As you create or diversify your portfolio, asking yourself what investments are riskier than others can save you money and time down the road. When choosing an investment, you should already have a risk level in mind that you are sticking with to ensure you are utilizing your money wisely.
As you choose your next investment, you might look at stocks, mutual funds, bonds, cryptocurrency, or real estate. All of these come with their own advantages and disadvantages, but if you are considering real estate, it could be because you’ve heard it carries less risk than others. Real estate investments are known to be lower risk and higher reward, but before putting money into a property, it is essential to learn why.
Real Estate Holds Its Value
Investments fluctuate depending on the stock market and, in this case, the housing market. While our country goes through economic ups and downs, many people who have investments in the stock market might see drastic changes in their earnings. It can become a game of predicting the right time to sell, and money can often be lost.
However, real estate investments hold their value when the stock market varies. While a stock investment will lower in price, a real estate investment will stay the same or even rise depending on the circumstances. This is a similar case in the housing market. The housing market fluctuates over the years, but it always rises as people always need homes. If you hold onto your property through these ebbs and flows, you will see that the turnout is better than a low stock market investment.
A Tangible Investment
Real estate investments offer you a tangible asset compared to stocks, mutual bonds, or cryptocurrency. You have the ability to see the value in your investment rather than watch it rise and fall over a screen or bank account. A tangible asset gives you the opportunity to raise its value through renovations or changes. Real estate has multiple avenues of growth to take advantage of since it is tangible in your portfolio. You can see it and, in turn, see its value to you.
Inflation Advantages
Market changes and inflation can cause adverse outcomes for other types of investments, but with real estate, you can use inflation to your advantage to help earn more money back each month.
As the prices of goods and services rise, so does the cost of living. If you are renting out one or multiple properties, you can raise the rent earned from those assets and get a higher monthly income.
A Consistent Income
Other investments offer the risk of losing money or only earning so much by the end of it. This may make the time and energy you put into these investments feel as if it was not worth it. However, real estate offers a less risky income path than others. Investing in real estate earns you a passive income each month when you invest in single-family, multi-family, or other types of properties. You can earn a consistent income with ease.
Real Estate Compared to Other Investments
Real estate investments can differ from other investment types for many reasons. When debating what asset you want to add to your portfolio, it is essential to understand your level of risk, your timeline, and how much you are willing to invest.
Compared to real estate investments, stocks are more volatile. They can vary drastically on the stock market and lead you to lose your money or not get back nearly as much as expected. While selling and buying stocks is easier, real estate can earn you more over time and frequently. CDs and bonds are considered the safest investments, but they only offer so much return in the end. If you are still looking for a safe investment but one that earns you much more, real estate can be the answer. Cryptocurrency has the opportunity to earn you a higher return, but with a very high risk, as it is still difficult to judge the rises and falls of the crypto market.
Real estate offers a less risky investment while earning you a high return each month and through your retirement. If you have questions about where to start investing in real estate, reach out to the team at Morton Capital.