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The Investment No One Brags About

In the longstanding debate between stocks and real estate, a major point of contention has been liquidity.

Generally speaking, stocks are liquid, real estate is not.

Those on the side of stocks will argue that liquidity enables an investor to be nimble, allowing for flexibility to adjust to changes and risks as well as allowing for capital preservation.

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Illiquidity Saves Investors

In the longstanding debate between stocks and real estate, a major point of contention has been liquidity.

Generally speaking, stocks are liquid, real estate is not.

Those on the side of stocks will argue that liquidity enables an investor to be nimble, allowing for flexibility to adjust to changes and risks as well as allowing for capital preservation.

MAXIMIZING PRIVATE INVESTMENT OPPORTUNITIES

It’s no secret that many of the country’s most prominent university endowments and private foundations have been hugely successful at investing and providing outsized returns for their constituents.

Their success is attributed to their allocating more of their investment portfolio to private investments including non-venture private equity, venture capital, private real estate, private oil & gas/natural resources, and precious metals.

Your Stock Portfolio Could Doom You in the Next Recession

Those who love Wall Street investment products tout the average annual return of 9.5% for the S&P Index over the past 20 years as a reason to invest in public equities. However, the 9.5% figure doesn’t paint the entire picture because that 20-year average doesn’t account for volatility.

For example, in 2017, the S&P 500’s total return was over 19.7%, but for 2018, it was minus 6.2%. What the pro-Wall Street crowd won’t mention is that to compensate for volatility, bonds are usually thrown in the mix as a hedge against downturns like in 2018.

Pay $0 in Capital Gains Taxes

There’s a lot to get excited about with Opportunity Zones but let’s be careful not to lose the forest for the trees. Don’t get caught up in the tax benefits, and forget to evaluate the viability of the deal.

For the uninitiated, here’s a primer on Opportunity Zones.

Ever since the passage of the Tax Cuts and Jobs Act of 2017 (“TCJA”), there’s been a tremendous amount of buzz surrounding the Qualified Opportunity Zone program created to spur economic development and job creation by investing in businesses located in economically-distressed communities.

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