Americans’ favorite investment opportunity
By Chuck Bentley
According to Bankrate.com’s Financial Security Index, for the first time in three years, real estate was the most popular investment option in America. That is almost hard to believe, given the real estate bust we experienced in 2008 and 2009.
When asked what kind of investments made the most sense, 27 percent said they would invest in property if they had a pool of spare cash. CDs and other cash investments, the top answer in Bankrate’s 2013 and 2014 surveys, came in second at 23 percent.
Possibly some of the reason for this shift is that home values are rising. S&P/Case-Shiller’s latest measurement of national home prices shows a 4.2 percent year-over-year gain from March to April. Since February 2012, when the index bottomed, prices have increased 26.8 percent.
Another reason Americans may prefer investing in real estate is that it is often easier to understand than stocks, bonds, and commodities. The Bible instructs us to “know the condition of your flocks,” so it is advising us to understand our investments.
But remember, many people were “upside down” on their home mortgages less than 7 years ago. Don’t forget that real estate can go up and down. It is never wise to invest with debt. So if you are in the 27 percent who prefer to diversify into real estate, operate with cash that you do not need to quickly access, or move your money into lower risk alternatives.
Originally posted 8/11/2015.