Those who have investments in real estate know just how lucrative those investments can be. It is always nice to have someone sending you a rent check if you rent out the property to them. Alternatively, real estate values tend to increase with time at any rate. This means that you can usually reliably count on the value of your property going up. However, real estate investing should just be the start of any balanced portfolio.
The horror that some faced during the Great Recession of 2008-2009 was far greater for some than for others simply because they had too much money tied up in real estate.
They stacked their entire portfolio and financial life on real estate. It probably felt great as the value of those properties was increasing, but it was a disaster when things reversed course. This can in fact happen in some cases, and that leads to terrible financial ruin.
Instead of doing just this, it is a good idea to diversify some investments. This means looking at stocks and other investment vehicles as something potentially worth putting your money into.
Benefits of Stock To Boost Real Estate Investments
Stock investing is pretty straightforward once you get the hang of it. It is very likely that even if you currently know nothing about investing in stocks you have at least heard people talking about them. They talk about how the stocks are doing on the news every day. If you hear someone say "the market is up/down" they are talking about how stocks did that day. They are describing if the value of those stocks increased or decreased.
Stocks are basically just pieces of ownership in companies that trade stock. The companies do this in order to raise money for expansion and anything else that they need funding for. Investors purchase stocks because they want to see their value increase before they sell them off to the next buyer. It is a way of sharing in the gains in profits of a company.
It is possible to purchase stocks in individual companies if you wish, but this requires a little more homework to get right.
On the other hand, you may decide that you want to purchase what are known as mutual funds. Mutual funds are funds set up to spread money out among a variety of stocks. That is to say that mutual funds may hold shares in several technology stocks while at the same time holding several consumer goods stocks at the same time. It could be spread out among so many different industries.
Mutual funds seek to spread money out in a diversified manner because they want to avoid taking a huge hit that can occur when a particular stock is in trouble. Investors who hold just individual stocks face the same risk as those who have too much money in just real estate. Someone seeking to avoid putting too much money in real estate probably should not put too much money in individual stocks as well.
In order to get invested in the stock market one must get a stock broker that they can work with. These days that often comes in the form of an online broker, though traditional brokers still exist.
Stock market investing has a historical yield of about eight to ten percent per year. That is significantly higher than the average of housing in most markets. This is why some will see stocks as a great idea for diversifying their overall portfolio of investments.
Having a diversified portfolio can help a person to sleep a little easier at night. They will know that it is unlikely that they are going to lose their entire investment portfolio all at once.
They may take a hit in one area of their portfolio or another, but it seems unlikely that they would lose it all. Given these terms, think about diversifying your own portfolio and perhaps finding some good mutual funds to stick some money into.
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