Additionally, owning rental properties is similar to owning an annuity as opposed to buying real estate investment trusts that offer dividends. Rental properties can provide consistent cash flow that may help investors avoid drawing on their investment accounts and triggering capital-gains tax until well into the future. Being a real asset that has historically appreciated at price, a single property can potentially provide a source of income for the rest of an individual’s life and store its initial value securely with upside potential.
Hustle: Another way to diversify your income, minimize taxes, and ramp up your savings is to run a side business. This business can be of any kind, which would provide a similar mix of cash flow and tax benefits. Business owners can write off certain business expenses to offset taxes from other investments.
Gersten acknowledges that there’s no cookie-cutter formula for everyone. Some investors may feel like real estate is their golden ticket, while others may not be interested in being landlords or running a business.