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Hello {!name}, Welcome to the Whole-Hearted-Way newsletter. I hope you enjoy this information and the practical tips. Feel free to email me with any topics you would like to see covered or great resources you would like to share. You may subscribe or unsubscribe at the bottom. Enjoy! -Fern Alix LaRocca CFP® EA Home or Investment?After 8 months of looking, and being outbid twice (yes, Bay Area real estate is still hot in certain areas), I finally found a home to buy. Every time I think that prices cannot go any higher—they go higher…and higher. What does this mean for all of us? For people trying to get into their first home, it can be very hard. They have to save faster than their rent will go up and faster than what the prices of homes will appreciate. There are options for them such as condos and TICs (tenants-in-common) properties which are similar in structure to the co-ops that are on the east coast. These people will need a structured savings and cash flow plan to get into their first home. Obviously buying and being tied down to a home is not desirable for all. In that case, you need to be prepared to pay the escalating rents that will happen to compensate landlords that are building equity in their property. Most renters I know are paying more than what my mortgage is for a much smaller space. But I am tied down to a locale and a mortgage and they are not. Pros and cons to each so it is an individual choice. For those already in a home, you are building up quite a bit of equity. Now the problem begins if you should tap that equity or not. Depression era people believed in being debt free. The idea was to pay off their mortgage and live debt free and with high cash flow in their retirement. That sounds great--- if it actually worked. What really happens is that the mortgage gets paid off and so goes the biggest tax write off they have and the high cash flow never happens. Think you won’t need a write-off by the time you retire? Think again. Most retirement plan withdrawals will be taxable. On top of that, if you make a certain amount of income at retirement, your social security will be taxable too. You may end up paying more tax on less income at retirement if you don’t structure your investments properly. What about that higher cash flow? Well, if you aren’t working at all then you can’t take any risk so your investments will probably provide a fixed income for the rest of your life. That sounds good unless a high inflationary economy starts. And what are the chances of that? With humans living longer than ever before, I would say most retirees will see another high inflation period that will eat away at their cash flow. Does anyone remember the eighties? Attracted to those reverse mortgages on the television? Lenders are chomping at the bit to give seniors cash out of their homes----- at exorbitantfees and rates. That’s because you won’t be able to qualify for much on a fixed income and the reverse mortgage will be your only option to get cash out while you are alive. I don’t like to think of the place where I live as an investment. After all we all need someplace to live, but when your home has substantial equity in it; equity that you can use for retirement income or other purposes, it may be in your best interests to review your options with a financial advisor before you are retired. I have experienced too many people living in multi-million dollar homes and can’t afford the heat or maintenance of their property because they didn’t plan ahead. Coaching Question for you—what does your ideal home look like when you are retired or working part-time? News Flash! – I will be holding a FREE teleclass –The 7 Steps to Creating Your Own Financial Plan on Wednesday, August 15th, 4p.m. pacific time. Email me to register for this one hour call. Because of all the spam filters, I need you to formally subscribe. So click on the subscribe link below and I will send you a free PDF file called -Choosing the Right Investment Benchmarks. Your feedback is always welcome and appreciated! Write to me at fern@wholeheartedway.com. <><><><><><><><><><><><><><><><><><><><><><><><><><><><> PLEASE FORWARD THIS PUBLICATION to your friends and colleagues, and invite them to subscribe as well at http://www.wholeheartedway.com/subscribe.html <><><><><><><>><><><><><><><><><><><><><><><><><><><><><> Fern respects your privacy and DOES NOT give out or sell subscribers' names and/or e-mail addresses. July 2007-- this newsletter is produced by Whole-Hearted-Way and provided by Fern Alix LaRocca CFP® EA
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