While stocks and bonds are typically the foundation of a savvy investor’s portfolio, they are far from the only asset class around.
While these financial assets are highly liquid, they are also unstable; it’s not uncommon for an investor to wake up to a portfolio whose value has been decimated just because a company in which they had invested declared solvency issues and their stock price plummeted.
Luckily, there are assets in which you can invest that are tied to the asset’s inherent worth rather than just investor confidence!
Today we will talk about real assets; what they are, why they’re a good investment vehicle, and which real assets make the best investments.
What are Real Assets?
A real asset, unsurprisingly, is an asset that is “real;” it exists physically in the real world. They are in contrast to intangible assets, such as debt, intellectual property, mortgages, and so on. While those assets are valued based on the idea of what they are worth, the value of a real asset is generally based on the inherent worth of the object.
Real assets are a hugely diverse asset class. Some common examples include real estate, factory equipment, and machinery, resources like oil and gas, precious metals, clothes, food, vehicles, buildings, land, product inventory, and much more.
If you can touch it with your hands, it is a real asset!
Benefits of Real Asset Investing
To understand the stability of a real asset, consider how an asset like company stock is valued. Stocks have no inherent worth; they are valued at whatever investors are willing to pay.
They are based on the idea of what a small piece of a certain company ought to be worth. As such, they can be devalued almost instantly if investors collectively decide the company has less value than they thought.
On the other hand, consider how a real asset like food is valued. Even if the company making the food declares bankruptcy, the food they make can still be eaten.
Even if inflation radically changes prices, food still provides the same nutritional value to consumers as it always has. As such, the inherent value of food is much harder to change.
Best Real Assets in Which to Invest
So, now that you know what a real asset is, what are the best real assets to invest in for a healthy and diverse portfolio? Since real assets tend to be slower to change value than intangible assets, it’s helpful to consider not just what assets are valuable and popular NOW, but what assets are likely to RETAIN their value long term.
Assets like real estate and food-producing farmland are great examples of real assets that can retain long-term value. People always need places to live, and people always need something to eat, so these assets are very unlikely to unexpectedly plummet in value.
If you are thinking of investing in either of these assets or in any real asset, I can recommend no better place to look than Belize.
While international investments have their specific advantages, Belize in particular is an ideal place to look for real estate and farmland because the property laws are similar to those of Europe and the US, while simultaneously being far cheaper.
Belize has both a strong agricultural economy and a rapidly developing real estate market, so both of these classes are set for significant growth while still currently being affordable for investors.
To learn more about investment opportunities available in Belize, check out our latest offerings here.