Is Real Estate the Best Investment of Your Money?
As the headlines roll about the cost of pretty much everything increasing, some Parkland homeowners and potential buyers wonder where their money would retain its value the most.
Should Parkland homeowners and real estate investors keep faith and trust in the real estate market's ability to increase their purchase worth and build them wealth? Or should they look to diversify some of their money into the stock market or just hold onto their green in a bank account and let it grow in interest? What is the best way to retain and grow a dollar right now?
Much of the financial climate across America has been impacted by the actions of The Fed and its decisions on increasing interest rates. A lot could be impacted by whether interest rates rise or fall. And every type of investment comes with its own set of risks.
Here is a picture of the Most Common Investment Types and How They Have Performed Recently
Real Estate/ Home Price Appreciation
Property value gains over the last year have seen an average of 6.26%
Gains in the last three years have been at 32.88%
Gains over the last five years have an average of 48.95%
The numbers above are looking to back up the age-old belief that homeownership is one of the most steady and solid ways to make a purchase in America that will grow your wealth. Real estate allows the owner to also use and enjoy the investment as compared to putting money in a stock or bond.
The key to purchasing real estate in Parkland and anywhere else is to have a long-term mindset. If you have seen headlines about recent homebuyers losing value in their homes, most often this is because they haven't owned their home nearly long enough to begin building a substantial amount of equity. A home should never be purchased with a get-rich-quick mindset. But it will be a solid and dependable investment when you hold onto ownership. The longer you own the home the better.
The average return on investment over the last year has been at -2.9%
The average return over the last three years has been 40.9%
The average return on five years is 51.9%
Putting your money into the stock market is not a great approach if you are putting in money you can't stand to lose. It is not a wise place to invest your life savings for example. It can be worth trying with money that is extra and you are hoping to make a return larger than you would just having the money sit in a bank without ever intending to touch it.
Many financial experts will advise that the stock market is not for the faint of heart and is best approached with extra money you would not be in dire straights losing. They also advise that it is a longer commitment that should not be watched daily (unless you want to age yourself with stress). It may not be the best area for a retiree to invest.
A 2023 average 10 bond has a rate of 3.6%
A 2020 10-year bond has a rate of 0.89%
A 2018 10-year bond has a rate of 2.91%
Bonds are seen as a more stable way of investing money as compared to stocks. A bond with a term of one year or less may bring a rate of 5% or above.
A bond is a loan made out to companies as well as federal, state, and local governments for a preset amount of time. This time can range anywhere from one month to 30 years. An investor earns interest from a bond and receives the total amount that the bond is worth after the term is up. A bond is only a great investment if you hold onto it for the entire term and don't cash it out early.
There are many more ways to invest your money these are the top three that are most utilized and most talked about. For more insight into how other investment strategies are making people money, you can check out the article written at realtor.com blog entitled Are Stocks, Bonds, Bitcoin, or Your Humble Home the Best Investment Today?
All said and done there are some good ways to invest your money but investing in real estate both in a primary home and investment property has long been one of the most promising ways to make a purchase with the intent to grow your dollar.
For more information on purchasing real estate in Parkland and surrounding areas please contact us anytime.