In recent years we are seeing a shift toward higher return investments. And since the 2008 stock market crash, investors have been searching for alternatives to find higher returns with less risk.
So while the average investor remains mired in dismal Wall Street securities, savvy investors are increasingly moving toward higher return investments.
CNBC reported in 2014 that “… wealthy investors generally have been getting better returns than retail investors because they have more money in alternative investments—especially private equity funds, which have generated much stronger returns in recent years.1”
The Truth About Wall Street
So contrast that with Warren Buffett’s 2015 annual shareholder letter.
Buffett tells his shareholders “Some commentators bemoan our current 2% per year growth in real GDP – and, yes, we would all like to see a higher rate. But let’s do some simple math using the much-lamented 2% figure. That rate, we will see, delivers astounding gains.2“
But when Buffett says “astounding gains” he is referring to GDP growth over a whole generation – 25 years.
And what about your portfolio?
In fact, it is arguable whether even 2% GDP growth is sustainable with massive government bloat, high taxes and businesses that are hamstrung by bureaucracy and failed economic policies.
So for the foreseeable future 2% annual return in the stock market is probably optimistic at best.
And the Wall Street Journal recently reported “The problem isn’t that you might be not able to get better than a 2% return, but that even getting 2% isn’t going to be psychologically easy.3”
But not everyone is settling for the crumbs.
Higher Return Investments Are Here Now
So more and more investors are moving into higher return investments with Cash-Flow Real Estate and Private Free Markets.
And watch for other opportunities as they open up in the next few months, such as private lending and private equity funds.
With the right investments, 10 to 15% or more annual return is not uncommon.
So not only will the right investments help you beat inflation by a healthy margin, you will do it mainly with cash flow.
And having that regular passive income stream is certainly better than betting that your paper statement will be larger next year or in 10 years.
As they say “a bird in the hand…”
So let’s compare how your portfolio will grow at 10% return vs. 2%.
Higher Return Investments Accelerate Growth
We’ll use 10 years for our example.
Our 2 fictitious investors are James and Mike. Both started with $600,000. So let’s see how each investment strategy stacks up head-to-head.
James owns a mix of cash-flow properties, private loans and private equity. James is getting an annual return of 10%.
And Mike owns a mix of stocks and mutual funds. Mike is getting an annual return of 2%.
After 10 years, here’s how James and Mike are doing.
So you can see just how much difference a few percent in returns makes over 10 years.
James’ portfolio has grown to $1,556,245 while Mike’s has only gotten to $731,397, barely above the $600,000 initial investment.
So which strategy makes more sense to you?
One idea is to invest in passive, cash-flow real estate with your retirement funds. It’s easier than you think and we’ll walk you through the whole process, step by step.
The Powerful Portfolio program will help you invest smarter with higher return investments like real estate.
Disclaimer: These are examples and your results may vary considerably. Past performance is not a guarantee of future gains. See our terms & conditions and income disclaimer below.