For over two years now investors have taken advantage of a down cycle by migrating to the Stock Market. Timing has been ideal with the Dow increasing by 87% from a March, 2007 low of near 6,500 to a high in April of around 12,000 by April of 2009.

 

Now, with the Dow dropping 698 points last week and losing 5.7% of its total value then following that performance up with the loss of another 5.6% on Monday when it dropped another 635 points, it may be time to consider alternative investments. The risk of not diversifying is, “not sleeping at night”. Consider that stocks have lost $4.6 trillion in value since last week! That means an investor with all of their assets in the Stock Market, has seen 11.3% of their net worth disappear in a little over a week. What this means is that the average 401k for Americans has lost $16,500.00 in the last week alone.

 

It’s no wonder that this has resulted in a mad rush to hard assets such as gold, which reached a record $1,700.00 an ounce, and to U.S. Treasuries, long considered the safest investment in the world. But, how much higher can gold go? And, how much could the owner of 10-year benchmark Treasury securities lose if the downgraded U.S. credit rating results in significant inflation at rates well above the return of 2.4% on 10-year Treasury Notes?

 

Where should investors be placing their funds to sleep at night? With real estate experiencing zero appreciation since 2002 according to the Case-Shiller Index, after experiencing between 4-5% annual growth for decades, it’s likely Real Estate will once again be a growth investment. This is why investors all over the United States are funneling a significant portion of their investment portfolios into real estate. Distressed properties have driven prices in real estate so low that the risk of a further drop in value is unlikely in most markets. Even pessimistic projections of 5% additional depreciation aren’t very risky when considering that last week alone the Dow dropped over 5% and then dropped over 5% more in just one day on Monday!

 

There are other benefits to owning real estate. It’s not a piece of paper, it’s tangible. There is also use and enjoyment as a vacation home. For the true investor renting their home out, rental rates have increased over 3% per year for the past 10 years. With so many households losing their homes and so many other prospective homeowner’s unable to qualify for home financing, rental rates are likely to climb even faster in the near future, according to The National Association of Realtors.

 

According to a Merrill Lynch-Cap Gemini Wealth Management Report published 5 years ago, as much as 25% of all assets held by wealthy Americans with over $5 million in assets, were invested in real estate that excluded their primary residence. Take advantage of timing and do what wealthy investors have been doing;

 

“Buy Real Estate now at the bottom of the market and enjoy the health benefits of being able to sleep at night!!!”