If you own equities like stocks and mutual funds, also owning investment real estate could be a nice way to diversify and “balance out” your overall portfolio. This is particularly the case when the stock market is volatile – a situation that has become more of the rule than the exception over the past few years.
But how exactly are the stock market and real estate corelated?
Typically, they run inversely to one another. As an example, when the S&P 500 – a market index that is comprised of 500 large-cap companies across numerous industry sectors, and that is considered by many as an essential “benchmark” for the U.S. stock market – falls, more money tends to flow into real estate.
One reason for this is because interest rates, and in turn mortgage rates, tend to fall during these times, which can make real estate more affordable for investors. In addition, because the price of real estate generally changes more slowly than the price of equities, this asset type can also offer added stability to your overall investment mix.
In fact, not only does real estate oftentimes hold its value when the stock market “corrects,” but it may even see an appreciation in its price. As added bonus, while some types of stocks and other equities may offer dividends and/or other income-producing qualities, rental properties – both residential and commercial – are known for their generation of ongoing cash flow (as well as various tax deductions).
So, if you own one or more residential rental properties in Orlando and/or the surrounding Central Florida area, give us a call to learn more about how we can take over some of the time-consuming tasks – including finding and screening potential tenants, collecting rent, performing regular maintenance, and responding to emergencies – while you still receive passive income. We look forward to talking with you!
How Real Estate Gets Impacted By a Decline in Stock Prices. Financial Samurai. Updated April 30, 2022. https://www.financialsamurai.com/how-does-real-estate-get-impacted-by-a-decline-in-stock-prices/#