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Any financial advisor would tell you that real estate is integral to any investment portfolio. Despite threats of recession, real estate tends to increase in value, offers a steady cash flow from rentals, and presents investors with tax incentives. As buyers get to pay loans in full, buyers can focus on appreciating the property’s value with the simplest improvement or renovation.
It is also worth noting that this asset type has little correlation with the stock market. As time passes, real estate investments can reduce risk and increase returns in one’s overall investment portfolio. One sound advice is to divide a chunk (capping at 20%) of your risk assets to real estate investment trusts or REITs, both local and foreign.
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REITs often come in index funds and exchange-traded funds or ETFs, and these are the sound choices for new players in the industry. REITs can come in the form of various properties like retail stores, storage units, apartments, offices, hotel rooms, and even hospitals, therefore providing a better range of investment options for your capital.
Real estate assets in the form of REITs are highly recommended as shares of these trusts are easier to sell than any physical property. It thus allows for more liquidity for owners. Unless buyers are looking to quickly and directly own real estate, REITs should be the better option for the present.
Bharti Jogia-Sattar is a financial executive in the greater Los Angeles metropolitan area with a broad expertise in financial and corporate management. To know about her work, visit this website.
