5 Reasons to Add Real Estate to Your Investment Portfolio
The world of real estate investment has developed something of a bad reputation over the past few years, particularly in the United States. Problems with American real estate investing have even been said to be catalysts to the global recession. However, real estate is in fact on of the best places for investors to put their money for a number of reasons. Consider these 5 arguments for adding real estate investments to your portfolio, and reap the benefits yourself.
- Diversify Your Portfolio
Every investor should be concerned with diversification. Putting too many eggs in one basket is risky business, and you don’t want to have your entire investment portfolio built around one or two markets or sectors. Markets rise and fall independent of one another, so by diversifying you can make sure that your portfolio never takes a sudden plunge. Consider it a kind of insurance policy against the market’s unpredictable nature.
- Hedge Inflation
You’ll always hear older generations talking about how things were less expensive in the old days, and they’re right–inflation slowly but steadily decreases the value of your dollar. Investing in real estate can help you offset the effects of inflation on your portfolio. When economies grow, the demand for real estate rises. This, in turn, drives up rent costs. So at the same time that inflation is devaluing your dollar, real estate investments give balance by coming into higher demand.
- Tangible Assets
Many investments are highly nebulous, meaning that you sign away your money, but you don’t have any real-world asset to show for it. Investing in stocks, for example, can often seem like a complicated game of trading play money. Real estate investments give you something tangible for your money, which is an attractive aspect of this sector for many investors. Your brick-and-mortar property gives you something to show, and it won’t be as affected by the principal agent conflict.
- Reliable Returns
Real estate investments are among the most reliable investments in the world, in terms of generating income. Populations are increasing all over the world, and more people leads to higher demand for real estate. Furthermore, any property can be rented, a dynamic which gives the investor a stable income with minimal work. The stock market is highly volatile–in the “Flash Crash” 2010, a trillion dollars in market value vanished in 15 minutes. Real estate investments give you stability and reliable returns in the unpredictable world of investment.
- Simple Investing
Finally, real estate investing is much simpler than many other markets. Sure there are things to learn and plenty of trade secrets, but Greenwood homes for sale is much easier for the average person to understand than 15 points on the NASDAQ. Real estate investment is backed by a tradition as old as history, a simple principle that anyone can understand. Property owners have the good fortune of trading in a concrete market, where a house is a house and investments generate income.