It sounds like the author bought some rough properties and didn’t invest in improvements on the front end. My rental properties are a cash register that return about 7 to 8% on my investment annually, and all have appreciated in value. On dividend stocks you’re lucky to get 3.5%, and contrary to the author’s statements, they do go down in value.
Diversification is the key. Nobody should put all their eggs in one basket.
Agreed. Though unlike you I didn't do any rental or real estate directly (I have a mutual fund for real estate). I simply invest in 30+ mutual funds for growth plus 12 mutual funds for bonds/treasuries/money markets for relative stability (and some hedging).
During the growth phase, each month's investment simply goes into whichever mutual fund has the lowest balance (buy low). And during the retirement phase, each month's withdrawal simply is withdrawn from whichever fund has the highest balance (sell high). I'm currently in a quasi-retired phase where I'm neither withdrawing or investing, but the above algorithm is how I've managed ours during the growth phase and many multiple family members during their growth or retirement phase.
Diversification is amazing for growth, not just withdrawal stability. Because I invest in 30+ different growth asset classes, they almost always go up and down in separate patterns. In other words, each month when it's time to invest there's almost always something that's low to take advantage of an opportunity.
Dividends of blue chip stocks almost never go down. I’m about to find out how well that works because I just retired in May and I’m going to be living off of SS and stock dividends.
For the last 20 years I have had a compound annual rate of return of 9.2 to 9.9% with standard risk depending on investment package and BFIT and AFIT accounts. If I had simply invested in an S&P ETF I would have had between 12 and 14% and been about 50% better off than I am today. My dividends that were paying maybe 3% back in the day would now be paying between 3 and 4 times that on my original investment. My capital gains would just be setting there getting bigger most of the time without taxes being due until I sold the principal which I would intend to pass on to my heirs or charity. Blue Chips and Aristocrats will sell their children and borrow money to continue paying their dividend in hard times and the market has always reverted to the mean as a whole. Individual companies do go out of business in failure but not all that often if they are in the top shelf group.
I have tried diversification as per the soothsayers and I consider it to be mediocre. In the last downturn everything went down. If you look at a diversified portfolio it goes down similarly to the market index most of the time. That has been my experience over 50 years of investing per the rules of thumb.
If you invest in the market as a whole from the outset your growth will be such that you can weather just about any 25% drop storm. Usually, in less than three years you will be right back where you were before the crash. It is always elevator or even free fall down and a very long chain of stairs climb back up. The worst in 50 years was that after 2008 made much worse by obama and bidet.
If you don’t start the right way to begin with the diversified approach is best because you will not likely have enough margin for safety against a drop when you need the money.
Once you pick an investment strategy it can be hard to change direction without serious tax consequence. I also have found that out the hard way.
You can have rental property. It is a PITA. In the long haul property hardly keeps up with inflation except for certain charmed markets and covid insanity. On top of that you get to have an annual or periodic bout over taxes, insurance, rents, repairs, damages and delinquent payments. I’ll leave that for Blackrock and the H8 slum lords.