Our retirement funds carry a heavy responsibility. They need to accumulate enough wealth during our working years to be able to provide a reliable source of income throughout retirement.
This is why financial advisors and wealth managers are constantly working to maintain the right balance between safety and growth for retirement portfolios. It’s also why it makes sense to look at real estate as an asset class to help take on retirement portfolios’ responsibilities.
There’s a long list of benefits real estate can provide to investors, but here are the top 3 reasons to consider adding real estate to your retirement fund.
1. Little Correlation With The Stock Market: Diversification can help protect the overall value of your portfolio when the market is down, and real estate is one way to add a strong layer of protection. While real estate goes through its own market cycles, it’s generally less volatile than the stock market and there’s typically little correlation between the two.
2. Protection Against Inflation: Real estate returns are typically adjusted for inflation. With inflation comes increased rents, which can mean more cash flow and higher property values. In fact, according to Federal Reserve Economic Data, rental prices, home values and commercial real estate values have all increased at a higher rate than inflation over the past 20 years.
3. Stable and Predictable Income: One of the things investors love most about real estate is that it can provide consistent and predictable income. Rent is one of the highest priority expenses for individuals and businesses, meaning it’s one of the last sources of income to suffer in an economic downturn.
How to Add Real Estate to Your Retirement Fund: Options for investing in real estate with a retirement account are limited with a traditional IRA or 401(k), other than choosing a portfolio that includes real estate mutual funds or REIT ETFs.
An option that’s often overlooked is contributing money into a self-directed IRA. This type of IRA allows you to invest retirement funds into alternative assets such as real estate as long as strict rules set by the IRS are followed. One of the easiest ways to ensure compliance is to invest through a reputable real estate investment platform with experience in handling retirement funds from a self-directed IRA.
You can learn more about investing in real estate, and other alternative assets, with a self-directed IRA by attending this webinar at 2 p.m. ET Wednesday, Sept. 29.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.