Why Real Estate is the Safer Investment.
Today, investing options are everywhere. You can buy into stocks, bonds, Certificate of Deposits, to name a few. When considering where to place your money, there are factors in the market to consider but simply, which of these presents the least risk and the quickest return? In short, the answer is almost always has been real estate. Franklin D. Roosevelt said it best :
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
There are many reasons why real estate is a safer option. Here are just 3 main reasons to consider:
- satisfaction and diversification.
As opposed to owning a share in a company, real estate is a tangible asset - it is an investment that is physically available and brings satisfaction to the investor; They have a sense of pride in their ownership. Furthermore, to ensure least risk it is important to diversify your investment portfolio. This can be done by investing in real estate as its’ correlation with other tangible and non-tangible assets.
Investing in a property is the one of the quickest ways to make your return but it also promises you steady return over a long period of time. The average 20-year returns in the commercial real estate slightly outperform the S&P 500 Index, running at around 9.5%. Residential and diversified real estate investments do a bit better, averaging 10.6%. Real estate investment trusts (REITS) perform best, with an average annual return of 11.8%. Stocks can be very volatile, especially when the economy or the company is facing challenges. Also, stocks are often emotional investments, and your decisions within the market can often be irrational.
In general, your risk of loss goes down the longer you hold real estate investments. Your equity builds and home prices rise over time. That is unlike the stock market, where the risk typically stays the same.
Properties provide security to the buyers. Properties are assets that will almost always grow in value. Whether you buy a commercial or residential property, the rates will increase during inflation owing to increasing prices. In the stock market, anomalies are quickly adjusted for by other investors. In the real estate market, there are thousands of little markets. You can always find deals and “buy low” and sell high Since inflation has a negative impact on fixed-income, people who invest in bonds will be at a disadvantage.
“Don’t wait to buy real estate. Buy real estate and wait.”
— Will Rogers