In today’s market, diversification beyond traditional asset allocation of stocks and bonds can be a critical component to your retirement plan. With interest rates likely on the rise, bonds could continue to lose value, and bond alternatives will be key to ensuring a healthy nest egg. Real estate investing is just one way that we’re helping our client’s embrace the everchanging economy by adding diversity to their investment portfolio.
When appropriate, our clients will invest in DSTs or REITs as just one piece of their overall investment strategy. Though Delaware Statutory Trusts (DSTs) are not new, they remain little known to the broader investment marketplace. Current tax laws have helped DSTs become an investment vehicle for accredited investors* who want the benefits of owning real estate without becoming a “landlord”, as well as current real estate investors who no longer want the responsibilities associated with active property management. A related but more well known way to invest in real estate is a real estate investment trust, or (REIT). A REIT allows you the flexibility to add real estate as an investment within a 401k or IRA qualified retirement plan.
Advantages of real estate investing can be dramatic and DSTs may help those who own property enjoy a true retirement by giving them a way to unlock their equity.
Potential benefits include:
- The ability to receive passive income from real estate without the hassles of property management
- The potential to satisfy the requirements for a 1031 exchange (DSTs) and avoid the capital gains and depreciation recovery tax on the sale of highly appreciated real estate
- Diversification beyond stocks and bonds and the flexibility to customize your investment by property type and geography
- The ability to leave an easily divided and lasting legacy for heirs
- The potential for capital appreciation and hedging against inflation
As CPAs and wealth managers, we’re constantly looking for new ways to help our client’s maximize their income potential by ensuring that their portfolios are always multi-dimensional and comprehensive. After all, we think it’s not just important to focus on what you earn on your investments, but what you keep. That’s why alternative investments have become a valuable piece of many of our client’s portfolios.
Interested in learning more about how alternative investments could fit into your financial plan? Schedule your review above and receive a copy of our recent feature in Kiplinger, “I’m a Landlord: Can I Ever Retire?”