To achieve true diversification, invest in real estate

For most investors who follow the directions of investment advisors and bank wealth managers, diversification means holding bonds as well as stocks.  But savvy investors who call their own shots know that real diversification must include another major asset class: income-producing real estate, particularly of the residential kind.

In 14 of the 15 previous U.S. equity bear markets, going back to 1956, home prices rose as measured by a national index, according to a 2015 article for Barron’s by Mark Hulbert.  The article relied heavily on information from Yale University’s Robert Shiller, a winner of the Nobel Prize in economics and the co-creator of the Case-Shiller Home-Price Index.

In that lone bear market prior to 2007 in which home prices did fall, they did so by just 0.4%, the article stated.

“All of this suggests that investors should consider the possibility of hedging their equity portfolios with an allocation to residential real estate,” Hulbert concluded.

Of course, national real estate data means nothing if you are in a depressed market. But if you are in one of the “hot” markets, including most metro areas on the coasts, real estate investments do even better than average.

In recent years, there have been steady increases in value for multifamily housing, though greater caution is required today.

At 360 Investment Advisors, we can help you with real estate investing as well as with securities. We know the ropes of private partnerships and LLCs that invest in real estate, as well as publicly traded real estate investment trusts.

Get started with real diversification.  Contact 360 Investment Advisors today!  Email Wendy at wendy@360investment advice.com