Stories like the Russian ruble crisis… oil’s precipitous drop… gold’s swoon… Japan’s recession… Greece’s stock market crash… new derivative implosion fears… and every other scary headline dominate the news cycle these days. If these stories—and their effects on your investment portfolio—are causing you to lose sleep… you need to consider an alternative.
Regular Daily readers know Mark’s all-time favorite investment—outside investing in private businesses—has always been real estate. He likes it because it is outside the stock market (making it less volatile)… it’s easy to understand (making it safer)… and you can use other people’s money to invest. This has allowed him to earn safe, lifetime annual returns of over 20%. Remember, Warren Buffett is the greatest stock investor in history… and his lifetime returns are just under 20%.
But real estate is about more than just great returns. It’s also about safety. In discussing this piece, Mark told me:
“Of all my assets, I worry less about real estate than everything else. Even cash.”
The reason is he has clear title to his property in a country with strong property rights. And he knows whatever happens to a given currency value, rents can always adjust to account for it. That means he always has a stable source of constant cash flow. Those rent checks keep coming in every month… regardless of what is happening to the ruble, oil, gold, or anything else.
As you can see in the chart above, real estate almost makes up one full quarter of Mark’s personal asset allocation. Here’s what Mark wrote about why he’s a real estate bull in an essay from the popular Wealth Builders Club essay series, Rental Real Estate 101:
Almost everyone who invested in real estate between 2005 and 2008—and there were millions of Americans who did—lost their shirts. But investing is always like this.
The average investor always gets into a trend when it is about to collapse. And then he’s so damaged emotionally by the experience he can’t bring himself to get back in when prices are right—even if he understands that investing is the smart thing to do.
It’s scary. And the fact is that 80% of the people reading this essay will not be able to get beyond their fear. But 10 years from now, they will look back and realize they made a huge mistake.
That is why I keep writing about real estate. It’s not because I believe Palm Beach Research Group subscribers want to read about it. I know they don’t! But I want to help them become wealthy, and real estate—even after the housing market’s rebound in many parts of the U.S.—is still the single best way to do so.
Bottom line: You’ll never insulate yourself from market shocks without having at least some portion of your wealth in rental real estate.
Now, many subscribers have written in over the years to say they’d love to invest in real estate if they only had enough funds to do it. If this is you, pay special attention to our next item…