Real Estate
Real Estate Returns vs S&P
15.00%
Versus S&P
•
13 minutes ago
15.00%
Versus S&P
•
13 minutes ago
6m High
6m Low
Real Estate
362.10
303.76
S&P 500
4,588.96
4,117.37
Real Estate
S&P 500
Does not follow the stock market
Sources: S&P/Case-Shiller U.S. National Home Price Index, SPX
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In the Market
Check out Real Estate in the stock market
Highlights
Good For
Hedge inflation + passive income
Time Horizon
5-10 years
Diversification
Relative to a traditional portfolio composed of 60% large-cap stocks and 40% bonds, a portfolio which includes some allocation to private real estate has historically shown the ability to drive higher returns, with generally more annual income and lower volatility over the past 20 years. Real estate has the power to hedge inflation. With increases in inflation in 59 of the last 60 years in the US, the ability to hedge these increases is a valuable trait in an investment. Real estate specifically is a unique asset because unlike others, it can earn income while hedging inflation.
Did you Know
There’s more money invested in real estate than in equities in the U.S. stock market.
Ellen DeGeneres has become known for her house flipping expertise, spending over $145m buying properties to flip.
The value of all real estate investment trusts (REITs) in the US is $1.24 trillion.
Considerations
Good source of passive income
Investment in a tangible, physical asset
Low volatility means more consistent returns
Reasons to Invest
Direct ownership of real estate is an active investment. You'll be putting in time and sweat equity to renovate, maintain, and rent out your properties.
There's a learning curve to real estate investing. You'll want a good understanding of local real estate markets, property laws, and maintenance, for example.
While real estate can offer passive income, that income is usually variable and can be heavily impacted by economic cycles and changes in local laws.
Drawbacks
How You’re Taxed
Capital Gains
Short-term capital gains are from selling assets owned for one year or less, which are taxed at ordinary income tax rates. Long-term capital gains are for assets owned for more than a year, and are taxed at a lower rate than ordinary income, with rates ranging from 0% to 20% depending on your total taxable income.