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Swooping from Real Estate to Real Assets

    Emmah
    By Emmah

    Whenever one asset greatly outperforms all others it is definitely the time to sell it or at least diversifies an investment portfolio a little bit more. In recent years property was the number one asset, all investors liked to lay their hands on. In the same way as 80’s and 90’s where the years of stocks and bonds, from 2000 onwards we’ve seen a huge rush in buying real estate, and the wheel  keeps turning still.

     

    Honestly we thought real estate’s popularity will decrease after 2008 economic crisis. This didn’t happen mainly due to false belief that real estate is a highly tangible asset. Although real estate represents property (which really is tangible), its value can be easily changed by emerging market trends like interest rate increase, which was recently declared by Federal Reserve.

     

     

    This is far from being the only misconception about real estate; people also don’t realize some other disadvantages of property ownership, like:

     

    • Real estate brings no profit- only way how people can earn money from their real estate, is by renting it, and for this to happen they need to invest lots of money in it, always have maintenance money on disposal and pay much higher taxes.
    • Real estate taxes can easily grow- as local governments are becoming more desperate, they will follow usual procedure, done so many times before the inflation. They will increase real estate ownership taxes.
    • We can expect less real estate buyers in 2019- tougher lending conditions and increased rates will cut the number of interested buyers. We are talking about both real estate flippers and regular family buyers.

    Having all this in mind, we figured that this is the right time to sell at least part of your real estate assets and invest money into something else. These are our top picks for 2018:

     

    Closed-End Funds

    These are traded in the same way as stocks and currently investors are able to buy these equities for very low discount prices. Not all closed-end funds, offer these bargain deals, and here are some of the main rules that should be followed when choosing the right closed-end fund for laying an investment:

     

    • Search for funds with higher return consistency;
    • Good CEFs comes with great management;
    • Check if their performance was the result of one lucky bet;
    • Always look for funds with discounts deeper than average;

    Energy Stocks

    World’s oil prices hit rock bottom in the previous years, and while energy stocks are quietly improving it is the right time to invest money in this sector. After the Trump administration left the Iran Deal, we have seen a 3% jump in oil prices. And if this trend continues this can prove a valuable investment.

     

     

    Gold

    Turning real estate money into highly valued precious metals is always a good idea.  Especially gold, as its value tends to increase in response to events that have the general ability to decrease the value of paper investments like stocks and bonds. In addition this asset is liquid and portable, you can easily sell it in when the opportunity is right and make a decent profit.

    Healthcare Stocks

    These were always known as great performers and secure investment options, all until accounting scandal in Valeant, one of America’s healthcare industry leaders. This caused small stock price drop, but healthcare stocks are still the number one performer and it will stay that way, mainly due to baby boomer generation getting older. Projected growth of healthcare sector earnings in United States is somewhere around 12% per year.
     

    Real estate is far from being the only non-tangible asset and only investors with diversified portfolio can guarantee their funds are not going to turn into bunch of worthless paper in case of inflation.