The best investment changes with the economic environment. Today Real Estate is it!
Cash is a good insurance plan in the event something unforeseen happens like a computer virus that wiped out online banking and credit card systems. But investment implies there should be a return. Real estate does that in the long run.
Mike Carlier
Lakeville, MN
With dynamic asset allocation, investments in different asset classes change over the course of an investment cycle. When real estate is crashing or stagnant, cash is a good place to be. There are times when cash is king.
You cannot consider investment return alone. You must consider risk versus return. Real estate has risks of loss due to maintenance, repairs, vacancies, foreclosure, recessions, disasters, fraud, crime, tenant damages, new laws and regulations, and lawsuits. Cash may have a lower return, but it does not have the risks that come with real estate investing.
Real estate ownership is also shown in public records and can make owners a target for lawyers and lawsuits. Cash in bank accounts is not shown in public records.
The risk/reward relationship is present in any asset class. Prevailing consensus is that increased risk is compensated by increased reward potential, and I agree with that, almost. Although cash offers little potential for reward, it has an almost guaranteed risk in inflationary value loss. The reward side is minimal and comes from potential deflation, which is not much of a realistic long term expectation.
I'm not disputing that cash is an important part of anyone's investment strategy. My own investment funds fluctuate between 8% - 20% cash, depending on market conditions. Cash, however is not what I consider part of my investments, only something ready and waiting to be invested.
Wow, I'd say real estate over cash anyday! Something physical will always have value and cash or at least any currency can literally become worthless overnight. Maybe at least Gold over cash as an investment.