Non-Correlated Diversification
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History has shown that the vast majority of millionaires either made or retain their wealth by investing in real estate.
Most people understand or certainly recognize they should invest in real estate, but HOW TO INVEST in the asset class has become the challenge. Wall Street has led people to believe that buying shares in Real Estate Investment Trusts or REITs is owning real estate. It’s not! Those are paper assets. But real estate is a hard asset. So what are people missing? First and foremost, investors must understand the difference between owning real estate and owning shares in a REIT or they’ll NEVER really get it. Direct Participation Real Estate or DPRE may hold the answer.
Paper assets like shares in REITs or Real Estate Mutual Funds tend to have dangerously high correlation with the overall stock market. That’s not diversification. To have diversification, investments must move independently of one another.
So why do the vast majority of accredited investors utilize direct investing in real estate? For one, it’s an actual hard asset which is non-correlated to other investments like stocks and bonds. So DPRE can potentially solve the lack of diversification issue or the “don’t put all your eggs in one basket” adage. But there are many other powerful reasons as well. Building Wealth, Creating Income, and gaining Tax Advantages to name a few.
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