Real estate investment trusts have pitfalls | Business

M.y column last month on the Importance of Knowing Social Security Rules included a case study of how a long-time federal employee could have a total of $ 75,680 in social security and federal pension income by knowing the rules, instead of $ 47,760 or $ 27,920 less.

You can read this by going to and clicking the “Articles” link at the top of the home page.

Since the 2008 financial panic and stock market collapse, normal investment alternatives for retirement planning have been terrible. Here are the returns as of May 24th, 2021: 0.10% to 0.50% for bank interest; 1.60 percent yield on 10-year US Treasuries; 2.30 percent yield on 30-year US Treasuries; and 2.02 percent average dividends for S&P 500 companies as of January 1, 2000.

Most people in the stock market take way too much risk because of the ridiculously low interest rates.

When I see people qualifying for their free strategy session, it’s not uncommon for them to have 80-95 percent of their savings exposed to stock market risk. If the stock market takes another big crash, they may never bounce back.

Note that the stock market fell about 50 percent during the dot-com crash of 2000-2002 and the financial panic and real estate crash of 2008-2009.

In order to double or triple those horrific returns listed above, there is nothing left but to look for alternative investments. These include real estate investment formulas, private pension schemes and the leasing of solar operating equipment.

Real Estate Investment Trusts (REITs), which often specialize in different types of property, are conceivable. In order to get a favorable tax status, they have to distribute 90 percent of the profits to the security owners via a dividend.

Typically, investors buy REITs for their dividends, which currently average more than double the dividends of S&P 500 companies and the 30-year government bond.

Warning: Buying REITS is a security, much like owning a stock or mutual fund, and you can lose capital.

On April 15, 2020, there were major losses in the REIT real estate indices compared to the previous year due to the coronavirus pandemic. The declining sectors were -15 percent for apartment buildings; -17 percent for office; -25 percent for healthcare; -48 percent for retail; and -53 percent for hotels.

In the case of data centers, however, it was +34 percent; +31 percent for cell towers; and +14 percent for industry. Source:

Note that you can often get higher and more stable returns by owning private real estate directly rather than through a REIT.

Private pension funds function like social security or any other pension. The longer you wait to trigger your retirement income, the more you get.

A nurse was 62 years old in 2014 and deposited $ 270,000 into a private pension. If she cashes in on her retirement income at age 70, she gets a lifetime guarantee of $ 27,000 per year. That’s a cash flow rate of 10 percent.

Solar business equipment leasing enables investors to participate in the government’s massive drive for “The New Green Deal” and a cleaner environment. The cash flow can average 5-7 percent annually.

However, you also have to add the tax savings. When purchasing $ 100,000 worth of solar panels that are rented to businesses, there is a 26 percent tax credit and a possible immediate $ 87,000 deduction under Section 179 of the Tax Code.

It’s not uncommon for high-income taxpayers to save $ 50,000 in taxes, which doubles the tax-adjusted return and reduces their overall personal tax burden.

Free Live Seminars and Lunch: 10:45 am June 12 at the Old Spaghetti Factory, 3155 W. Chandler Blvd. # 9, grocer; and 10:30 am June 13 at Hyatt Place, 3535 W. Chandler Blvd.

The topic is “Double your social security and other pension income and pay no taxes!”

For an RSVP, please contact Dr. Harold Wong at 480-706-0177 or [email protected] His website is

Dr. Harold Wong received his Ph.D. in Economics from the University of California / Berkeley and has appeared on over 400 television / radio programs.