Nowadays, there are many options available for investment — you can buy stocks, bonds, Certificate of Deposit (CDs) or cash equivalents. But when you decide to put your savings into an investment, it is very important to ask yourself a simple question: Which one includes the least risk and is the safest option? The answer to this question has almost always been real estate investment.
Here are a few reasons to explain the reason why it’s considered the best option:
1. In terms of inflation, properties provide security to the investors. Properties are assets that will almost always grow in value. Whether you buy a commercial or residential property, the rates will increase during inflation owing to increasing prices. So, investing in properties will get you higher rental returns during this period. Since inflation has a negative impact on fixed-income, people who invest in bonds will be at a disadvantage.
2. In terms of psychological satisfaction and diversification, properties are a tangible asset — it is an investment that exists physically and provides satisfaction to investors. They get a feeling of actually owning something real unlike stocks and bonds. Even if a market collapses and you can’t find tenants, you can always use it as a home or sell it. Furthermore, to ensure least risk it is important to diversify your investment portfolio. This can be done by investing in real estate as its’ correlation with other tangible and non-tangible assets is comparatively less.
3. In terms of volatility, investing in properties promises you steady returns over a long period of time. According to the National Council of Real Estate Investment Fiduciaries (NCREIF), commercial properties provided almost 8.4% returns in ten years (2000–2010). This is because unlike stocks and bonds, real estate is a stable and risk-free industry.
4. In terms of renting out a property, investors enjoy monthly rental income that is more stable than any other investment option. All investors have to do is to do research and find the perfect property, rent it to potential buyers and sit back and relax even in days of financial decline. Investors will be particularly comfortable if the property is in demand as the rental income becomes more stable. Even if the real estate industry is not growing, it’s safe to say your property will still be more valuable after 10–15 years.
Real estate investment also allows anyone and everyone to become an investor — you don’t have to be an expert to become a part of it. Once you understand how valuable and safe it is for you, all you need is the right team to guide you through the whole process.
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