1Post No:Canada Real Estate 365 - Americans Buying

From Canada Real Estate 365 - While the globe watched the United States stock market convulse in January because of fears of a possible recession and troubles related to subprime mortgages, Rudy Nielsen was busy closing a million-dollar deal with another USA buyer.

"American buyers are still coming here," Nielsen told the Georgia Straight. "There's still a great demand for Washington guys to drive up to B.C. and get some great skiing, some fishing, and even some of our golf. So they’re still buying recreational land."

The veteran realtor, who has been in the property market for more than forty years, also said that the sales volume being created by his company doesn't indicate a slowdown in terms of USA purchases of recreational properties.

2 Post No:New Real Estate ETF Enters at a Challenging Time

PowerShares is entering into the real estate market with the United States through a new actively managed exchange traded fund (ETF) launched Wednesday.

PowerShares Active Real Estate Fund (PSR) will trade on the New York Stock Exchange and will invest in real estate securities within the FTSE NAREIT Equity REITs Index.

Billy Fisher for TheStreet reports that the Equity REITs Index has fallen 41.2% this year, more than the S&P 500’s 37.6% decline. However, the Invesco company reveals they think this is an opportune time to jump into the real estate market. The investors need to be convinced that this is the bottom for real estate. It is also important to remember that the markets will not remain depressed forever and a recovery could be just around the corner. We watch the trend lines in order to get a sense of this.

One advantage the new PowerShares fund might have is that the actively managed format allows it to avoid areas of the market that have been hit the hardest. The fund will focus more on commercial real estate than single-family housing.

The crisis has delayed the launch of MacroShares’ new funds.

• SPDR Dow Jones Wilshire REIT Index (RWR), down 58.8% year-to-date

3 Post No:When the market has slumped.

Most folks I know get quite excited when the market is marching upwards — that’s when they ask the usual questions about what type of stock to get into or what fund is worth checking out. It’s the herd mentality at work, and when stocks are strong and market momentum is fierce, we can’t help but be swept in it. But what about those times when the market is in the dumps? If you’ve got the funds, entering the market during a correction or bearish period may yield you good value for your money, especially when you take the long view. Taking the contrarian approach can yield you bigger returns down the road since big downtrends are usually followed by even bigger rallies.

When all you hear is bad news.

As they say, buy when there’s blood on the streets. This is simply a corollary to the “rule” that states that you should consider buying when the market is down. I get particularly excited when people are selling and bad news is circulating everywhere, thereby exerting downward pressure on the markets. So contrary to what you may think, bad news is really good news….for buyers and investors!

When you stumble unto a windfall.

Okay so how many of us can admit to spending a windfall before we actually ever receive it? Have you tried mentally accounting for a windfall, and assigning it to an expense bucket before you’ve even gotten a chance to touch it? Unfortunately, it happens too often especially these days when cash flow is tight and everyday costs are up. But if we change our habits and place any unexpected extra money (such as an inheritance, cash gift, tax refund or even the remote possibility of a lottery win) into the stock market instead, that money will leave you a much bigger impression later on than if you simply spent it. Windfall + stock market + power of compounding = potentially big profits later.

4 Post No:When Should You Buy Into The Stock Market?

I’ve got this former co-worker who absolutely refuses to buy into the stock market. He says it’s like playing the lottery or gambling. And no matter what kind of justifications I make, he won’t listen — instead, he’s content with putting his money into real estate property in his native country. His investments have yielded him significant returns in recent years, so it may be hard to argue with him about it.

However, this just emphasizes yet one more truism about investing:

Invest in what you know best and what you’re most comfortable with.

Though many of us don’t necessarily begin our investing lives as experts on things we’ve invested in, the point here is that we do enough due diligence on matters that put our money at some risk.

Thus, if you’re open to the idea of investing in the stock market (like most people actually are ) but are somehow still on the fence about it, maybe some of the following thoughts will help you take the dip into a few investments that should grow at a greater pace than your staid FDIC insured savings account, over the long term.

The Best Time To Get Into The Stock Market?

A lot of people I know ask me about when they should start investing in the market. My quick answer to them is “Buy now!”, but that really deserves a bit more explanation. Here’s what I really mean: when somebody asks me “When should I buy into equities?” I ask them to zero in on these 8 indicators that could tell them they’re ready to wade into stocks:

When you’re comfortable about it.

Don’t jump into the market unless you’re really comfortable with the inherent risk it offers. Because of the relatively higher returns that stocks give you, the risk to your capital is also greater. Of course, there is other risk involved if you do NOT invest in the market, like the risk that your money won’t be keeping up with inflation. By diversifying your portfolio and maintaining a long term investment horizon, you’ll manage your risk of capital loss much better.

Like, yesterday!

Most personal finance buffs will tell you that you should invest early or as soon as possible. I’ll take it further and say you should have started investing yesterday — and it’s obvious why. A while back, the stock market was a lot lower than it is now. Not in the near term of course, but look far enough in the past and you’ll see how it’s climbed. If you had invested yesterday, you’d be sitting on some profits. This is the case even as the market has dipped so many times over the years: the market’s long term trend is still UP.

4 Post No:Non-Financial Hardship 401k Withdrawal

Although the investor must still pay taxes on non-financial hardship withdrawals, the ten-percent penalty fee is waived. There are five ways to qualify:

1. You become totally and permanently disabled
2. Your medical debts exceed 7.5 percent of your adjusted gross income
3. A court of law has ordered you to give the funds to your divorced spouse, a child, or a dependent
4. You are permanently laid off, terminated, quit, or retire early in the same year you turn 55 or later
5. You are permanently laid off, terminated, quit, or retired and have established a payment schedule of regular withdrawals in equal amounts of the rest of your expected natural life. Once the first withdrawal has been made, the investor is required to continue taking them for five years or until he/she reaches the age of 59 1/2, whichever is longer.

A 401k hardship withdrawal should be a last resort. An IRA, for example, has a lifetime withdrawal exemption of $10,000 for a house with no strings attached.

What is the maximum contribution limit on your 401k account? The answer depends on your plan, your salary, and government guidelines. In short, your contribution limit is the lower of the maximum amount your employer permits as a percentage of salary (e.g., if your employer lets you contribute 4% of your salary and you earn pre-tax $20,000, your maximum contribution limit is $800), or the government guidelines as follows:

401k Maximum Contribution Limits
2004: $13,000
2005: $14,000
2006: $15,000

Once the year 2006 has been reached, the total maximum contribution limit will be increased based on changes in the cost of living.

5 Post No:401k Hardship Withdrawal

What if your employer doesn’t offer 401k loans or you are not eligible? It may still be possible for you to access cash if the following four conditions are met (note that the government does not require employers to provide 401k hardship withdrawals, so you must check with your plan administrator):

1. The withdrawal is necessary due to an immediate and severe financial need
2. The withdrawal is necessary to satisfy that need (i.e., you can’t get the money elsewhere)
3. The amount of the loan does not exceed the amount of the need
4. You have already obtained all distributable or non-taxable loans available under your 401k plan

If these conditions are met, the funds can be withdrawn and used for one of the following five purposes:

1. A primary home purchase
2. Higher education tuition, room and board and fees for the next twelve months for you, your spouse, your dependents or children (even if they are no longer dependent upon you)
3. To prevent eviction from your home or foreclosure on your primary residence
4. Severe financial hardship
5. Tax-deductible medical expenses that are not reimbursed for you, your spouse or your dependents

All 401k hardship withdrawals are subject to taxes and the ten-percent penalty. This means that a $10,000 withdrawal can result in not only significantly less cash in your pocket (possibly as little as $6,500 or $7,500), but causes you to forgo forever the tax-deferred growth that could have been generated by those assets. 401k hardship withdrawal proceeds cannot be returned to the account once the disbursement has been made.

6 Post No:401k Loan Limits

In most cases, an employee can borrow up to fifty-percent of their vested account balance up to a maximum of $50,000. If the employee has taken out a 401k loan in the previous twelve months, they will only be able to borrow fifty-percent of their vested account balance up to $50,000, less the outstanding balance on the previous loan. The 401k loan must be paid back over the subsequent five years with the exception of home purchases, which are eligible for a longer time horizon.

401k Loan Interest Expense

Even though you’re borrowing from yourself, you still have to pay interest! Most plans set the standard interest rate at prime plus an additional one or two percent. The benefit is two-fold: 1.) unlike interest paid to a bank, you will eventually get this money back in the form of qualified disbursements at or near retirement, and 2.) the interest you pay back into your 401k plan is tax-sheltered.

The Drawbacks of 401k Loans

The biggest danger of taking out a 401k loan is that it will disrupt the dollar cost averaging process. This has the potential to significantly lower long-term results. Another consideration is employment stability; if an employee quits or is terminated, the 401k loan must be repaid in full, normally within sixty days. Should the plan participant fail to meet the deadline, a default would be declared and penalty-fees and taxes assessed.

6 Post No:Investment customization and flexibility

401k retirement plans give employees a range of choices as to how their assets are invested. An individual that knows he or she does not have a high tolerance for risk could opt for a higher asset allocation in low-risk investments such as short-term bonds; likewise, a young professional interested in building long-term wealth could place a heavier emphasis on equities. Many businesses allow employees to acquire company stock for their 401k retirement plan at a discount although many financial advisors recommend against holding a substantial portion of your 401k in the shares of your employer in light of the Enron and Worldcom scandals.

One of the benefits of a 401k retirement plan is that it can follow an employee throughout his or her career. When changing employers, the investor has four options:

1.) Leave his/her assets in the old employer’s 401k retirement plan
Many 401k plan administrators charge record keeping and other fees to manage your account, regardless of whether you are still with the company. These fees can take a significant bite out of your future net worth, especially if you have accounts maintained at several different employers.

2.) Complete a 401k rollover to the new employer’s 401k plan
Practically speaking, this option is only available if the employee has another job offer before leaving their current employer. In some cases, it may be the best option as it is simple. How do you know if it is the right choice? The decision should largely be made based on the investment options of the new 401k plan. If you are unsatisfied with the choices available to you, completing a 401k rollover to an IRA may be a better option.

3.) Complete a 401k rollover and move the assets to an Individual Retirement Account (IRA)
Completing a 401k rollover is almost always the best choice for those interested in providing for a comfortable retirement because it allows the investor’s capital to continue compounding tax-deferred while providing maximum control over asset allocation (i.e., you aren’t limited to the investments offered by the 401k plan provider.) Here’s how it works: A distribution of the current 401k plan assets is ordered (this is reported on the IRS Form 1099-R.) Once the assets are received by the employee, they must be contributed into the new retirement plan within sixty days; this deposit is reported on IRS Form 5498. The government limits 401k rollovers to once every twelve months.

4.) Cash out the proceeds, paying taxes and the 10% penalty fee
With the exception of failing to take advantage of an employer’s contribution match program, cashing out a 401k when leaving jobs is the single most stupid decision a working individual can make. According to a press release by the 401K Help Center, research indicates “as many as 66 percent of Generation X job changers take cash when leaving their jobs, and 78 percent of workers aged 20-29 take cash.” The tragedy is far greater than the taxes and penalty fee alone; indeed, the greater financial loss comes from the decades of tax-deferred compounding that capital could have earned had the account owner chosen to initiate a 401k rollover.

The purpose of your 401k retirement plan is to provide for your golden years. There are times, however, when you need cash and there are no viable options other than to tap your nest egg. For this reason, the government allows plan administrators to offer 401k loans to participants (be aware that the government doesn’t require this and therefore it is not always available.)

The primary benefit of 401k loans is that the proceeds are not subject to taxes or the ten-percent penalty fee except in the event of default. The government does not set guidelines or restrictions on the uses for 401k loans. Many employers, however, do; these can include minimum loan balances (usually $1,000) and the number of loans outstanding at any time in order to reduce administrative costs. Additionally, some employers require that married employees get the consent of their spouse before taking out a loan, the theory being that both are affected by the decision.

7 Post No:401k Retirement Plan

Begin Providing for Your Future

Anyone familiar with the time value of money knows that even small amounts, when compounded over long periods, can result in thousands, or even millions, of dollars in additional wealth. This simple truth is one of the reasons many financial planners recommend tax-advantaged accounts and investments such as traditional / Roth IRA’s and municipal bonds. In the past, these decisions were not as crucial because of the prevalence of defined-benefit pension plans. Today, those old-world pensions are going by the wayside at many U.S. firms; instead, most of today’s workforce is likely to find their retirement years funded by the proceeds of their 401k retirement plan.

What is a 401k retirement plan?

A 401k retirement plan is a special type of account funded through pre-tax payroll deductions. The funds in the account can be invested in a number of different stocks, bonds, mutual funds or other assets, and are not taxed on any capital gains, dividends, or interest until they are withdrawn. The retirement savings vehicle was created by Congress in 1981 and gets its name from the section of the Internal Revenue Code that describes it; you guess it - section 401k.

What are the benefits of a 401k retirement plan?

There are five key benefits that make investing through a 401k retirement plan particularly attractive. They are:

• Tax advantage
• Employer match programs
• Investment customization and flexibility
• Portability
• Loan and hardship withdrawals

Tax advantage of 401k retirement plans

As touched on in the introduction, the primary benefit of a 401k retirement plan is the favorable tax treatment it receives from Uncle Sam. Dividend, interest, and capital gains are not taxed until they are disbursed; in the mean time, they can compound tax-deferred inside the account. In the case of a young worker with three or four decades ahead of them, this can mean can mean the difference between living at the Plaza Hotel or the Budget 8.

Employer match for 401k retirement plans

Many employers, in an effort to attract and retain talent, offer to match a certain percentage of the employee’s contribution. According to Starbucks’ “Total Pay Package” brochure, for example, the company will match a percentage of the first 4% of pay the employee contributes to their 401(k) retirement plan. Employees at the company for less than 36 months receive a 25% match; 36 to 60 months receive a 50% match; 60 to 120 months receive a 75% match; 120 or more months receive a 150% match.

In other words, an employee working at the coffee giant for over ten years earning $100,000 that contributed $4,000 to their 401(k) would receive a $6,000 deposit in the account directly from the company (150% match on $4,000 contribution.) Anything the employee deposited above the 4% threshold would not receive a match.

Even if you have high-interest credit card debt, it is preferable, in almost all cases, to contribute the maximum amount your company will match! The reason is simple math: If you are paying 20% on a credit card and your company is matching you dollar-for-dollar (a 100% return), you are going to end up poorer by paying off the debt. Factor in the tax-deferred gains generated by the 401(k) plan, and the disparity becomes even larger. For more information on this topic, I suggest you read the work of Suze Orman.

Although the topic will be discussed in further detail later in this article, be aware that employer matching contributions up to six-percent of an employee’s pre-tax salary are not included in the annual limit. For example, if you qualified, you could make a 401k contribution of $13,000 in 2004 and have your employer still match the first six-percent of your salary; that match would be deposited above and beyond the $13,000 you contributed directly.

8 Post No:Copyright © 2008. All Rights Reserved. Mike Stathis.

Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.

The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.

Restrictions Against Reproduction: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the copyright owner and the Publisher. These articles and commentaries cannot be reposted or used in any publications for which there is any revenue generated directly or indirectly. These articles cannot be used to enhance the viewer appeal of any website, including any ad revenue on the website, other than those sites for which specific written permission has been granted. Any such violations are unlawful and violators will be prosecuted in accordance with these laws.

9 Post No:Why did I rehash the painful events of the past?

Because it is important to keep in mind how the market responded to events. Just like we look at previous prices to measure moving averages and volatility, we must also retrace previous market sentiment. Now let's consider some basic trend analysis. As you can see, the Dow made an all-time high in October 2007. Since then, it has made lower lows and lower highs, typical of a downward trend. But how far and how long will this bear market last? First of all, we need to remember that the previous bullish rally was quite fast, occurring over about 20 months. In fact, the lion's share happened in 6 months (May to October 2007) for about 18% gains. What does that mean? Well, in my opinion, it means the bullish rally was not that valid. Remember, price validity strengthens with time.

If we look where the Dow is now, it's easy to see that it hit some fairly strong support around the 10,800 range. However, this support was just prior to the previous bull run which began in early 2007. In other words, if in fact, the previous bull run was an artifact, it is likely that the Dow has a way to go down before any long-term trend reversal.

Next we examine a 14-month chart of the Dow. As you can see, I've drawn the upper and lower trend lines. The dashed lower trend line illustrates very short-term extreme selling pressure I typically dismiss as noise. But as you can see, we've encountered three of these periods thus far, making what I would normally consider to be noise an important consideration.

The big question is where will the market head over the next several months. No one knows for certain, as this depends upon many variables and the timing of these variables. All we can do is look at the possibilities. The first thing I will say is that, based upon the three previous periods of extreme selling pressure, it is likely that we will see additional periods of these brisk sell-offs, but only if the downward trend remains in place. As for the downward trend, currently the Dow is trying to mount a strong rally up from the previous oversold level around 10,800. This rally was triggered by the Fed's bailout commitment to Fannie and Freddie, as well as additional positive news in the financial sector. Therefore, barring any further catastrophic events over the next several weeks, it looks as if the market could continue the current rally. But by how much and for how long? Once again, it is impossible to say without knowing in advance several variables

10 Post No:Stock Market Forecasting Made Simple

Generally speaking, throughout the decline of a bubble, there is a new theme every month or so. And in-between these periods, the “no news is good news” sentiment is usually cause for a market rally in the early stages, as denial remains a strong force. At a later stage when “no news” isn't enough to lift the market, pundits and CEOs come out and claim that the worst is over. Let's look back at the past 18 months and see how things played out.

A Look at the Recent Past

In late February of 2007 we saw the first signs of problems with mortgage companies that were buried deep in sub-primes.

(1) After a drop of around 500 points, the market rallied to new highs by late April.

(2) Next, the move from early March to mid-July was huge, the Dow having moved from 12,000 to 14,000.

(3) Then the avalanche began and the market dropped by 1200 points over about 4 weeks.

(4) But one day in particular it fell to around 11,500 intraday and closed up significantly.

(5) That intraday low was a key level that I knew would be retested down the road. In fact, I was certain it would fall through it based on what I knew about the troubles in the real estate market and banks.

11 Post No:Wealth Evaporation of $40 Trillion: 3 Areas: Global Stock Market Capitalization, U.S. Residential Real Estate, and Oil.

We have never seen so much global wealth destruction happen at once. Global equity markets are off in the 50 percent range and don’t seem to be letting up. We are seeing wealth destruction at an unprecedented rate. We can debate whether inflation will show up but until the U.S. Treasury bubble pops, we can expect to see deflation in our current forecast. I think it is hard for many to comprehend that $40 trillion has evaporated from a few niche markets.

In this article I’m going to focus only on 3 areas and find $40 trillion of wealth that is now gone. Keep in mind that this figure is not all encompassing. Recent estimates put global wealth destruction upwards of $70 trillion. So where is this $40 trillion? Let us first look at global equity markets:

Global Stock Market Cap Value at Peak: $60.7 trillion

Current Global Stock Market Cap Value: $30 trillion (approximate)

At the peak the global stock market value in 2007 hit a peak of $60.7 trillion. Of course this was an epic bubble but the market was not reacting that way in 2007. The fact that most markets are off approximately 50 percent, would now put the global equity markets back to $30 trillion, a level unseen since 1999. The world it would seem has just witnessed a lost decade occur over one year.

Now keep in mind this varies. Here are a few baramoteres:

MSCI World Index: -50.1% from high

MSCI Emerging Markets Index: -60.4% from high

S & P 500: -47% from high

Hang Seng Index: -58% from high

Russia Trading System Index: -67.4% from high

Dublin ISEQ Index: -76.8% from high

Bombay Sensex Index: -54.9% from high

I think you get the picture. So right here alone, we have found our first $30.7 trillion in wealth destruction.

Running total: $30.7 Trillion

That is merely looking at global stock markets. But what about global real estate? We all know that there were multiple housing bubbles going on at the same time globally as everyone believed in the housing mania that swept the globe. From Dublin, to Sydney, to London, to Madrid, to New York, to Los Angeles, every major city seemed to be engulfed in this same housing delusion.

*Source: The Economist

In fact, as it turns out the United States did not have the most outrageous housing prices which is really saying something considering the seed of our bubble was planted way back in the early 1980s.

Countries like Ireland and Britain are in worse shape when it comes to real estate values. But let us only look at U.S. residential real estate values. First, at the peak residential real estate values were estimated to be at $24 trillion. If we look at the Case-Shiller Index we are now off by 25% from the peak. So let us do that math now:

U.S. Residential Real Estate at Peak: $24 trillion

Current U.S. Residential Value: $18 trillion

We’ve just found another $6 trillion gone but recent estimates are saying that American households have lost $7 trillion in real estate wealth. We’ll be generous and say $6 trillion. Keep in mind that we are only counting U.S. residential real estate. We didn’t even look at U.S. commercial real estate which is now imploding. In fact, I recently argued that the FDIC was ill equipped to handle the oncoming tsunami of

12 Post No:Bond Market Vs Stock Market

Many people think that the bond market and the stock market is one and the same. In fact, many people who invest in bond market and the stock market either with their own personal investment account or retirement plans also cannot tell the difference between the two. Although, most people have a general idea that stock market is associated with risk while bonds offer relatively more safety.
Bond market vs stock market is a crucial differentiating factor as both markets can earn you money but they are different in terms of the potential risks and rewards. Let us try and understand the difference between the bond market and the stock market.

When you buy a share of stock, you actually end up taking the ownership in the company whose stock you are investing in. This means that you will end up sharing the profits as well as the losses incurred by the company in the years to come. If a company’s revenue decreases, it would ultimately affect the stock price of that company leading to a decline in the stock price. However, if the company’s revenue increases, the stock price would go up because the company is generating more profits.

On the other hand, a bond does not allow you ownership in a company. If a company wants to raise money without dividing itself, they can decide to sell bonds instead of issuing stocks. So, when you buy a bond of a company, you become more like a creditor than an owner in the company, and you are paid back over the life of the bond. As a bondholder, you will earn a return on your money, which is a fixed percentage, and this return is paid annually. So, if a bond is for 10 years, you will get interest for each of those 10 years and then your principal amount (the amount you invested) is returned to you at the time of expiration of the bond.

In the short term, you have greater chances of losing money in the stock market than the bond market. However, in order to figure out which is a better investment opportunity, you should study your risk tolerance along with the kind of returns you are looking for and according make the choice of investing either in the bond market or the stock market.

13 Post No: HOW PROFITABLE IS REAL ESTATE AS AN INVESTMENT?

The first chart below shows an overview of historical returns of stocks versus real estate.

As you can see, un-leveraged real estate has outperformed the stock market for over 5 years and 50% leveraged real estate has outperformed the stock market over any period – including down markets. Remember, Prestigious Properties typically uses 70-85% leverage to purchase existing apartment buildings.

CLICK IMAGE TO ENLARGE

As you can see, un-leveraged real estate has outperformed the stock market for over 5 years and 50% leveraged real estate has outperformed the stock market over any period – including down markets. Remember, Prestigious Properties typically uses 70-85% leverage to purchase existing apartment buildings.

14 Post No: Why Real Estate?

A few of the many advantages Real Estate can provide are:

1. Leverage
   Real Estate is a tangible asset which means obtaining financing is easy as compared to stocks or mutual funds. Adding leverage means that you can use only a small amount of your money to control a large investment. As an example, with a typical 25% down payment, you would benefit from 100% of the appreciation even though you've only invested 25% of your own money. This means that if the property value were to go up by 6%, your actual ROI (Return On Investment) would be 24% (not including any additional profit centers discussed below)
2. Cash Flow
   The rent received from tenants goes towards mortgage payments, utilities and taxes. Any leftover amount is referred to as cash flow. Real Estate investments can generate a continuous flow of cash on an ongoing basis. This cash flow is also known as passive income, which continually increases due to Principal Reduction and rising rents.
3. Principal Reduction
   A portion of each mortgage payment will reduce the principal owing on the mortgage until eventually (typically 25 years) the mortgage is paid off in full. This reduction in the principal amount is known as principal reduction. This means that even if the property were to never increase in value, it would eventually be paid off in full and the cash flow would continually increase due to lower expenses and rising rents. When the property is sold, the principal reduction gets converted to cash in your pocket.
4. Capital Appreciation
   This is described as the value of the investment increasing over time. By purchasing well-selected properties in the right area of the right town at the right time, the appreciation can be well above the market average while also greatly reducing your risks.
5. Wealth Creation & Preservation
   Real Estate is used by sophisticated investors to not only create wealth but also to preserve it. History has proven that over the long term properly selected Real Estate outperforms any other investment.
6. Hedge against Inflation
   Real Estate can be an excellent hedge against inflation. As inflation rates increase generally so do Real Estate values. Historically these increases not only match but are much higher than the inflation rate.
7. Freedom
   There are many types of freedom Real Estate can provide; financial freedom, freedom to travel and spend unlimited time with loved ones, freedom to do as you please. Regardless of the freedom you are seeking, Real Estate should be a part of every serious investor's portfolio.

15 Post No: The 2008 Stock Market Crash - Irrational Despondence?

Since the S&P 500 peaked in 2007, the stock market has plummeted a whopping 42% from the peak. The dot-com bubble deflated over several years, whereas the United States housing bubble has collapsed over a much shorter time period and has brought down with it the American banking system. Fear has run amuck, and the question is, has rational thought regarding value given way to irrational fears regarding market risks?

If one believes that the market is a somewhat random geometric series of cash flows that resembles exponential growth, then one should be able to identify peaks and troughs in the market by defining an “upper peak” and “lower trough” line.

The recent bear stock market has easily broken through the previous “lower trough” line and therefore savvy investors may now find substantial value in good stocks that have solid balance sheets and dividends that pay above safe investments like bonds. The following graph shows the S&P 500 and the upper and lower trading bands:

How does this relate to Calgary real estate? Bear markets such as the 1987 stock market crash did not have an impact on Calgary real estate prices and there has been virtually no correlation between Calgary real estate prices and the S&P 500.

There is likely a stronger linkage between the S&P/TSX Capped Energy Index and Calgary real estate prices. Overall, the slumping stock prices in this sector will likely result in less money available for capital expenditures, and less shareholders cashing out. In turn, this may result in less demand for high end real estate in Calgary over the next 12 months.

I believe that in the energy sector in particular, one can find substantial value through scouring balance sheets for price to earnings ratios, price to book value ratios and dividend yields. The most recent CIBC World Markets Canadian Portfolio Strategy Outlook makes the argument that TSX stocks are at the cheapest since 1987, and furthermore that energy stocks will provide the most upside over the next year.