7 Reasons to Invest in Real Assets vs. Stocks

Have you ever considered investing, but you aren’t sure where to start?

Maybe you’ve been told that you should save your money to invest in the next big idea, a large corporation, or the stock market.

The most popular ways to invest in the financial world are through stocks, equities, and bonds. Many investors’ portfolios are exclusively composed of these types of financial assets. 

assetsHowever, solely depending on investing in stocks or jumping into a currently popular investment craze is like throwing spaghetti at a wall and hoping that it sticks.

Within the stock market, there isn’t a clear path for an investment strategy, and the last thing we’d want to do is take a gamble with our financial future.

An asset is any economic resource (cash, stocks, bonds, mutual funds, and bank deposits) that has the potential to provide future value. Assets are a tool for building and converting wealth and purchasing power.

house in Belize
However, there is another asset class out there, known as “real assets.” A real asset is a physical asset, such as oil, gold and silver metals, raw land, and commercial real estate. Its value is intrinsically backed by its substance and physical properties. It’s valuable to establish these assets early on, so they will grow over time.

When your passive income meets or exceeds the amount of money it takes to fund your lifestyle, you’ve achieved financial freedom. At this point, you no longer have to work a traditional job where you trade your time for money, and your income grows while you’re sleeping.

Since valuations are so high in the stock and bond market, I’ve discovered that real assets offer more attractive and unique benefits. Specifically, investing in real estate has created passive investment opportunities which have helped me build a better financial future for my family and me.

Here are the top seven reasons investing in real assets (HINT: real estate) is something to consider:

  1. Consistent income: Ready for steady cash flow? Real assets usually yield predictable income streams that are established through contractual agreements and boast an attractive operating margin.
  2. Easy to understand: Investing in real estate is simple…purchase a property, then manage the upkeep and tenants. You could later attempt to resell for a higher value. The point is, you are more in control of your investment.
    working on taxes3.  Higher return potential: Real assets not only offer generous yields, but they’re also historically cheaper than stocks and offer more long-term return potential with a better margin of safety.
    4.  Inflation protection: As inflation rises, the value of the real estate, commodities, and other real assets tends to increase in price. This is why real assets are an excellent inflation hedge.
    5. Safer to invest with debt: You could invest in a new property with a 20% down payment or less and finance the rest of the property’s cost.
    6. Tax benefits: You could have a mortgage interest deduction, zero capital gains tax with a 1031 Exchange, and tax depreciation (which can tax-shelter part of your rent income).
     7. Loan paydown: Your tenant will be responsible for the monthly principal portion of your property loan…which equals more money in your pockets!

    If you want to dive into this further and discuss investment opportunities that may interest you, schedule a callTo learn more about passive investments, check out our OnDemand Webinar How to Passively Invest. You’ll be given an opportunity to view an exclusive investment opportunity with Caribbean Capital Group. Check it out!