or the money runs dry constantly.  But to truly invest in real estate, you need a buy-and-hold strategy.  

By understanding how to buy real Estate, educating yourself on how to rent it out, and potentially leveraging your property, you can make more than the standard 4% return real estate gets in the open market.  But that outsized return comes with risk, and more education is needed.  It can be a significant investment, especially for those who work at it.

I write more about real Estate and index fund investing here in the 6 Simple Steps to Investing and understand how I think you should order your investments.

If anyone wants to reach out please Contact Me!

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This article is informational; it should not be considered Health, Financial, or Legal Advice. Not all information will be accurate. Consult health, financial, or legal professional before making any significant decisions

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