FYI: “For money you wouldn’t need for more than 10 years, which ONE of the following do you think would be the best way to invest it—stocks, bonds, real estate, cash, gold/metals, or bitcoin/cryptocurrency?”
That question was recently asked of more than a thousand investors in a recent Bankrate survey, and the winner—by a large margin—was real estate. For every two respondents who answered stocks there were more than three who said real estate is the way to go.
Are these investors onto something? Have financial planners been wrong all these years? For this column I mine the historical data for answers.
On the face of it, the respondents to the survey need to go back to their history books, as pointed out in a recent column by my colleague Catey Hill. Since 1890, U.S. real estate has produced an annualized return above inflation of just 0.4%, as judged by the Case-Shiller U.S. National Home Price Index and the consumer-price index. The S&P 500 SPX, +1.53% (or its predecessor indexes) did far better, outpacing inflation at a 6.3% annualized rate (when including dividends).
Even long-term U.S. Treasury Bonds outperformed real estate, producing an annualized inflation-adjusted total return of 2.7%. Check out the chart below:
Regards,
Ted
https://www.marketwatch.com/story/the-single-best-investment-for-the-next-decade-2019-08-08/print
Comments
No, they're definitely not worth over a million. However, they do now cost well over a million.
I’ll say I continue to be amazed by the performance of real estate funds. Maintain a small “nibble” in OREAX - and the danged thing is up 19% YTD (20% after today) - following on the heels of several other good years. I keep expecting it to fall off a cliff - but hasn’t yet.
It looks like OREAX lost about 6% in 2018 when there was increased concern about rising interest rates. That concern has faded this year. Maybe REITS will continue to make sense as long as we remain in a low interest rate world.....
Wish I hadn’t deleted my running list of exchanges from about 5-6 years ago. However, I did buy into OREAX (umm ... maybe 2012 or 2013) after it had sustained a nasty licking. Was really in the cellar at the time. Yes - the falling rates have helped REITS. Personally I suspect they’re overvalued - but sticking to my normal allocation is the plan. You never can call the markets exactly right.
Regards
"U.S. real estate". "U.S. National Home Price Index". There you have the joker in the deck . A national real estate index is totally meaningless. With respect to real estate, it's location, location, location. (I believe that I've heard that before, someplace.) Go ahead and show me how the "annualized return above inflation of just 0.4%" is true in zip 941__. Sure thing.
Garbage in / garbage out. (I believe that I've heard that before also.)