Financial Justice

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Social justice warriors dominate the 24-hour news cycle by seeking to right one social injustice or another. Lost in all the shuffle is another form of injustice, financial injustice.

For too long, Main Street investors have given up their power to Wall Street investment advisers, mutual funds and pension plans. Lulled into believing that if they place their hard-earned cash with one of these many Wall Street money managers, their retirement security is virtually assured and they have no worries.

However, once these Main Street investors reach retirement age, reality hits hard, and many face the stark reality they are underfunded and unprepared for retirement. They find out any appreciation they may have gained in their portfolios was eaten up by fees, mismanagement, and inflation.

Meanwhile, Wall Street was getting fat all along of their retirement plan, leaving only a carcass at retirement. Giving up their power and their voice to Wall Street has resulted in depleted retirement accounts. It’s time Main Street investors regained power and control over their finances to chart their own course to a worry-free retirement.

Where individual retail investors once dominated the market, it’s now overwhelmingly driven by large institutional players – in particular, passive funds like mutual and pension funds. Entrenched in many employer 401(k) plans, mutual fund administrators face little competition and have little incentive to outperform their contemporaries. They merely need to be average to stay in the game and collect their fees.

Meanwhile, employees lulled into complacency thinking the dual benefits of employer matching and tax deferral couldn’t possibly be improved upon end up with egg on their face when they realize their 401(k)’s underperformed and they would have been better off investing their funds elsewhere, like in alternative investments. Some employees just shrug their shoulders when their annual reports reveal returns on their 401(k) account barely outpace inflation, if at all. Meanwhile, the mutual funds continue to collect their fees and make money even when their clients lose.

Public pension plans are in even worse shape.
All over the country, many public pension systems inch closer to complete collapse every year. The decision by some of the most significant funds, such as the California and New York retirement systems, to prioritize political and social objectives over maximizing value for their employees has created a ticking time bomb for public workers’ retirements. The kicker is, it’s not just the public employees that pay the price.

Taxpayers are ultimately responsible for redressing any pension funding deficits, making this an issue that impacts every single American. That explains why the public pension administrators are willing to play fast and loose with employees’ pension funds. They still get paid while taxpayers foot the bill if values go south. They have nothing to lose by pushing their political and social agendas on someone else’s dime.

Many Main Street investors don’t realize their retirement futures are salvageable. The central problem for Main Street investors is they’re placing their trust in administrators and managers whose investment objectives don’t align with theirs. These mutual fund managers and public pension administrators get paid no matter their performance while downturns and negative values are absorbed by investors or by taxpayers.

The key to turning the tables on Wall Street and putting your retirement planning back on track is to take back control of your investment trajectory. Recall power from Wall Street by taking money out of their hands and controlling your investment destiny.

No other class of investment offers the type of returns and control you need to build wealth and retire comfortably than real estate. Real estate investments have been proven time and again and it’s a secret high net-worth individuals “HNWIs” have known for ages.

For those hesitant to get their hands dirty through direct real estate investments, there are many credible and lucrative ways to invest in real estate indirectly. For example, there are many private third-party real estate investment options that allow an investor to have a say in how their funds are invested without dealing with the day-to-day headaches.

Co-investing with an established private fund in the real estate asset class allows you to reap the benefits of real estate investing without the heartburn. Plus, you have the bonus of avoiding Wall Street volatility.

 

Co-investing in real estate, typically through a private real estate investment fund or syndication, is growing in popularity.

Private funds specializing in real estate investing, offering either debt, equity, or hybrid options, provide investors with an array of opportunities within a wide variety of real estate asset classes along with a broad risk-return spectrum. These private funds are generally capitalized from pooled funds of like-minded investors raised through private securities offerings exempt from SEC registration requirements.

With syndications, investors not only have a choice in which private funds to invest but because of the relatively small size of these funds, investors also have more direct access to the managers of these funds to ensure synchronization of investment objectives. This transparency allows for a higher level of due diligence and instills confidence that your funds are in the hands of experienced and competent investment professionals whose interests align with yours.

In addition to choice and access, real estate investment provides additional streams of income that contrast with the one-dimensional Wall Street appreciation buy and sell strategy. Private real estate investment funds typically offer regular income distributions from operations in addition to profits from appreciation upon sale or refinance of properties.

Real estate investing through private funds that outperform Wall Street while being shielded from market volatility is one vital tool for seizing control back from Wall Street and putting your retirement plan on the right track. And, unlike stock values that can disappear in a puff of smoke, real estate-backed investments will never go to zero because as Roy Rogers once famously said, “they aren’t making any more of it.”

When starting, it helps to invest in asset classes, locales and managers with which you have familiarity. As your confidence builds, the time will come to stretch your wings and expand your asset classes and geographic targets.

When will you know when the time is right?
That’s the beauty of all this. It’s entirely up to you. You’re in control. No more being held hostage to the whims of mutual fund and pension plan administrators. Reclaiming power from Wall Street means taking control of your retirement planning and finally giving yourself the surest shot at living your best years comfortably and worry-free.

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