WHAT IS YOUR INVESTMENT STRATEGY?
For some, a primary financial goal is to get out of debt. It makes little sense to talk about investment options when we are paying high interest on debt. Once we are debt-free, or have only a mortgage or car payment, it makes more sense to consider investment options.
Stocks, bonds, CDs, precious metals, real estate, art, and collectibles are some examples of investment opportunities. A prudent investor will utilize several options to diversify and thereby reduce the risk of loss when one sector underperforms. Diversification is a worthwhile investment strategy. There is wisdom in not putting all your eggs in one basket.
Are you invested in gold? I have a friend who is quick to remind me that his investment in gold has been appreciating well recently. We all know of some stocks that have also performed well in recent months. However, recent performance is not always indicative of future performance. A good example is real estate.
Andrew Carnegie once said that 90% of millionaires became so through owning real estate. Although investors have done well in real estate for decades, some have acknowledged a slump in real estate investments in the past couple of years. This may present an opportunity for investors to rethink real estate in today’s market.
1. The adage, “Buy Low and Sell High” may present a rare opportunity to add to real estate holdings at this time.
2. Real estate is a performing asset. Unlike gold or art, real estate not only appreciates, but can provide income as it grows in value.
3. Some headwinds that affect real estate are diminishing. This is especially true regarding interest rates, which are already starting to fall. Lower rates equate to higher real estate prices. Insurance costs are abating. New insurers are coming to the market and policy rates are declining. This makes real estate more affordable.
There are many ways to invest in real estate. REITs, or real estate investment trusts, allow small investors to participate in large real estate projects. Buying a lot or a rental property or a duplex can allow a small investor to get started.
For someone who is currently renting the home they live in, now may be the best time to make the plunge into homeownership. Parents can invest in their children and real estate by helping their kids with a down payment on their own home. That kind of investment can pay multiple dividends!
Perhaps we don’t have the magical powers of King Midas, who could make gold simply by touching things, but we can make our own home be our castle.If you have any questions or comments about this article or other real estate issues, please contact Bob Oxnard at [email protected]
