By: Melissa Etezadi, HappyNest PR and Content Manager
Like many novice investors, I was told at a young age the only way to save money for retirement was to invest in your 401(k), open an IRA, and of course, invest in the stock market. Growing up, I remember watching my dad emotionally react to the twists and turns of the Dow. His mood would fluctuate as the market would swing from high to low. We knew as kids if the numbers on the tv screen were red, it probably wasn’t a good day to ask for spending money.
It wasn’t until I graduated college with over $100,000 in student loan debt, and a mediocre first paying job, that I realized I needed to find new ways to diversify my portfolio and grow my nest egg. The real question, though, how? I decided to take to the internet – it’s here where I learned about investing in real estate.
So, what makes real estate worth investing in? Unlike traditional investments such as stocks and bonds, real estate is not tied to the stock market’s volatility and fluctuations. Real estate is a tangible asset, so it relies on the economics of a local market instead. There have been many situations where the stock market has been in a downturn, while real estate investments’ value was on the rise.
I learned that real estate is a less liquid asset, so it takes longer to convert to cash. This is one of the main reasons many financial experts stress the need for a balanced portfolio of real estate, stocks, and bonds. In the finance world, it’s called diversification.
My investment journey was slow – I did not invest in some fantastic stock that turned into millions overnight or purchase a $5M CVS Pharmacy or apartment building. I researched the subject and visited popular sites such as www.reit.com, www.investopedia.com, www.daveramsey.com, and www.myhappynest.com to help learn the terminology.
After exploring all my options, I decided to buy shares of REITs as they seemed to be the best way to gain exposure to real estate investing without having property management duties or fronting a large sum of money. I learned that REITS are a long-term investment and traditionally pay 3, 4, or even 5% dividends, helping me double my investment over time. My goal is to continue growing my wealth by maintaining a healthy portfolio of diversified investments so my children won’t have to see me go through the stress my father did.