When it comes to investing and building wealth, hard assets should be one of your top priorities. What are hard assets, you ask? A hard asset is a tangible asset that has intrinsic value that you can often sell quickly for cash. Some of the most common hard assets include real estate, precious metals, and collectibles. In this article, we discuss the many benefits of investing in hard assets with a focus on real estate. We also dispel some myths about hard asset investing that have been floating around for years. So read on to learn more!
What Are Hard Assets?
The definition of hard assets can vary depending on who you ask, but there are some common characteristics that all hard assets share. First and foremost, hard assets have intrinsic value, meaning that they are worth something simply because they exist, regardless of the market conditions. In addition, hard assets can often be sold quickly for cash, making them a desirable investment during economic uncertainty when the stock market is volatile and other investments are risky.
There are many different types of hard assets, but some of the most popular include real estate, precious metals, and collectibles. Let’s take a closer look at each one:
Real Estate
One of the oldest and most popular forms of hard asset investing is real estate. Real estate is tangible property, such as a house, office building, or land. It can be used for residential or commercial purposes and provides investors with both stability and appreciation potential. Real estate is a popular investment because it offers several benefits:
– Stability: Unlike stocks and other investments, real estate is not as volatile and tends to be less affected by economic downturns.
– Appreciation Potential: Real estate has historically appreciated at a rate greater than inflation, meaning that your investment will grow over time.
– Diversification: Owning real estate allows you to diversify your portfolio since it doesn’t correlate with the stock market.
Precious Metals
Another popular hard asset investment is precious metal, such as gold bullion, silver, and platinum. Precious metal is often purchased as a hedge against inflation and economic uncertainty. They are also a popular investment because they offer the following benefits:
– Portability: Physical gold and silver are easy to transport, making them a good option for investors who want to store their assets in multiple locations.
– Liquidity: Precious metals can be sold quickly at current market prices, making them a relatively liquid investment.
– Diversification: Like real estate, precious metals do not correlate with the stock market and provide portfolio diversification.
Collectibles
Collectibles have been around since ancient times, and they include anything from art to stamps to coins. Collectibles are unique. They offer both intrinsic value and the potential for appreciation over time. They also offer several advantages for hard asset investing:
– Appreciation Potential: Over a long period, collectibles have appreciated at a rate greater than inflation. This means that your investment will grow in value without being affected by economic uncertainty or market volatility.
– Diversification: Like real estate and precious metals, collectibles do not correlate with the stock market and provide portfolio diversification.
Benefits Of Hard Asset Investing
There are many benefits to hard asset investing, making it an attractive option for those who want to build wealth over the long term. Some of these include stability and appreciation potential as well as liquidity during times of crisis or uncertainty when other assets may be less liquid due to market volatility. In addition, hard assets can be a good way to diversify your portfolio and protect yourself from economic downturns.
Stability
Hard assets are typically more stable due to their intrinsic value, meaning they are worth something simply because they exist, regardless of the market conditions. In addition, hard assets are often sold quickly for cash, making them a desirable investment during economic uncertainty when the stock market is volatile and other investments are risky
Appreciation Potential
One of the biggest benefits of hard asset investing is the potential for appreciation over time. Many hard assets have historically appreciated at a rate greater than inflation, meaning that your investment will grow in value without being affected by economic downturns or market volatility.
Diversification
Another benefit of hard asset investing is diversification. When you invest in hard assets, you’re not just investing in one thing – you’re spreading your risk across multiple investments. This helps to protect your portfolio against downturns in any one particular market.
Liquidity
Precious metals and collectibles are relatively liquid. They can be sold quickly at current market prices, making them a good option for investors who want to access their money quickly during times of crisis or uncertainty.
Protection Against Inflation
Hard assets offer protection against inflation, which is when the general level of prices for goods and services rises over time. By investing in hard assets, you can ensure that your investment will grow even if the rate of inflation exceeds the rate of return on other types of investments.
Tax Benefits
In some cases, hard asset investments may provide tax benefits. For example, precious metals may be eligible for a lower tax rate when they are sold, and collectibles may be exempt from capital gains taxes.
The Most Popular Hard Asset
Without a doubt, the most popular hard asset is real estate. This has been true for centuries, as owning property is a great way to build wealth over time. There are many reasons why hard asset investing with real estate is so popular, including:
- Rental income
- Asset appreciation
- Hedge against inflation
- Intrinsic value
- Tax benefits
- Financial freedom
Rental Income
Hard asset investing with real estate is a great way to earn passive income. Not only does owning rental properties provide you with monthly cash flow, but it can also be used as leverage for future investments.
Asset Appreciation
Hard assets have historically appreciated over time, and real estate is no exception. When you own hard assets like property, there’s always the potential for appreciation due to inflation or other market factors, such as population growth which increases demand for housing stock. If you hold onto your hard assets long enough, they’ll likely increase in price even if nothing else changes about them (except maybe some maintenance).
Hedge Against Inflation
Investing in hard assets like real estate provides an alternative way of saving money while hedging against inflation. Inflation occurs when the general level of prices for goods and services rises over time, making it hard for people to save money since their dollars lose value. However, by investing in hard assets, you can ensure that your investment will grow even if the rate of inflation exceeds the rate of return on other types of investments.
Intrinsic Value
One of the primary benefits of hard assets is they have intrinsic value. They are worth something simply because they exist, regardless of market conditions or economic fluctuations. For example, a gold coin has intrinsic value because it’s made out of gold – even if there was no economy whatsoever, people would still want gold coins because they’re valuable.
Tax Benefits
In some cases, hard asset investments may provide tax benefits. For example, precious metals may be eligible for a lower tax rate when you sell them and collectibles may be exempt from capital gains taxes. Real estate may also provide tax benefits such as depreciation and the ability to write off certain expenses.
Financial Freedom
If you start a business around investing in real estate or dedicate yourself to investing in real estate full time, you can achieve financial freedom. You’ll have enough money coming in each month to cover your expenses, and you can live comfortably without having to rely on a day job. Hard asset investing with real estate is one of the best ways to achieve this goal, as it provides consistent monthly income and long-term appreciation potential.
Hard Assets for the Future
Investing in hard assets always has been, and likely always will be, very popular, including hard assets such as real estate, gold bullion and silver coins, fine art, or wine.
The hard asset investing discussed here focuses on a physical asset to invest in for the future. These hard assets are tangible things that you can hold onto and use when needed rather than having them sit underutilized.
