If you’re starting your real estate investing portfolio later in life, you may not have as much time to be as successful as you’d like to be, so be sure you consider the following points first.
Time is More Important than Money in Real Estate InvestingAs stated before, it takes time to really be successful in real estate investing. You can always make more money, but you cannot make more time. You get the time you get and that’s it.
Using the example below, which one would you choose?
Example A: You’re 30-something with $10,000 in the bank. You have the ability to save another $10,000 a year after that.
Example B: You’re in your early 60s with $500,000 in the bank, but you only have the ability to save about $50,000 a year after that.
Most people would choose Example A because there is more time to save a greater amount of money. The younger a person is when they begin investing, the more opportunity there is to take advantage of compounding options to increase wealth. Later in life, these options are limited as there is not as much time.
The Older You Get the More Conservative You BecomeFor most people, age brings with it conservatism. This isn’t to say that if you’re a natural risk taker that you all of a sudden become conservative but getting older does tend to make people more conservative and less likely to take risks. This switch is likely due to the shrinking time frame you have to accomplish your goals.
As an example, if you’re in your 30s, you have a good 30 years to make investments, take a loss or two, and land back on your feet financially before retirement. If you’re only a few years from retirement, you’ll be less likely to take that kind of risk knowing there isn’t enough time to recoup. To compensate for this limitation, some older investors think that taking on a higher-yielding investment is the right idea. Unfortunately, higher yield usually means higher risk, which is exactly what you don’t want to do at this stage in your life.
Age plays a huge role in real estate investing as the younger you are, the more time you have to build a strong portfolio. Time is far more important than money in this case as you can’t make or buy more of it. And since time is not on your side as you grow older, your options for investing become limited as well.
If you’re thinking of getting in on real estate investing later in life, make sure you’ve considered the points listed above as it’s very likely you won’t achieve the results you’re looking for.