Right now you might be thinking of the answer to the question, you might even be running some numbers in your head, or maybe your intuition provided the answer for you. Either way, you probably already have the answer, or at least think you do. Let me re-frame the question further:

Which investment has provided the greatest return since 1870?

A) Equities

B) Treasury Bills

C) Bonds

D) Housing

If you believe the answer is obvious you might be in for a surprise, while it may be easy to eliminate a few off of the list immediately, chance are you debated two options seriously. Part of you might be wondering if it’s some type of trick question. More on that in a minute.

Every good investor knows that you shouldn’t put all of your eggs in one basket. Which is why it makes sense to have a diversified portfolio of investments that react differently to market news and pressures. Many investors will diversify only in the stock market, and not take notice of what is happening in the real estate sector.

Many assume the stock market is where the real money is made and that real estate is a sub-par investment–is that the case?

Why don’t we take a look at what the research says on the topic?

According to new research “The rate of Return on Everything, 1870–2015” by Oscar Jordan, Katharina Knoll, Dmitry Kushinov, Moritz Schularick, and Alan Taylor; real estate has outperformed equities since 1870. They discovered this controversial fact by gathering the largest data set in history to study stocks, bonds, and real estate over the last century to determine the rate of return on everything. If you chose option D give yourself a pat on the back.

There are many reasons to have real estate as part of your investment portfolio, one of which is the fact that real estate has been steadily climbing in value since 1967, it’s also one of the few investments that produces income from rents and also appreciates with time. Mark Twain is credited with telling people to invest in real estate because it’s a scarce resource that we can’t produce more of.

“Buy land, they’re not making it anymore” -Mark Twain

Real estate investing will give you two advantages in a bear market. The first is appreciation– the value of your property can continue to grow even if the stock market isn’t, there is no correlation between the two. Second, even if your real estate investment isn’t growing as fast as you want it to, you can still be collecting rental income from your tenants.

“Real estate exhibits low correlation with public markets and due to its fundamental value, is uniquely positioned to weather downturns” -Omer Amsel

The research also points out that Investors considering international investing in equities should consider real estate instead; diversified international real estate isn’t reactive compared to equities.

“The ideal investor would like to hold an internationally diversified portfolio of real estate holdings, even more so than equities.”

Don’t limit yourself only to equities, consider expanding your horizons by investing internationally in real estate.

The Greatest Investment of The Last Century–And it’s Not the Stock Market

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Trevor Whiting

VP, Investor Relations

RealtyReturns



Experienced Sales Leader of over 14 years and has started offices in London, Toronto, and the US. He was VP of Investor Relations of RealtyMogul where was responsible for revenue growth, sales operations, and growth initiatives. Under his leadership, he developed a sales playbook that resulted in 2x growth.