A good portfolio should be diversified. There’s stocks, bonds… but also real estate. In fact, most investors would be better off investing in real estate rather than other types of investment — for a number of reasons. If the volatility of the market has you hesitating to invest, consider a few of the reasons why real estate might be better.
1. Real estate is a more versatile investment.
You can make money through real estate in a few ways. First, there’s equity: It accrues value over time. Second, you can rent it out. Third, if you don’t want to rent, you can always just flip. Real estate gives you a lot of different opportunities to make money, so even if the market is changing, you’ll still find a way to profit.
2. Real estate fluctuates far less.
Real estate always goes up in value over time, compared to the stock market which frequently goes up and down. If you want an investment that’s never going to give you a heart attack, you want real estate. Even when real estate boomed-and-busted, it was over a comparatively short period of time, and it did rebound.
3. Real estate is something everyone knows a little about.
Most people have bought or sold a home whereas most people have not bought and sold a company. The fundamentals of a business can be very confusing, but most people know a little about what real estate would be considered valuable.
4. Real estate is both physical and finite.
Real estate is valuable for the same reason gold is: There’s a limited amount of it. There will always be a finite amount of real estate, which is why it’s always going to be more valuable than other types of investment.
5. Real estate gives you control over your investment.
You have direct control over real estate. If you want to make it into a business, you can. Your own effort in flipping a house or renting matters. But if you’re just investing in stocks and bonds, there’s very little you can do to influence the ultimate outcome of the investment. You’re at the mercy of the market forces.
That’s not to say you shouldn’t be invested in stocks and bonds, too. But in times of high volatility, it can be better to purchase something a little more secure. Real estate has long been a good investment during tumultuous times for all these reasons.