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Text Box: Life of Riley (from page #2)

Text Box: The index hit $2 million in 2001, when many were starting to lose money in impressive quantities. The 50/50 portfolio yield had dipped below 3%, and the income threshold had risen to $62,500.
Reaching for the brass ring
today, assuming income rose by 2.6% in 2002 and 2.2% in 2003 (government figures for average wage gains), you could live the Life of Riley with an income of $65,536. Unfortunately, portfolio yields have continued to decline. At 2.37% in 2003, you'd need a record $2,765,232.
As I said, the real problem in America isn't price inflation. It's wealth inflation. While consumer prices were rising at 2% to 4%

Text Box: during virtually any period from 1980 to the present, the Life of Riley Index was rising at 9% to11% a year.
Small wonder the brass ring continues to elude us. (The Life of Riley portfolio value is calculated by dividing the 40th percentile income by the yield on a portfolio invested 50% in the S&P 500 index and 50% in five-year Treasury obligations.
Sources: Economic Indicators, Dallas Fed, Census Bureau).

Text Box: hold" investments as they match individual retirement goals, and recreational interests. Raw Land may be one of the best investments because of the lower cost and reduced tax basis for long term appreciation, or development plans. 1st mortgage loans, land contracts, and seller take backs (soft money) loans are other ways to make a good return on investment, and keep liquidity with the risk secured by real property.

Text Box: Existing home sales data for May provided by the national association of realtors, shows existing home sales up to annual rate of 6.5 million. This is a 2.5% increase over April numbers and a growth pace second only to all time monthly high of September 2003. To put it simply existing home sales are very hot even with the “short supply” of real properties on the market, and this is driving prices up, and making investment grade single family and multifamily properties tougher to find. New Home sales have been peaking in the first quarter and are expected to continue strong but at a reduced pace as mortgage rates continue to “inch up” with any rate hikes through year end New home sales that are “turn key” (ready to move in) often have gained considerably in value

Text Box: in the short period between sale and move in. Additionally, lower maintenance costs can make it profitable to and hold rent vs. sell. However, you will need to consider this because buying and establishing principle residence can result in a considerable tax exemption. After establishing your primary residence for 2 years (of 5 consecutive years )in a home you are eligible for a $250,000 capital gain exemption per individual (500,000 exemptions for married couple if title is held jointly) Commercial real estate has been soft in most places and may be a better buy opportunity. Industrial has been expanding at a record breaking pace and is opening up new areas especially for transportation and storage related investments. Land and Vacation properties also tend to be good long term "buy and

Text Box: “existing home sales are very hot even with the “short supply” of real properties on the market” But… “1st mortgage loans, Land contracts, and seller take backs (soft money) loans are other ways to make a good return on investment, and keep liquidity with the risk secured by real property