Earlier this week, the Dow Jones Industrial Average (DJIA) fell nearly 300 points as fears of a trade war between the U.S. and China reached a fevered pitch, erasing all 2018 gains for the index. The S&P 500 and Nasdaq composite also dropped this week, while Treasury prices rose as investors looked for a safe haven amid the selloff.
Read on to see why this ongoing stock market volatility means right now is a great time to diversify and put some of your hard-earned assets into proven, secure alternatives like income producing real estate investment.
“[The] Dow is trying to avoid its longest losing streak in 40-plus years”, wrote CNBC on Friday.
In addition, Goldman Sachs strategists are predicting “weak stock market returns” ahead, despite booming corporate earnings, due in large part to a number of looming policy obstacles, including the potential for an escalating trade war. Stock price appreciation is also being constrained by tightening monetary policy, a flattening yield curve and the upcoming mid-term Congressional elections.
“Among the biggest hurdles the market faces are continued rate hikes from the Federal Reserve,” wrote CNBC. “[Along with] the prospect that economic growth will slow after the tax cut benefits begin to diminish, and the rising U.S. budget deficit”.
As of Friday morning, the DJIA was down -1.95 percent year-to-date (YTD), eroding consumer and business confidence as fears escalate that trade penalties on all sides will have an even greater negative impact on future growth. Looking back, the DJIA average ten-year return (since 2008) is only 7.6%, which really equates to just 4.42 percent when you subtract the long-term average inflation rate of 3.18 percent.
So, what does all of this mean for investors? It means that right now it’s time to diversify and stop investing all of your hard-earned money in the stock market, which top analysts agree is headed for a 30 percent correction. Instead, investors should move money into secure, proven alternative investments like income producing real estate, which provides a hedge against inflation and can be purchased in your IRA account to provide predictable, ongoing tax-deferred income.
Over time, investment properties like luxury condos and vacation home rentals have consistently outperformed the stock market, especially when you take inflation into account. As we’ve shown, when you take inflation into account, the stock market is struggling to provide even lackluster returns of 5 percent, while income producing investment properties are pulling in 8-14 percent returns in popular vacation destinations like Mexico’s Riviera Maya.
In addition, these innovative vacation home rentals are designed to provide easy ownership as well as ongoing income. Professional property managers are in place to take care of all maintenance, marketing and the day-to-day operations, ensuring guest satisfaction and repeat business, providing a totally hands-off ownership experience in these turnkey investment properties.
Would you like to learn more about alternative investments like real estate? Tell us where in the comments!