The real estate market is a difficult one to invest in long term. A number of hurdles including the management of assets, payment processing and A/P, A/R concerns, as well as picking and choosing which geographical areas to invest in can cause nightmares for newcomers looking for portfolio exposure.
The realities of investing in real estate in a rising interest rate environment are also daunting. To date, the average real estate based mutual fund has declined approximately 7% during the first quarter of this year, due in large part to the rising interest rate environment we now find ourselves in.
As a highly levered asset class, buying into a sector which is highly tethered to interest rates is what some would consider to be a foolish bet in this environment. Over the long haul, however, real estate has proven to be an asset class which closely approximates equities and provides diversification, two key reasons why many affluent investors continue to hold a significant percentage of their holdings in this asset class.
Vanguard Real Estate Index is one place to start for investors looking for exposure to a range of real estate assets which have produced very good results in the past and are poised to continue to perform well over the long haul.
This fund is one of the most highly recommended in its class due to its size and prominence, making this ETF a great place for long term investors to begin their journey.
Invest wisely, my friends.
