p with far more money. Why let that wonderful opportunity to borrow cheap and invest high go to waste?

Sounds pretty good, and it could work. If stocks for the long run do yield a near certain 10 to 12 percent annual return, this strategy will pay off big.

The Fallacy

Unfortunately, the 10 to 12 percent stock return figure doesn't hold up under close review. Stock market volatility creates far more uncertainly than the stock enthusiasts admit. If your retirement years coincide with a bear market, you could end up flipping burgers at McDonald's, or maybe greeting customers at Wal-Mart. Contrary to the stock enthusiast’s claims, financial assets do display considerable long-term risk That's why you should favor long-term investing in real estate rather than stocks: Not only do safely leveraged real estate returns out perform the stock market's supposed yield of 10 to 12 percent, but real estate (housing) experiences far less downside volatility yet gives near certain upside potential.

Less Risk with Real Estate

For proof positive that Ohio houses exp

First, you want to direct your attention to the word invest. In recent years, promoters of every type of cockeyed Ohio scheme and speculation have claimed to offer Ohio investment opportunities. Peddlers of Ohio financial products, purveyors of financial services, demagoguing politicians, and even new car dealers tell us to buy what they are selling because we would be making a good investment. Commodities, jewelry, condo timeshares, baseball cards, and old Mason jars all are marketed as worthy investments. Even items we used to call luxury goods or extravagances such as $5,000 wristwatches and $50,000 cars are now advertised as investments.

Wealth-Building Ohio Investments

If you're going to borrow against your Ohio home equity to invest, choose assets that will yield both a growing stream of income and a near certain increase in value. Naturally, you should favor Ohio rental houses and apartments. In terms of cash flows, no other asset beats income proper ties. In terms of inflation protection, no other asset beats income properties. Yet, when inflation falls, interest rates fall. Property cash flows go up due to lower Ohio mortgage payments. Values go up because of increased consumer buying power. With rental properties, you win when inflation runs rampant; and you win as it declines.

In addition, Ohio rental properties give numerous tax advantages such as tax-free, cash-out refinances (to further pyramid your wealth), noncash tax deductions for depreciation, tax-free trade-up exchanges, and deferred taxes on capital gains through the use of installment sale contracts

Double Leverage

To pursue this Ohio investment strategy, you would use a cash-out refinance (or an Ohio home equity line of credit) to raise, say, $25,000 or $50,000 (perhaps more). You would then apply that money as a down payment to acquire a rental property.

Your interest costs (at today's rates) should total less than 7 percent, but the rental income from your property should yield (after expenses) 8 to 11 percent. With this spread between borrowing costs and yield, your leveraged rate of return would skyrocket. Yet, if you chose your Ohio rental property according to sound investment principles (as explained in my books on real estate investing), you could achieve these very high returns with little risk. (You would never want to gamble your Ohio home equity with risky ventures.)

What about Stocks?

During the late bull run, numerous financial writers and advisors urged homeowners to cash out their home equity and invest it in the stock market. In his 1997 best-selling book, The Strategy: A Homeowner's Guide to Wealth Creation (Key Porter Books) Garth Turner painted a wealthy, risk-free future for homeowners.

Imagine wealth virtually without risk. It's now possible thanks to the amazing convergence of low interest rates, solidly rising financial markets in the long run and an economic rebound in North America that will last well into the new millennium. . . . Today you can dip into your real estate equity and put that money into financial assets with confidence as long as you are a long-term investor.

Turner goes on to tell his readers, "The new rules of real estate: |a home| is now just shelter, not an investment. . . . What you ultimately want and need is wealth, not a house. . . . The future is in financial assets, not in real estate."

Likewise, in his best-selling and highly influential book, Stocks for the Long Run, 3rd ed. (McGraw-Hill, 2002), esteemed Wharton professor Jeremy Siegel also enthuses over stocks as the salvation for all investors who will keep the faith.5 "Buy and hold through the market's ups and downs," Siegel advises. You will become wealthy. Virtually guaranteed. Similar to Garth Turner, Siegel suggests (though not so emphatically) that homeowners leverage up their home financing and put the cash proceeds into the stock market.

The Reasoning

From a casual perspective, this idea seems to merit attention. Borrow Ohio mortgage money at a tax-deductible rate of 5 to 7 percent. Put that cash in a tax-sheltered, stock-based retirement plan. History shows that over the long run you can expect stocks to yield returns of 10 to 12 percent a year—albeit with bumps and jolts along the way. Hang on for the ride, and you will eventually end up with far more money. Why let that wonderful opportunity to borrow cheap and invest high go to waste?

Sounds pretty good, and it could work. If stocks for the long run do yield a near certain 10 to 12 percent annual return, this strategy will pay off big.

The Fallacy

Unfortunately, the 10 to 12 percent stock return figure doesn't hold up under close review. Stock market volatility creates far more uncertainly than the stock enthusiasts admit. If your retirement years coincide with a bear market, you could end up flipping burgers at McDonald's, or maybe greeting customers at Wal-Mart. Contrary to the stock enthusiast’s claims, financial assets do display considerable long-term risk That's why you should favor long-term investing in real estate rather than stocks: Not only do safely leveraged real estate returns out perform the stock market's supposed yield of 10 to 12 percent, but real estate (housing) experiences far less downside volatility yet gives near certain upside potential.

Less Risk with Real Estate

For proof positive that Ohio houses expe

rest rates fall. Property cash flows go up due to lower Ohio mortgage payments. Values go up because of increased consumer buying power. With rental properties, you win when inflation runs rampant; and you win as it declines.

In addition, Ohio rental properties give numerous tax advantages such as tax-free, cash-out refinances (to further pyramid your wealth), noncash tax deductions for depreciation, tax-free trade-up exchanges, and deferred taxes on capital gains through the use of installment sale contracts

Double Leverage

To pursue this Ohio investment strategy, you would use a cash-out refinance (or an Ohio home equity line of credit) to raise, say, $25,000 or $50,000 (perhaps more). You would then apply that money as a down payment to acquire a rental property.

Your interest costs (at today's rates) should total less than 7 percent, but the rental income from your property should yield (after expenses) 8 to 11 percent. With this spread between borrowing costs and yield, your leveraged rate of return would skyrocket. Yet, if you chose your Ohio rental property according to sound investment principles (as explained in my books on real estate investing), you could achieve these very high returns with little risk. (You would never want to gamble your Ohio home equity with risky ventures.)

What about Stocks?

During the late bull run, numerous financial writers and advisors urged homeowners to cash out their home equity and invest it in the stock market. In his 1997 best-selling book, The Strategy: A Homeowner's Guide to Wealth Creation (Key Porter Books) Garth Turner painted a wealthy, risk-free future for homeowners.

Imagine wealth virtually without risk. It's now possible thanks to the amazing convergence of low interest rates, solidly rising financial markets in the long run and an economic rebound in North America that will last well into the new millennium. . . . Today you can dip into your real estate equity and put that money into financial assets with confidence as long as you are a long-term investor.

Turner goes on to tell his readers, "The new rules of real estate: |a home| is now just shelter, not an investment. . . . What you ultimately want and need is wealth, not a house. . . . The future is in financial assets, not in real estate."

Likewise, in his best-selling and highly influential book, Stocks for the Long Run, 3rd ed. (McGraw-Hill, 2002), esteemed Wharton professor Jeremy Siegel also enthuses over stocks as the salvation for all investors who will keep the faith.5 "Buy and hold through the market's ups and downs," Siegel advises. You will become wealthy. Virtually guaranteed. Similar to Garth Turner, Siegel suggests (though not so emphatically) that homeowners leverage up their home financing and put the cash proceeds into the stock market.

The Reasoning

From a casual perspective, this idea seems to merit attention. Borrow Ohio mortgage money at a tax-deductible rate of 5 to 7 percent. Put that cash in a tax-sheltered, stock-based retirement plan. History shows that over the long run you can expect stocks to yield returns of 10 to 12 percent a year—albeit with bumps and jolts along the way. Hang on for the ride, and you will eventually end up with far more money. Why let that wonderful opportunity to borrow cheap and invest high go to waste?

Sounds pretty good, and it could work. If stocks for the long run do yield a near certain 10 to 12 percent annual return, this strategy will pay off big.

The Fallacy

Unfortunately, the 10 to 12 percent stock return figure doesn't hold up under close review. Stock market volatility creates far more uncertainly than the stock enthusiasts admit. If your retirement years coincide with a bear market, you could end up flipping burgers at McDonald's, or maybe greeting customers at Wal-Mart. Contrary to the stock enthusiast’s claims, financial assets do display considerable long-term risk That's why you should favor long-term investing in real estate rather than stocks: Not only do safely leveraged real estate returns out perform the stock market's supposed yield of 10 to 12 percent, but real estate (housing) experiences far less downside volatility yet gives near certain upside potential.

Less Risk with Real Estate

For proof positive that Ohio houses exp

property according to sound investment principles (as explained in my books on real estate investing), you could achieve these very high returns with little risk. (You would never want to gamble your Ohio home equity with risky ventures.)

What about Stocks?

During the late bull run, numerous financial writers and advisors urged homeowners to cash out their home equity and invest it in the stock market. In his 1997 best-selling book, The Strategy: A Homeowner's Guide to Wealth Creation (Key Porter Books) Garth Turner painted a wealthy, risk-free future for homeowners.

Imagine wealth virtually without risk. It's now possible thanks to the amazing convergence of low interest rates, solidly rising financial markets in the long run and an economic rebound in North America that will last well into the new millennium. . . . Today you can dip into your real estate equity and put that money into financial assets with confidence as long as you are a long-term investor.

Turner goes on to tell his readers, "The new rules of real estate: |a home| is now just shelter, not an investment. . . . What you ultimately want and need is wealth, not a house. . . . The future is in financial assets, not in real estate."

Likewise, in his best-selling and highly influential book, Stocks for the Long Run, 3rd ed. (McGraw-Hill, 2002), esteemed Wharton professor Jeremy Siegel also enthuses over stocks as the salvation for all investors who will keep the faith.5 "Buy and hold through the market's ups and downs," Siegel advises. You will become wealthy. Virtually guaranteed. Similar to Garth Turner, Siegel suggests (though not so emphatically) that homeowners leverage up their home financing and put the cash proceeds into the stock market.

The Reasoning

From a casual perspective, this idea seems to merit attention. Borrow Ohio mortgage money at a tax-deductible rate of 5 to 7 percent. Put that cash in a tax-sheltered, stock-based retirement plan. History shows that over the long run you can expect stocks to yield returns of 10 to 12 percent a year—albeit with bumps and jolts along the way. Hang on for the ride, and you will eventually end up with far more money. Why let that wonderful opportunity to borrow cheap and invest high go to waste?

Sounds pretty good, and it could work. If stocks for the long run do yield a near certain 10 to 12 percent annual return, this strategy will pay off big.

The Fallacy

Unfortunately, the 10 to 12 percent stock return figure doesn't hold up under close review. Stock market volatility creates far more uncertainly than the stock enthusiasts admit. If your retirement years coincide with a bear market, you could end up flipping burgers at McDonald's, or maybe greeting customers at Wal-Mart. Contrary to the stock enthusiast’s claims, financial assets do display considerable long-term risk That's why you should favor long-term investing in real estate rather than stocks: Not only do safely leveraged real estate returns out perform the stock market's supposed yield of 10 to 12 percent, but real estate (housing) experiences far less downside volatility yet gives near certain upside potential.

Less Risk with Real Estate

For proof positive that Ohio houses exp

not an investment. . . . What you ultimately want and need is wealth, not a house. . . . The future is in financial assets, not in real estate."

Likewise, in his best-selling and highly influential book, Stocks for the Long Run, 3rd ed. (McGraw-Hill, 2002), esteemed Wharton professor Jeremy Siegel also enthuses over stocks as the salvation for all investors who will keep the faith.5 "Buy and hold through the market's ups and downs," Siegel advises. You will become wealthy. Virtually guaranteed. Similar to Garth Turner, Siegel suggests (though not so emphatically) that homeowners leverage up their home financing and put the cash proceeds into the stock market.

The Reasoning

From a casual perspective, this idea seems to merit attention. Borrow Ohio mortgage money at a tax-deductible rate of 5 to 7 percent. Put that cash in a tax-sheltered, stock-based retirement plan. History shows that over the long run you can expect stocks to yield returns of 10 to 12 percent a year—albeit with bumps and jolts along the way. Hang on for the ride, and you will eventually end up with far more money. Why let that wonderful opportunity to borrow cheap and invest high go to waste?

Sounds pretty good, and it could work. If stocks for the long run do yield a near certain 10 to 12 percent annual return, this strategy will pay off big.

The Fallacy

Unfortunately, the 10 to 12 percent stock return figure doesn't hold up under close review. Stock market volatility creates far more uncertainly than the stock enthusiasts admit. If your retirement years coincide with a bear market, you could end up flipping burgers at McDonald's, or maybe greeting customers at Wal-Mart. Contrary to the stock enthusiast’s claims, financial assets do display considerable long-term risk That's why you should favor long-term investing in real estate rather than stocks: Not only do safely leveraged real estate returns out perform the stock market's supposed yield of 10 to 12 percent, but real estate (housing) experiences far less downside volatility yet gives near certain upside potential.

Less Risk with Real Estate

For proof positive that Ohio houses exp

p with far more money. Why let that wonderful opportunity to borrow cheap and invest high go to waste?

Sounds pretty good, and it could work. If stocks for the long run do yield a near certain 10 to 12 percent annual return, this strategy will pay off big.

The Fallacy

Unfortunately, the 10 to 12 percent stock return figure doesn't hold up under close review. Stock market volatility creates far more uncertainly than the stock enthusiasts admit. If your retirement years coincide with a bear market, you could end up flipping burgers at McDonald's, or maybe greeting customers at Wal-Mart. Contrary to the stock enthusiast’s claims, financial assets do display considerable long-term risk That's why you should favor long-term investing in real estate rather than stocks: Not only do safely leveraged real estate returns out perform the stock market's supposed yield of 10 to 12 percent, but real estate (housing) experiences far less downside volatility yet gives near certain upside potential.

Less Risk with Real Estate

For proof positive that Ohio houses experience fewer and less severe price slides than stocks, try this experiment. Call several mortgage lenders. Ask them if you can borrow 80 percent of a home's purchase price for a period of 15 to 30 years at a fixed rate of interest. Of course you can. Now, ask those same lenders—or even your stock-touting brokerage firm—if they will make you a similar deal on a portfolio of stocks. "What? Are you crazy?" they'd respond. Or just as likely, they'd tell you to pay cash for your stocks with money borrowed with a low-interest-rate home equity loan.

This simple, commonsense approach to risk assessment speaks volumes. If stocks were less risky than Ohio real estate, why won't lenders grant stock portfolio loans for the same duration, terms, and cost that are widely available with Ohio mortgage loans? (Remember, too, property loans never include a margin call.)

More Income with Real Estate

Ohio rental properties outperform stocks as an investment because they yield a dependable and growing flow of income. Over time, rents for well-kept homes and apartments consistently go up. In contrast, at current market valuation, most stocks pay dividends of only 1 to 3 percent a year. More than 125 companies in the S&P 500 pay no dividends at all; therefore, stocks include a large component of speculation. You buy stocks not for their income, but because you think you can later sell them for a higher price to someone else—and of course, your buyer feels the same. But when confidence in the "greater fool" theory wanes, the bear roars. Stock prices free-fall.

All true investments yield enough current income to justify their current price. If you're paying for hoped-to-be future outcomes, you're speculating, not investing in Ohio mortgage, financing, and mortgage loans.