We’ve all heard the advice that diversifying your investments is the best way to protect yourself should one of your investment channels bottom out. It’s good advice, but there will always be investments that consistently perform better than others. This article will discuss mutual funds and how they stack up against real estate investments.
Real Estate Provides More Leverage
When purchasing $1 of mutual funds, you get one dollar’s worth of value. When you buy real estate, you are leveraging your investment dollar because you are paying a 20% deposit and mortgaging the rest.
If you have $100,000 invested in mutual funds, which doubles in value in 10 – 12 years, you have made $100,000. Not bad, but you can do better with property investing.
An investment in a $500,000 house that has increased to $750,000 nets you $250,000. It’s not unheard of for homes to double in value in that amount of time, potentially raising your gains to $500,000. That net gain is before we’ve even talked about rental income.
Essentially, the ability to borrow your real estate investment gives you significant leverage that is impossible with most other types of investment.
Mutual Funds Expense Ratios and Fees Can Devalue Your Investment
Mutual funds are popular as a hands-off type of investment. However, if you don’t pay attention, the fund expense ratios and fees can eat away the value. Management fees can also vary between funds, and some will pass on sales and marketing costs to their clients.
The fund manager’s expertise can also enhance or degrade the performance of your mutual fund. Your investment may be exposed to corruption, unnecessary trading, and selling losses at quarter’s ends to balance the ledger. Unfortunately, you have little control over these events other than to cash out and try your luck elsewhere.
While real estate investments come with costs, most property expenses can be used to reduce your tax liability. Mutual fund fees and expenses are not tax deductible. You must also pay tax on any capital gains the mutual fund produces every year.
Property Rarely Loses Value Over the Long Term
It’s possible to lose out no matter what investment vehicle you choose. However, over the long term, property values are unlikely to be worth less than the amount you originally paid.
Mutual funds invest in the stock market, so an economic crisis can pose a significant risk to your capital gains. Many people at the cusp of retiring have been forced to rethink their plans after their mutual funds lost tens of thousands in value overnight.
Property investments are much less volatile. While property values do experience dips and troughs, they are rarely catastrophic. Short of a zombie apocalypse, a couple of decades of appreciation will still put you in front by a significant margin, even if you do happen to be selling at a low point.
Are you ready to consider property investing to secure your financial future? Increase your chances of purchasing income-producing property with potential by talking to experts prepared to share their experience and expertise. A solid real estate strategy will give savvy investors more leverage and options. Property investment also provides stability during economic strife than more volatile mutual funds.
Lea and Lefry Amarille are real estate investors. They have been actively involved in the GTA and Durham Regio for a number of years. Their mission is to provide great quality homes for tenants, while at the same time providing an above-average return on investment (R.O.I) for their investor partners and themselves. It is truly a win-win-win way of investing!
Lea and Lefry offer their investor partners hands-free investment opportunities. If you are interested to learn how to earn an above-average return on your investment, backed by a solid asset, and without the hassle of being a landlord, please contact Lea and Lefry.
For more information about Lea and Lefry and their investment program,
please call (416) 827-0586 or visit https://investorleaandlef.com/