Investing in Real Estate : How is it different from other alternative Investments?

Investing in Real Estate : How is it different from other alternative Investments?

Investments, Alternative investments, Stocks, Bonds, Gold, Real Estate, Risk, Returns, Diversification,
 
Here are some successful people talking about investing in real estate :
 
“Ninety percent of all millionaires become so through owning real estate.”
-Andrew Carnegie
“The major fortunes in America have been made in land.”
-John D. Rockefeller
“I would give a thousand furlongs of sea for an acre of barren ground.”
-Shakespeare
“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.”
-Marshall Field
“The best investment on Earth is earth.”
-Louis Glickman, American business executive
 

So, obviously, real estate can be a good investment, provided the investment is planned properly.

How RE is different from any other form of alternative assets?

– There is Low correlation with equities in the short run only

– However, Both equities and RE are adversely affected in a recession

– RE investments produces apparent low volatility

– Location specific investments – The local factors affect the real estate prices a lot more than global factors (unlike commodities, stocks, gold etc which are impacted by global macro economic factors)

– Interdependence of land uses

– Large transactions which are typically leveraged by use of substantial amount of debt.

– RE investments typically habe long gestation period

Here are some of the reasons for Including RE in Investment Portfolio :

– RE investments can produce high absolute returns

– It is a Hedge against inflation

– Portfolio is diversified to reflect overall investment universe

– It provides tax benefits – may not be available in any other alternative investments

– Suitability to various investors

– Risk tolerant investor

– Risk-sensitive investor

– Inflation sensitive investor

But as Raplh Waldo Emerson says “Fear always springs from ignorance”…. The first thing is to obvious do a lot of planning and become aware about the purpose of investments

 

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