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Invest in Real Estate

4 Reasons to Have Real Estate in Your Portfolio

Invest in Real EstatePractically all financial experts agree that real estate is important to an investor’s portfolio. These industry experts believe that it is not enough for you to own some stocks and have a share of mutual funds and bonds. For new investors, this suggestion probably wouldn’t make sense. To clarify why experts think this way, let’s take a look at the reasons they say to justify the idea: Inflation Hedging Real estate has the capability to act as a hedge against inflation. This is because this asset class has a close relationship with the GDP growth of a country. When economies improve, the demand for real estate intensifies. In effect, this pushes up the prices of rent and increases the capital value of the asset. Inherent Diversity Another good reason is that there are different types of real estate to invest in. Most people would probably think that the only things you can purchase here are apartments and condo units, but this is not the case. There are commercial properties where you can put your money, too. The people at explain that there are management rights, leaseholds, motels, and caravan parks where you can invest in. This diversity plays to the investor’s benefit, as you can further diversify your real estate assets and, by extension, your entire portfolio. Stable Income Return Real estate has a solid, stable income flow. Unlike other asset classes that are highly sensitive to market shifts, properties have basically flat rental rates. A rental property would continue to rake in a stable amount of income on a regular basis, provided that it remains occupied. Tangible Asset Value Perhaps what sets real estate apart from other classes is that it is tangible. There is less friction between the principal and the agent, as the investor has a hold of the asset as a whole. This tangibility is a trait that other asset classes do not have. If you ask the experts, these are the reasons real estate is worth investing in. From an objective financial perspective, the experts are right. These reasons do make a lot of sense, especially when it comes to enriching your portfolio’s profitability.
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