When we have money, many options for the best Investment come to mind. Like investing in the stock market, forex or commodities, these days cryptocurrencies are another good choice or you can just put your money in the bank or mutual funds and so on. These are good businesses, some of which can even be profitable, but almost all of these investments have a high risk potential. A successful and profitable business is one that is driven by your passion. When you put your passion into something, it brings you joy and comfort and becomes a symbol of success for you. It keeps you motivated and you continue to learn and invest in such an entity.
Real estate is easily the number one choice for any investor. You will never find a person in any corner of the world who says he has no interest or confidence in real estate. Firstly, real estate is a necessity for every person in the present day, secondly, it is the most valuable physical asset and thirdly it comes with minimal risk.
About 15 to 20 years ago, Kodak was worth billions of dollars, but where is it today? Nokia used to dominate the mobile phone world but now its share in the mobile phone industry in the world is negligible. There are so many examples of such enterprises that could not adapt to the modern world and have now disappeared.
However, one entity that has been in constant operation for decades, centuries, and thousands of years is now a property. Real estate is a proven tool to earn passive income without the risks involved. What’s even better is that you can improve the profits of your real estate investments with good management just like any other business.
According to various researches around the world, real estate has been declared the non-1 passive income investment in the world. In almost all the research I have studied real estate is placed first or second place. There was not a single search that ranked real estate in the third position or below. All their research has shown that real estate is a minimum risky investment. The wheel does not need to be reinvented now by any person/party because it is a proven fact by the world’s leading economic researchers.
Take a look at this ranking of Financialsamurai.com, real estate is at No. 2 and No. 3, where the RECs, REITs, etc. are placed at No. 2, which are also real estate investments, and physical real estate is ranked at No. 3 with a 45 score. The higher the score, the better it is, a risk in physical property is noted at 8, which is only a second after putting your money in the bank. This is obviously related to the US market because in Pakistani real estate market will most certainly top the list.
Whether you are investing in a portfolio or a passive income, real estate is the best and highest investment in the business world. You are no longer creating land and our population is accelerating. In 1900, the world population was about one and a half billion but in just a matter of 122 years in 2022, it is close to 8 billion and is growing exponentially. In the next 50 years, the world’s population is expected to be around 11 Billion.
Real estate is therefore a necessity, as everyone needs shelter over their head.
Many people will beg to differentiate and believe that stocks can offer a better return. I urge you to differentiate, especially in the Pakistani market. Real estate especially rental real estate is the only option that can give you 15 to 20% annual return without putting much at risk. It is a tangible physical asset and is suitable for every type of investor.
Every physical investment in real estate you make is headed by you as CEO. As a CEO, you can make improvements, reduce costs, increase rent, find better tenants, and market accordingly. Real estate is something you can see, feel and use. Life is about living, and real estate can provide a higher quality of life. Given that we all spend much more time in our homes due to the pandemic, the internal value of the real estate has greatly increased. When the world is over, you can look for shelter on your property. Real estate is one of the three pillars for survival, the other two being food and health.
The most important factor in favor of real estate is that it is much simpler and easier for everyone to invest in. Real estate makes more millionaires than any other asset class in the world.
One of the biggest mistakes most investors make over time is speculation, one wrong decision can end in bankruptcy for many. Bill Hwang, CEO of Bows, who lost $ 20 Billion in 2 days, is a classic example of such damage. Shares that were the reason for his enormous wealth turned out to be the reason for his ultimate failure as well. You can read the full story at Bloomberg.
The money that comes from such speculation in stocks follows a vicious cycle where you end up losing what you have earned. The temptation finally takes over at some point and you risk everything.
Real estate on the other hand can be risky when you speculate but due to its tangible and physical nature, it will never be the reason for your bankruptcy. It is therefore best practice to actively manage your business and/or invest in intangible assets for passive income while maintaining at least a 50% portfolio in rental property and real estate.
Also, if you want to read more informative content about construction and real estate, keep following Feeta Blog, the best property blog in Pakistan.
