Start Investing at 40 and You Can Still Get to $1,000,000

If you’re only starting to invest at 40, American Hotel Income Properties REIT LP (TSX:HOT.UN) and Brookfield Property Partners L.P. (TSX:BPY.UN)(NASDAQ:BPY) should be your holdings to have $1 million when you retire in 25 years.

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Retirement will flash in your mind on the day you turn 40. Panic, however, will grip you when you suddenly realize there isn’t enough on your nest egg when you retire in 25 years. You begin to think of ways to generate at least $1 million by the time you get there. But can you achieve that objective? Chances are you can!

The key is not to delay the process and start building your nest egg immediately. Invest in American Hotel Income Properties REIT (TSX:HOT.UN) or AHIP and Brookfield Property (TSX:BPY.UN)(NASDAQ:BPY) to jump-start the daunting task. These stocks are known wealth builders for would-be retirees because of the extremely high dividends.

Dividend machine

You need a dividend machine-like AHIP to relieve you of the anxiety. The 12.34% dividend of this $538.24 real estate investment trust (REIT) is one of the highest, if not the highest on the TSX.

Let us assume you have $55,000 to buy shares of AHIP.  Off the bat, and with the REIT stock’s 12.34% yield, your investment would be worth $1,008,609 in 25 years. Your problem is solved without complications provided AHIP maintains the yield for the duration of the investment time frame.

AHIP operates 112 premium-brands, select-service hotels in U.S. secondary markets. Its real estate portfolio is strategically located in 32 states and 39 cities, all of which are multiple demand generators.

AHIP chose this niche because it has higher earning potentials compared with the pressure-laden primary hotel markets.

AHIP can maintain high profitability, as the average cost of salaries, wages, and benefits of select-service hotels are just 27.1% of AHIP’s total operating revenue.

Solid back-up

Brookfield Partners is one of the world’s premier commercial real estate companies. This $25.24 billion real estate company owns, develops, and operates a broad portfolio of office, retail, multi-family, industrial, hospitality, triple net lease, self-storage, student housing and manufactured housing assets.

The company is part of the Brookfield family that operates real estate, infrastructure, renewable power, and private equity assets worldwide. Assets under management in North America are about $239 billion.

The other AUMs of the Brookfield group are in Europe and the Middle East ($71 billion), South America ($42 billion), and Asia-Pacific ($3 billion). For Brookfield Property, the goal is to generate long-term returns, produce stable cash flows, and achieve distribution growth of 5% to 8%.

Brookfield Property operates in dynamic markets where the company can further pursue diversification. The stock’s 6.67% dividend is not as juicy as AHIP. Still, you have the opportunity to double your investment in not more than 11 years.

It’s now or never

People who start their planning for retirement in their early 20s would have a bumper crop harvest 40 years down the road. For those who start at 40, there’s intense pressure to reach the $1 million retirement goal.

Luckily, you have wealth-builders like AHIP and Brookfield Property to turn to and still be able to live a comfortable retirement. At 40, it’s still not too late for you to reach that coveted millionaire status.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. Brookfield Property Partners is a recommendation of Stock Advisor Canada.

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