2021-08-26

Americans See Real Estate As A Better Investment Than Stock Market Or Gold

Since the very beginning of money as a means for wealth accumulation, people became interested in, well, accumulation. The tools allowing doing that are numerous and have been dramatically changing during the course of history if to say least. In this article, we’re trying to look at the cost fluctuations historically based on verified data collected from numerous sources to define, how exactly tools of wealth accumulation range today. Or should be, depending on their profitability – if to exclude all other factors like personal preferences, politics, or popularity in people’s minds.

What is the best investment right now?

We have spent a lot of time preparing the table below.

Name of an investment asset

Cost of an investment asset, $

Profitability in two planes of view:

1) all-time price change

2) price change for the past 10 years

At the start of monitoring *

In 2011

In 2021

All-time price change, %

Price change

2011-2021, %

Savings account, %

8.32

0.30

0.10

-98.8%

-66.7%

Silver

13.92

42.11

25.55

183.5%

-39.3%

Crude Oil

18.84

95.28

67.25

357.0%

-29.4%

Platinum

226

1,515.8

1,164.4

515.2%

-23.2%

Sugar

0.04

0.23

0.18

450.0%

-21.7%

Coffee

0.67

2.28

1.8

268.7%

-21.1%

Cotton

0.27

0.97

0.87

322.2%

-10.3%

Gold

520.33

1,948.86

1,768.41

339.9%

-9.3%

Wheat

2

8.32

7.62

381.0%

-8.4%

Corn

1.14

6.39

6.85

600.9%

+107.2%

Natural Gas

5.59

3.61

3.92

-29.9%

+108.6%

Copper

0.31

4

4.54

1,464.5%

+113.5%

Soybean

2.39

13.56

15.84

662.8%

+116.8%

US Dollar Index

108

81

102

-5.6%

+125.9%

House average price (inflation-adjusted)

180,718

202,478

314,769

174.2%

+155.5%

House average price

17,800

173,445

314,769

1,768.4%

+181.5%

Dow Jones

1,502

14,669

34,935

2,325.9%

+238.2%

S&P 500

307

1,637

4,395

1,431.6%

+268.5%

Nikkei

136.57

10,050

29,331.37

21,477.2%

+291.9%

Palladium

56.2

816.75

2,812

5,003.6%

+344.3%

Bitcoin**

0.00076

18.55

44,321

5,831,710,526.3%

+238,927.2%

* The price at the start of monitoring can begin in various years; some span over 100 years back from today, some start only 4-5 decades back to the past.

** We personally do not recommend investing in existing speculative intangible assets. We like things we can touch ;)

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This table gives you a more or less informative insight into the cost of each of the most applied options for investing in the US. How you should read it:

  • First, you see the name of a type of investment asset, which price fluctuations we’re exploring in the chart
  • Then goes its cost in three points: at the very beginning of its trade, in 2011, and in 2021
  • Then goes the mathematical comparison of the rise (+) or fall (-) of the asset’s cost through time; this is given in two dimensions: a) how the price has grown or fallen for the entire period of the asset on the market and b) how it changed for the past ten years.

We also provide you the general inflation rates, for the years 1914, 2011, and 2021, just for reference: 1%, 2.96%, and 4.81%. That is, to preserve your money each year, you have to invest in any asset, which gives you profitability more than the rate of inflation.

As you can see with your own eyes, all commodities and assets tend to grow in price over time – all but three: the savings account, which really stopped being a tool for money accumulation today; natural gas; and US Dollar. They have fallen overall, while other assets have grown.

When you look at the picture of the past ten years, it is completely different from general. For your convenience, we have ranged all assets by their profitability for the past 10 years in the last column to give you a clear understanding of which asset is good for investing and which’s not.

We can draw the following conclusions from the table:

  • Real estate stocks 2021 are one of the best in adding to the cost. Real estate has added +155.5% (inflation-adjusted) and 181.5% (not minding inflation) for the past decade. In the all-time chart, they demonstrate amazing +1,768.4% growth, which shan’t go unnoticed by you if you’re looking for a reliable market of investments.
  • To estimate the real estate vs stocks values, look at the Dow Jones, S&P 500, and Nikkei. They add value in all cuts – for the entire period and for the past 10 years, adding at least +238.2% (and at most +291.9%). Compare it to what we have just written about the real estate cost and see for yourself that they are both profitable.
  • What has added the most to the price in both time slices is the palladium, giving the income to its investors of +5,003.6% for all time and +344.3% for the past decade.

Surely, you should have noticed that we’ve included one more super-income asset to the table. That’s Bitcoin. It might feel insane that it has added +238,927% for the past 10 years. But it is the only asset in the chart that has been created in the computer era, not existing before it. We do not recommend you put money into its highly speculative asset since it hasn’t shown its real value yet (if it has any at all) – people have to “stop playing” with it to know for sure. What’s on the market today around the Bitcoin is (if to evaluate it cold-headedly) hysteria a sort of this: “Look at this shiny thing I have! I can do it and you can too! Let’s play with it as a cat plays with a mouse!…” But what they forget to tell everyone is that cat eats or abandons a torn mouse corpse when it will have played enough. So come back to our reviewed article in 7-10 years – we’ll add a new column to the chart to expose how the assets are doing and if Bitcoin exists by that time.

Is gold a good long-term investment?

Now, to define what the better long-term investment is, we should again look at the table. Many people think of gold when they want to invest in something tangible (and shiny ;) ). However, it is not the most popular asset so far.

According to one of the latest investor and potential investor surveys, it became clear that gold is chosen as the primary asset by only 18% of them. The first place is taken by real estate (41%), second – by stocks (26%), third by the gold, fourth by savings accounts (9%), bonds were chosen by 3%, and other or no instruments were chosen by 3%.

We are genuinely surprised by the choice of savings accounts by 9% of investors since such an instrument only brings 0.10% annual profit in 2021 (which doesn’t even cover inflation). These must be very conservative people.

As you can see, gold is not an option if you’re looking for a short-term or mid-long-term investment option: it gave up in the price by -9.3% in the past decade (although, generally, for 100+ years of monitoring, it has added +339%). So you should only seriously consider gold if you’re investing for 30-50-70 years. In that case, yes, it is a conservatively good investment.

Is real estate a good investment right now?

What you really should be focusing on today is real estate. Considering real money (not inflation-adjusted), it has been adding on average 18% annually, having grown by +181% for the past decade. That is – your house of $200,000 bought in 2011 is now worth $362,000. And you do nothing to make it grow!

Moreover – if you’re a landlord, owning a rental property, you also collect rental incomes by letting it, which can be your main or auxiliary job.

No wonder, 41% of investors found it as their major interest in investing. If to think about it, it is one of only a few “good” assets on the market for an average person to deal with:

  • It grows over time without any effort on your side
  • It is tangible, so, in most cases, it comes with “physical shipment” unlike stocks, futures, options, and other derivatives
  • It is available to be bought by everybody (using own money or bank financing)
  • It does not require tiresome hands-on operating like stock market assets would, which you can buy and sell within a minute and have to constantly monitor to play on their cost fluctuations in order to secure winnings and evade losses.

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Physical precious metals stand close to it. However, they can also be intangible if you own them without physical shipment, which is not so good for just everybody.

The downsides of owning real estate are:

  • It does not necessarily appreciate over time if it’s located in a decadent neighborhood
  • It has the cost of maintenance as it dilapidates over time
  • It requires you to pay annual taxes for its ownership, which can be a ‘dead weight’ if you don’t earn from it
  • It is not sold instantly, as its liquidity is not the quickest in either case.

Conclusion

When you choose where to invest your money, you have to start with the research. Although you can rely on the provided table, it is mostly general, to give you an insight into very long-term profitability, which might not be the case for you.

What is understood for sure is that today, the real investment options, which go way farther than saving you from inflation, are copper, real estate, or palladium.

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More about DGY

DGY is a real estate investment and property management company. Our experts have an impressive experience in turning businessmen into smart real estate investors. We collect limitless opportunities throughout the world’s best real estate markets and help our clients implement the best deals. We take care of all due diligence and customize documentation while your income grows. We also provide you with property management services so you can forget about the tiresome maintenance of several objects and entrust this process to professionals.

Investment advice and recommendations

DGY is an investment company that takes care of every client and helps them become successful investors. With the help of an investment experience and a well-thought plan, we will help you examine the market, choose a strategy specifically for you or your business, and calculate future costs to start making money with real estate investment.

Property management

In order to invest in real estate, you should consider how you will run your management in Ukraine. DGY will help you eliminate all possible pitfalls at an early stage as a personal project manager will be assigned to your case. They will assist you in choosing the project according to all required objectives.

Property Renovation

DGY Investments takes care not only of purchasing property but also renovating an existing one. With the help of a thorough plan and estimating, we will thoroughly prepare a property for sale. Our professionals evaluate an investment property and create a strategy that includes the costs for renovation, possible taxes, fluctuations on the market, etc. Therefore, our clients are able to resell the renovated properties in Ukraine with more than 15-20% profit from the initial price.

Paperwork

Before our clients decide to deal with real estate investing, they consult with our experts concerning details such as the necessary documents needed to purchase a property and successfully run all the processes connected to it.
Therefore, if you are eager to invest in Ukraine, it’s essential to have all the paperwork done correctly, and that’s the moment when our team of experts takes care of this step. DGY Investments helps investors buy real estate property, manage the paperwork, start preparing relevant documents for purchasing realty in Ukraine, and close the deal successfully.

Real estate investment opportunities in Ukraine

When an investor decides to invest in real estate in Ukraine, the most affordable way to attain stable passive income is through buying residential real estate. Investors can expect to receive a regular monthly payment from their tenants at a fixed monthly amount, unaffected by inflation or other unforeseen circumstances. The amount of rental income will vary depending on the size, type of property and location. For example, buying an apartment in Ukraine’s capital Kyiv is beneficial to investors due to offering a large working population, central location and affordable prices. Hence, the minimum price of renting a decent one-bedroom apartment in Shevchenkivskyi District will be around $1000 per month in 2021, followed by Pecherskyi District with a cost of $850 per month. Besides, investing in real estate in Ukraine annually brings clever investors up to 15% of yield, attracting many business people every year.

Properties for investments in Ukraine

Ukraine has a giant sector for real estate investing. Businessmen who come there all over the world often choose between investing in residential and commercial properties. The main advantage of buying property in Ukraine is the affordability of prices on the houses and apartments. For instance, if you invest in real estate in a historical district, a luxurious apartment will cost you around $80k only.

How to invest in Ukrainian Real Estate

In order to invest in Ukrainian real estate, you should take into account a list of crucial factors. The first one is to choose what kind of realty you are going to invest in: residential or commercial. It is vital as it should comply with Ukrainian real estate law. The second tip is to identify the purpose of purchase in order to make a strategy for the property. For instance, you may purchase the property for your own use or buy it for lease. The next step is to calculate the taxes and what kinds of taxes are payable during the purchase, owning, or selling. Also, to invest in real estate properly, you should keep in mind currency control rules in Ukraine to sell a property and get a higher profit.

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