Real Estate
Real estate remains a popular asset class with a bright overall outlook amid
record-low interest rates, low financing and construction costs,
demographic increase and its tax advantages versus financial assets.
Hence it has repeatedly proven itself as a valuable component of every
investor’s portfolio. Over the long term, strategically picked real estate has
generated returns competitive to fixed income and lower volatility than
equities, while at the same time consistently providing powerful
diversification benefits to both asset classes.
The idea is straightforward: one asset class may increase in value to offset
losses in other classes. True diversification requires investments in a large
range of assets, both in type and in geographic distribution. While many
investors focus on stocks and bonds, certain alternative investments,
especially those in real estate profit from returns usually inverse to fixed
income and varying performance measured against the stock market.
The benefits of a real estate allocation are numerous. With well-chosen
assets, investors can enjoy predictable cash flow, excellent returns, capital
gains, tax advantages, and diversification, lower portfolio volatility and
provide a higher return per unit of risk - and it's possible to leverage real
estate to build wealth.
Well diversified portfolios that hold real estate investments alongside
stock and bond investments have proven to be more efficient portfolios
than these that did not include real estate investing.