"Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth." -Theodore Roosevelt
With talks of a recession in the near future, people are asking themselves what their best approach is in protecting their assets from a repeat of 2008. Are equities less risky? Or is real estate? In a recent article from Market Watch entitled, "The Single Best Investment For the Next Decade," financial columnist Mark Hulbert explores that question and helps us better understand the current landscape of equities and real estate and the risks involved.
Hulbert references a recent survey by Bankrate, where more than a thousand investors were asked this question: "For money you wouldn't need for more than 10 years, which ONE of the following do you think would be the best way to invest it-stocks, bonds, real estate, cash, gold/metals, or bitcoin/cryptocurrency?"
The investors response?
By a huge margin!
"For every two respondents who answered stocks there were more than three who stated real estate is the way to go." Hulbert adds.
So, what's up with Stocks and Bonds?
To sum it up Hulbert says, "The stock and bond markets are currently so overvalued that it's not only possible, but downright plausible, that real estate will do better than either or these asset classes over the next decade."
For bonds, the market's best judgment right now is that your return above inflation over the next decade will be just 0.3% annualized. (Hulbert).
Forecasting equity performance is much tougher than with bonds because a larger number of factors can impact their returns, but their projections aren't looking good either. Hulbert states, "According to almost all standard valuation metrics, stocks are currently somewhere between overvalued and extremely overvalued.”
Yah, but is real estate any safer?
For many, the financial crisis of 2008 is still deep and it's hard to forget that real estate had an awful performance as well. It appears though that real estate's performance in 2008 was the EXCEPTION, not the rule. "In every other stock bear market since the 1950's, the Case-Shiller Home Price Index rose in all but one. And in that lone bear market prior to 2007 in which the index did fall, it did so by just 0.4%" Hulbert explains.
Hulbert backs that up with more data and continues on, "Furthermore, you should know that the Case-Shiller Index has been less volatile than the stock market-a lot less. As measured by the standard deviation of returns, in fact, the Case-Shiller Index is only 40% as volatile as the overall stock market. Perceptions to the contrary that real estate is riskier than equities derive from the leverage we typically use when purchasing real estate. Note carefully that the risk comes from the leverage, not the real estate inherently!"
Hulbert ends his article with this piece of advice, "So, if you were to believe there is a major stock bear market in the cards at some point in the next decade, you might choose real estate just because of it's lower risk."
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Alternative Investment: IRA Real Estate to Occupy
In today's financial world, it's smart to get creative and look to alternative investments. At Lasaii Benefits, we do just that. With the potential interest earnings from the SAFE-HARBOR®-Directed IRA™, possible appreciation of the real estate over time, rental income, and the intrinsic value of occupancy, if you wish, together with the tax write-offs (if you qualify), the actual total value and benefits of both the SHIRA™ and the real estate could be a double digit return for you! In other words, the perfect alternative investment.
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Visit www.lasaiibenefits.com to sign up to receive our "Understanding the SAFE HARBOR®-Directed IRA™" Guide to learn more. You may also visit our website to see if you qualify for our program.
To read Hulbert's article and explore the survey and data used: