May 30, 2024
Investments

Is real estate actually a good investment?


Like its American peers, the global real estate market in industrialized nations offers comparable returns to the international stock market.

Over the long term, returns on stocks in industrialized nations is 7%, including dividends, and 7.2% in global real estate, including rental income some investors receive from properties. Investing internationally may have more risk for American buyers, who are less likely to know local rules and regulations in foreign countries; however, global markets may offer opportunities for a higher return. For instance, Portugal’s real estate market is booming due to international visitors deciding to move there for a better quality of life. Portugal’s housing offers a 6.3% return in the long term, versus only 4.3% for its stock market.

For those with deep enough pockets to stay in, investing in housing will almost always bear out as long as the buyer has enough equity to manage unforeseen expenses and wait out vacancies or slumps in the market. Real estate promises to appreciate over the long term, offers an opportunity to collect rent for income, and allows investors to leverage borrowed capital to increase additional returns on investment.

Above all, though, the diversification of assets is the surest way to guarantee a strong return on investments. Spreading investments across different assets increases potential returns and mitigates risk.

Story editing by Nicole Caldwell. Copy editing by Paris Close. Photo selection by Lacy Kerrick.

This story originally appeared on Wealth Enhancement Group and was produced and distributed in partnership with Stacker Studio.



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