Jim Dahle explains why real estate belongs in a diversified portfolio. He invests for high returns and because real estate moves independently of stocks and bonds, making it a natural third pillar alongside equities and fixed income.
When you boil it all down, these are the two main reasons I invest in real estate. And it's not because I gotta feel like I can put my hands on my investment, is not because all the tax breaks are so awesome. It's not for passive income. Right. There's two main reasons I invest in real estate. One is high returns. And real estate returns are high, like stock returns. And so that's a good thing in your portfolio. In fact, with a little bit of leverage added to them, they can be a little bit higher than stock returns. And the second reason is relatively low, low to moderate correlation with the stocks and bonds in your portfolio. I think it's the best of the alternative asset classes out there. So when I. I don't know that I even think of it as an alternative anymore. When I think about a reasonable portfolio, I think about stocks, bonds and real estate. When we're talking about stocks and bonds and real estate, I think most people are okay with those being pretty good chunks of your portfolio. But those are the reasons why I invest in real estate.
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