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Survey: Real Eatate Barely Beats Cash for Investment

By
Industry Observer

CNBC cites a survey by Bankrate.com which asked 1,000 investors what was the best investment for money to be left for a decade or more.  Top answer was real estate, chosen by 27% of the respondents.  This is the first year in three that real estate was the winner. 

What's really weird is that the winner in the last two years was cash, and cash was a close second this year too.  Almost the same number of persons polled this year felt that something that was close to guaranteed to lose value was a better investment than real estate.  Further down the list of responses were stocks and bonds, surprising to me since both have had records of fairly consistent long term gains

Residential real estate is a good investment if you consider that it will give you and your family shelter from the elements, and will also add a few other life style benefits.  That can't be said for cash or securities.  Beyond ones personal residence, there are some advantages in real estate investment, including but not limited to tax benefits, possible appreciation, and ability to leverage a small amount of assets via long term financing.  All the advantages are balanced with like amounts of risk.

But then there's what many perceive as an alternative, cash under the mattress.  How so many people who call themselves investors can claim that cash is a good investment is a mystery to me.  The answer was not gold or treasury bonds, but cash.  I always felt that cash is what you use when you invest, it's not itself an investment. 

Can anyone explain how cash can be considered a good long term investment?


Posted by

 Mike Carlier  Lakeville, MN

 

612-916-3033

 

Stefan Winter
Real Estate in IL & NV | Owner of Real Estate Web Tech | Daily Vlogger - Las Vegas, NV
Owner - Winter Group & Real Estate Web Tech

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. 

Jul 22, 2015 07:34 AM
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

The best investment changes with the economic environment.   Today Real Estate is it!

Jul 22, 2015 11:24 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

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.

Jul 22, 2015 11:35 AM
Jerry Lucas
ABC Legal Docs LLC - Colorado Springs, CO
Notary Training, Consulting. Colorado Springs, CO

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.

Jul 22, 2015 01:58 PM
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

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.

Jul 23, 2015 04:25 AM