That gets us realistically to real estate. Real estate has two advantages: one is you have to live somewhere and two, you have amazing tax benefits from deducting the interest on your loan to a major exclusion from taxes when you sell your residence. You can accumulate a lot of money by simply paying your mortgage (the shorter the amortization the more you will accumulate quicker - more accumulating on a 15 year fixed than on a 30 year fixed.) You also get the increase in value in your house to add to ever increasing equity.
Before I get into some of the tax benefits, which I have mentioned many times in other columns, I want to identify where we are financially in this Country. In 2005 the median household income was about $46,300 and has probably risen in the last year and a half to a little over $47,000. Also another note which isn't pleasant: there are more people unemployed than there are millionaires even at the higher millionaire figure.
To put matters more into perspective the average billionaire is around 55 years old and the millionaires are seven years older on average. So even if you are planning to get there and don't make it, you probably will be too old to do anything else that would be meaningful for yourself. You have got to get started planning and moving toward financial independence. Who knows the future of medicare and social security? Your future is in your hands.
Real Estate affords great tax benefits. First you can deduct interest on your loan up to $1 million dollars in loans. You can offset the interest on your rentals against the income from same. You can deduct the property tax you pay from your income. When you are ready to sell the property, if you have lived there for at least 2 years, you get a $250,000 of profits excluded from your taxes if you are single and a $500,000 exclusion if you are married and hold the property jointly. On a rental you can get a tax free exchange (1031 exchange) to defer the income tax due on sale.
I think real estate is generally the answer for everyone. If you don't find something that you think can work for you. Whatever you do plan for success and then do it. The results will be the financial cornerstone of the rest of your life.