A visitor to my office this week commented that I must really hate it when the stock market is down. I explained to him that there are many different areas of investing and the stock market was just one of them. In fact, among my client base as a whole, the stock market accounts for only about a third of our total investments.
With the Parade of Homes in town this week I think it is appropriate to remind people that real estate can also be a valuable investment tool. I first became interested in real estate as a teenager when I was reading a financial journal about the nation’s wealthiest individuals. After listing all the various ways they made money, in their professions, businesses or otherwise, it went on to say that the largest portion of their wealth was obtained through owning real estate.
Early in my career I met with a man who owned a chain of drug stores. I asked him about the profits from such a venture to which he responded that his retail businesses were only there to pay the payments on the real estate, but that it was the real estate in which the stores were housed that created his true wealth. I have since found the same attitude among many other successful business people who use their businesses as a way to acquire more real estate, which is their main asset.
Most average investors are not aware of the various ways to own and profit from real estate. They think of the three terrible “T’s” of rental properties, Tenants, Taxes and Toilets, and want no part of it. They are not aware of the many ways through which regular investors can share ownership in some of the finest real estate in the world without ever having to lift a finger.
My 15-year-old son has invested his own earnings in some of these projects. One day we drove past a very large and successful business and I said, “Do you realize you own part of that building, and as that store makes money and pays rent, part of it comes to you.” He was fascinated.
I feel that an allocation of commercial real estate is important. While stocks have been struggling over the past year, REITS have been a viable diversification tool. It is a shame so few people know how to take advantage of this opportunity.
As you admire the beautiful homes in this year’s parade, give some thought to adding a real estate portion to your own investments. If you think all is gloomy in the investing world, it is likely because you just don’t know where to look.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 1173 S. 250 W. Suite 505, St. George, UT 84770.
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