Why Real Estate Might Outshine Gold And Bitcoin As A Long-Term Investment

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Why Real Estate Might Outshine Gold And Bitcoin As A Long-Term Investment
Why Real Estate Might Outshine Gold And Bitcoin As A Long-Term Investment
Why Real Estate Might Outshine Gold And Bitcoin As A Long-Term Investment

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Soaring mortgage rates have made homeownership more costly, but many financial experts still advocate real estate as a top investment choice.

However, the allure of speculative markets like cryptocurrency, art and classic cars has captivated many investors.

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If you feel overwhelmed by these diverse options, you’re not alone.

Crafting an effective investment strategy hinges on several factors:

  • Budget: How much can you afford to invest?

  • Time horizon: When do you need access to your funds?

  • Risk tolerance: how comfortable are you with market volatility?

  • Effort: How much time and energy will you dedicate to investment research and management?

Certain asset classes, such as art, demand specialized knowledge, while others, like stocks and bonds, are more accessible to a wider range of investors.

Thanks to skyrocketing home values, many homeowners hold significant equity, which could be a potential springboard for buying an investment property through a home-equity loan or HELOC, said Hannah Jones, senior economic research analyst at Research.com.

“However, investing in real estate is not a slam-dunk in all markets as high home prices and elevated mortgage rates squeeze potential earnings,” Jones said. “Investors or homeowners looking to branch out into buying an investment property should fully understand the expected cost and income from a property as well as the time horizon to see a profit.”

Take a look at how real estate compares to other investments.

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While year-over-year growth in real estate may lag the S&P 500, a longer-term view reveals its strength.

A Realtor.com analysis shows a solid average five-year return of 26% since 1975. The National Association of Realtors reports that homeowners have seen a significant increase in housing wealth, with the average homeowner gaining at least $147,000 in the past five years.

“Traditional investments like 401(k)s, IRAs and ETFs are great for passive growth, but real estate brings a whole different level of wealth,” said real estate investor and broker Dan Reedy.

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