The Importance of Building Supplemental Wealth

By
Amy Leong

April 7, 2021

As we reflect on our financial situations moving into the second quarter of 2021 with the pandemic still in swing, we feel it’s important for those who may be relying on a pension in their later years to look at other income options. By options, we mean smart, cash-flowing real estate that can add a supplemental income stream, above your pension.

We have been assisting and helping union members, first responders, teachers, and those who have a pension but want additional income. Perhaps your expenses or way of living outweigh your pension amount, or maybe you want to retire even earlier or live half the year abroad. All of this is possible by investing in real estate!

Let’s Talk About Pensions 

Pensions are wonderful, and they do give you a sense of security, but investing in real estate offers a level of control and management of that money that a pension may not provide. 

Common questions people ask about their pensions are: What exactly is our pension fund investing in? What percentage rate of return are we getting? Is my pension invested in bonds, mutual funds, or REITS? 

All too often, the answers are unclear and the returns promised of 8-10% are actually more like 3-5%. There are many rules with when and how one can take out their money, and this can dramatically change depending on the date and year. 

There are also governing bodies who dictate the algorithm for your pension fund. Did you know some pensions will only let you check on your pension amount once per year? 

It’s All About Cash Flow 

The aim of pursuing additional income options—such as investing—is the ability to generate what we call consistent “cashflow”. Cashflow is the bread and butter for building long term, sustainable passive income through real estate. 

By purchasing multiple properties, one can not only pay off the mortgage by renting the property out to other people, but the interest on the property over till will begin to accumulate over time. The Vancouver real estate market has proven time and time again to be an incredible long-term investment from an appreciation standpoint alone.

Real estate is also a fantastic long-term investment strategy, as you are able to leverage the market. What this means is, investors are able to secure mortgages in order to gain access to the property without paying for the full value up-front. 

It is always crucial to understand the risk involved in speculating with any sort of investment. However, with the right amount of planning and strategic analysis of personal finances, one can build an incredibly impressive portfolio by leveraging mortgages on properties whilst also renting the properties out.

The Power of Investing

When it comes to retirement, individuals in Canada have a few options. Many people that fail to plan ahead will rely on the Canadian Pension Plan (CPP). Other people may receive pension plan payouts from their place of employment. 

However, savvy individuals will have an additional game plan to put their money to work. By budgeting well in advance each month, our clients have been able to reach their down-payment targets that we helped them formulate. 

Investing in real estate in Vancouver is one of the best long-term strategies for building incredible, tangible wealth. Over the last thirty years, Vancouver has seen tremendous appreciation with property value, with many homes tripling in price or more. 

Additionally, because rent supply is low, rent prices are high enough to cover entire mortgage payments. Once the mortgage is paid off, monthly rent will accumulate as straight cash payouts.

If you have yet to purchase your first home, our team at Amy & Ally are here to assist you in making the process significantly more manageable. From finding the best cashflow properties and deals, to educating on why certain properties are worth the investment, we’d love to get in touch with you and chat about how to get the ball rolling.

It’s never too early to start preparing to build your portfolio! Reach out to us to learn next steps.