“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world” —Franklin D. Roosevelt
One question I get asked a lot is, what is the best investment I can make right now?
People are waking up to the notion that inflation is coming (and is already here!).
The government has been printing money like crazy, and inflation is already rearing its ugly head.
Because of this, it is so important to get out of cash and find other assets to invest your money into. It’s not the time to be sitting on your reserves.
As Robert Kiyosaki says, “cash is trash.”
Now, why would anyone say that?
Well, as more cash gets printed the rest of it becomes worth less.
But there is a silver lining to all of this.
By acting now, you can position yourself to take advantage of one of the greatest transfers of wealth that we’ve ever seen.
But that raises the question… what is the best asset for you?
Let’s find out!
Cryptocurrency
You would have to be hiding under a rock not to be hearing all the craze about Crypto. From dog-meme coins, to the art world, and to all the get rich dreams, Crypto is everywhere.
It reminds me of the dot com bubble. Every day there are huge movements, crazy speculations, and the space is so new that people are wanting to get in while it’s hot.
Pros
The first pro is that some Cryptos have limited supply. Bitcoin, for example, has a hard cap of 21 million coins. There will never be more than that.
This system works as an inflation hedge.
If there isn’t the ability to make more coins, the value is less likely to be inflated.
It is important to note, however, that not all Cryptos have hard caps. For example, Dogecoin has no limit, therefore it is more susceptible to inflation.
Another pro is that Crypto is an international product.
They are subject to less regulation, and you can more easily transfer your coins.
Cons
The biggest con to Crypto is that the market is all speculative.
What is the value of one of these digital coins? Is it $0 or $1 Billion?
We don’t know, and because of that, the value can change very rapidly.
On top of this, there isn’t a real value to these coins. There is no physical asset.
The reason this is important is with looking towards the future. How many more kinds of coins will be made? What is the next new development?
With physical assets, you know that no matter what changes, you will still have that real tangible thing and that thing will have an inherent value. We don’t know that with Crypto.
The next con is one that I may get some flack for. The technology of Crypto is complex.
I got a book at the library about Crypto and how it works, and it was over 300 pages of code-speak!
That’s not to say that you can’t understand it, but the complexity of the product leaves it open to more opportunities for issues.
Technology is often susceptible to theft and manipulation. Just think about how often people’s credit cards get stolen!
While blockchain technology has a reliable ledger system, we don’t know if there is some kind of back door that can be created. Or if other issues may arise as the technology develops and changes over time.
You can also lose all your coins/assets if you lose your password or your computer.
You don’t want to be like my friend that bought bitcoin when it was cheap, and now he can’t access it when it is worth millions!
Summary
The best aspect about Crypto is that some coins like Bitcoin have a limited supply, and that creates an inflation hedge.
The problem with that, however, is that the market is speculative. So even though there is the inflation hedge, that is negated by the rapid ups and downs of the market.
It’s like going to Vegas and putting it all on red.
You can win big, but that (bit)coin flips both ways. If you have the money you feel like you can comfortably lose, go for it.
I’m not a fan of Crypto, and I recommend you do something else with your money if your goal is long-term growth.
Gold (And Silver)
Pros
The first pro with gold and silver is that they are real assets. They are physical things that you can hold in your hand, and they will hold onto their worth as long as you have the asset.
They are also an inflation hedge. Since there is a finite quantity of gold and silver, it protects its value against any inflation, and it holds onto its value.
Some people claim that gold and silver are volatile, but really that is the change in the value of the dollar, not gold and silver.
As the value of the dollar changes, it can buy more or less gold. But the value of the gold stays the same.
For example, 100 years ago, the value of a quality men’s tailored suit was one gold coin. And now, converting dollars to gold, a similar suite still costs that same amount of gold.
Precious metals hold their value.
There is also the history of gold and silver.
They both have been recognized as money for over 5000 years, and only recently have we turned away from them as the primary form of purchasing power.
You could go almost anywhere in the world, and people would acknowledge the value of it.
Cons
The biggest con to gold and silver is their physical storage.
If you have a lot of your wealth tied into it, you’ll have to have a large space for it. We can’t all have a massive home vault like Scrooge McDuck for all our gold!
There are options, however. One is that you can store it in a home safe if that works for you.
You can also put it in a safety deposit box, but make sure to get it with insurance.
There are also options of private vaulting where you pay an annual 0.5% of the value of the gold/silver to store it.
The other con is one that was already mentioned. Precious metals can be seen as volatile.
But, as I explained, the value of gold or silver isn’t changing, it’s the changing buying power of the dollar. More than almost any other asset, gold and silver hold their value.
Summary
The key to getting into gold and silver is to not look at them as an investment.
What do I mean by that?
Well, gold and silver hold their value, they do not gain value like other investments. Gold and silver ARE actually money.
So the way to look at gold and silver is to hold onto your wealth, to have a certain amount that is in reserve and won’t become worthless as inflation gets worse.
So the key is to own some gold and silver. Some financial advisors say 2-10% of your net worth.
But you could always own more! Do whatever is right for you!
It is important to note, however, that if you invest in gold and silver you should get the real asset, not ETFs.
You might think that the ease of getting in and out of an ETF is preferable. However, that ignores the added counterparty risk of paper assets.
Basically, counterparty risk is the possibility that something happens to the other party that holds the asset. Kinda like a company on the stock market, if the bank or group that manages the ETF goes under, you may lose everything.
Real Estate – Multi-family Value Add Deals (specifically)
We’re going to talk about the cream of the crop of real estate, multi-family.
The reason being that there are so many advantages of this class of real estate.
It’s also a comparable investment since you can invest passively.
If you want to own but don’t want to be a landlord, then passive investing in multi-family is a great option
Pros
One of my favorite advantages to multi-family real estate is the tax advantages.
Basically, having this asset allows you to reduce your taxes, defer your taxes, or completely write off your taxes.
This is perfect for high earners and real estate professionals.
On top of this, these investments have higher returns than most other investments. Things vary from deal to deal, but 10-20% is not uncommon.
Compare that to the average 7% return of the stock market, and you can see the advantage of this investment right away.
Like other real assets, multi-family real estate is also an inflation hedge. Because you have a real asset, the value of it will rise with inflation.
And if you have debt with the property, you can also pay off that loan with the inflated currency. It’s almost like shorting the dollar. You are paying off the loan with the less valuable dollar.
Cons
One of the downsides is that this asset is that it is illiquid.
Unlike stocks where you can quickly sell and get cash, these assets are a long-term investment. They have a much longer holding period.
Typically, you will have your money in the asset for 3-7 years. But if your plan is for long-term growth, then this isn’t really an issue.
Another downside is the low level of control.
This was something I had a hard time adjusting to. I came to multi-family from renting out single-family homes, so the adjustment to letting someone else do the work took getting used to.
This is a double-edged sword, however. You’re not having to be the one having to be taking phone calls or doing the hard work of keeping up the property. But if you are like I was, it can be difficult to relinquish control.
Summary
Multi-family syndication is a great asset to own. There is a consistent cash flow, the rate of return is high, and there is a hedge against inflation.
The biggest downside is the time that your money is tied into the asset, but if your plan is for long-term investing and growth, then that negative works towards your advantage.
The best tip I can give you with this asset is to try it out.
Many people are nervous about investing in something they aren’t fully familiar with.
But think about it, what is more traditional than investing in housing? The only reason we think of stock as “traditional” is the big investment firms spending billions to make you think that.
Getting involved in a deal is easy, and once you begin, you’ll see all the benefits.
The Verdict
Cryptocurrency is experiencing a huge amount of volatility. The best use case for Crypto is short-term speculative investing, putting in only the amount you’re willing to lose completely.
As it stands, the volatility and lack of physical assets don’t bode well for long-term investments.
Physical gold and silver on the other hand are key to holding onto your wealth.
While they may not really be an investment since they don’t gain value, having a sizable amount of your wealth in gold and silver works as an amazing hedge against inflation.
But the real winner of this is multi-family real estate.
Unlike other real estate, you can get involved passively. You can even gain wealth over time, unlike gold and silver. There are also the tax benefits and the hedge against inflation with multi-family.
Being a real, physical asset has its many perks.
Multifamily real estate is the best investment you may have never tried — or even heard of.
But if this is enough to get you to want to learn more, then you are in the right place.
I have plenty more information to help guide you in your multi-family investing journey.
Check out our special report about investing. It compares the stock market to real estate, and it also includes how the pandemic affects your investment future.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
