Retirement: Beating the New Era of Zero Investment Returns

Can Americans beat the new economy, to retire with confidence and in comfort?

There is little uncertainty about what’s ahead in the minds of many leading financial experts. They are pretty adamant that at best we are facing a stalled economy, if not a recession even greater than 2008. What threats does this really bring to Americans who are trying to save, and get ahead financially?

The New Era

Even if things don’t crash; fund giant Bill Gross warns we are entering an era of minimal to zero returns, and that can be far worse for retirement savings than most understand.

Sub 5% returns in the stock market and bonds mean that savers and investors will effectively be in a zero net gain environment, and a negative rate situation when inflation is factored in. That means cash and saving may not grow, and could be depleted year after year, before retirement instead.

That’s if markets don’t plummet from the stampede effect. 2016 began with what CNBC calls the “worst performance ever.” The coverage also warns that dominant financial institutions and governments rarely warn the public of impending crashes.

Key Points

That would be counterproductive to their goals. CNBC reminds us that the peak to trough of the last 6 recessions has been 37 percent. That would take the S&P 500 down to 1,300; if this next recession were to be just of the average variety,” And forecaststhis one will be worse.”

Financial advisor and author Harry S. Dent who has successfully called previous crashes predicts this next one will be far uglier than what we’ve seen in the past, including the Dow Jones getting crushed to just 6k.

Sam Zell is adamant that the US is heading into a recession in 2016, that’s if it isn’t already in one. He’s walking the walk too, and has recently shed billions in investments which he believes have topped out for this cycle.

Negative interest rates are already being effectively felt by many savers across the world, and Bloomberg warns that this could simultaneously tighten lending and working capital for businesses and home buyers at the same time.

Factors That Could Alter the Course of the Economy

What factors could alter the current course of economic and investment performance for better or worse?

  • 2016 presidential election
  • Fed rate changes
  • Positive or negative reports on job, growth
  • Stock market volatility
  • New regulations

Most Important Considerations for Retirement Planning

  • How to grow savings and investments in a zero rate environment
  • How to save enough when other sources of income may be hampered
  • How to ensure sufficient passive income for time out of work, and in retirement

Key Takeaways from the Economic Forecast

Less than 10% of Americans have enough saved for retirement. Saving and growing that nest egg through traditional stock and bond portfolios seems unlikely to be a viable strategy ahead. These assets may still have a place in a well-balanced portfolios, but all of them, including cash in the bank could be net losers for a number of years.

In order to beat these dynamics Americans must act fast to beat the crowd to the few asset classes which still offer value, attractive yields, and most importantly; reliable cash flow.

Mobile Home Park Investing

Investing in mobile home park investing may be the answer for many. It is the one asset class which Sam Zell has continued to increase his footprint in, even while selling off apartments, office buildings, and other business investments.

The advantages of this sector for retirement planning include:

  • Traditionally grows in line with inflation
  • Can produce consistent income uncorrelated to asset value
  • True passive income and monthly cash flow
  • Potential to perform well in both bull and bear markets
  • Full suite of tax advantages

Perhaps even more notably in the current and forecast environment; seller financing and alternative financing is quite common in this space. That could prove to be an invaluable advantage during periods when conventional lending is tight. It means the ability to leverage and achieve asset and income growth, while others struggle to stay afloat.

Summary

The economic and investment performance forecast for Americans isn’t very sunny according to the majority of experts. Even stalemate returns can be a serious threat to retirement planning. However, there is at least one asset class which could prove a powerful ally. Don’t overlook the advantages of mobile home park investing.

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