Real Estate and the Well-Diversified Portfolio | Millennium Trust Company

Real Estate and the Well-Diversified Portfolio

December 18, 2017
By Tom Daley

Though the bull market has been leaving investors grinning, the constant threat of recession is consistently looming in their minds. Financial advisors continue to preach that the best protection from a volatile market is a well-diversified portfolio.

Seems simple enough, until you ask yourself: Is my portfolio really diversified?  Stocks, bonds, and cash are a good start, but investors are left scratching their heads to uncover further diversification methods.

Financial advisors and their investors are more frequently turning to alternatives to help diversify portfolios. Real estate is one alternative asset class that many investors are familiar with, and it can provide investors with steady income and higher yields than traditional fixed income. High-net-worth investors have been moving more of their assets to real estate, with an average of 33% of their portfolios in real estate, according to a 2017 Tiger 21 survey.

While most investors defer to the traditional method of investing in actual property, pooled investment vehicles, a real estate investment trust (REIT) or alternative platforms may offer investors further diversification and potentially less risk. These vehicles offer investors a wider range of investment assets.

Whether you're a seasoned investor or just beginning your financial journey, advisors will continue to preach diversifying your portfolio to help balance risks and returns. For more information on investing in real estate in your retirement account, you can reference our Guide to Holding Real Estate in Your Retirement Account, Frequently Asked Questions and our Real Estate Investment Timeline.

The material in this blog is presented for informational purposes only. Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.

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