It doesn’t take much in today’s still shaky economy to scare would-be investors, especially in the traditional stock and bond markets. Earlier in the year, as markets plummeted amid increasing gloomy indicators and less than stellar job reports, concerned investors sold stock and waited on the sidelines for things to improve. But October’s ongoing dismal economic and political news has continued to paralyze less than confident investors who are still waiting and hoping for a clear sign that the stock market is safe to enter again.
In mid-October, U.S. stocks dropped on mixed earnings, Standard and Poor’s index fell, dropping 12 points, or 0.7 percent, to 1,742. The Dow Jones industrial average fell 91 points, or 0.6 percent to 15, 377 and the Nasdaq composite dropped 35 points, or 0.9 percent to 3,894.
On the bond front, the central bank is currently buying $85 billion in bonds every month to keep interest rates low, and in government bond trading the yield on the 10-year note has largely remained unchanged at 2.51 percent. Concern that the Federal Reserve may start tapering its economic stimulus program, has prompted an exodus from bond funds amid the specter of rising interest rates – a threat to investors because this drive bond prices lower, making them less valuable.
However, government-backed bonds are no longer the only piece of candy in the bowl for investors seeking safety and yield. Investors seeking better returns are increasingly turning to alternative investments such as real estate.
Invest, Yes- Landlord, No
While many investors like the idea of owning rental property, they don’t want to deal with the day-to-day hassle of being a landlord. One of the ways investors can circumvent this potential headache is to join a real estate investment group.
Today’s real estate investment groups don’t just buy or build multi-family units. They are just as likely to take advantage of today’s low interest rates and lower home prices by investing in single-family homes. The company operating the investment group may also take care of maintenance and advertising, as well as interviewing tenants in exchange for a percentage of the monthly rent. For investors looking for a hands-off, lower-risk method of investing, real estate might just be the treat.
Trick or treat – stocks and bonds are scary. Real estate might just be the sweet spot investors are seeking.