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Long-Term Asset with the Highest Returns | Real Estate Investing


May 10, 2021

Harsha Moole, M.D., MBBS


What is the long-term asset that will give you the highest returns? So many long-term investment opportunities are available in the market, but real estate investing beats them all. Have you ever wondered why all the investors that seem to be successful have an investment in real estate? It is because, in the long run, you can steadily build sustainable wealth through real estate.

If you are considering venturing into real estate as a doctor, then you are putting your money in the right place. So many investment options are available to you. You can decide to buy properties or invest in real estate trust funds. Whatever your choice may be, having a real estate portfolio is a wise investment move.

What Are Long-term Assets in Investment?

There are different classifications of investments based on the time of maturity. An investment could be short-term, medium-term, or long-term. A long-term investment is held for more than one year. A long-term investor is, therefore, someone willing to bear some level of risk for a long time to gain more rewards.

Different investment portfolios are considered to be long-term investments. Common among them are real estate investment and stocks. These investment portfolios take a more extended period to mature and yield higher dividends with time.

Why Real Estate Should be Treated as A Long-term Asset

There are so many reasons why real estate should be treated as a long-term investment. As a doctor looking out for investment opportunities, you may be wondering if you should go into real estate in the long term. If that is the case, then here are some reasons why you should treat real estate as one:

#1. Real estate yields higher returns with time.

The demand for properties will continue to grow as the world population increases. What this means also is that the value of properties will significantly increase also in the long run. Real estate investment, therefore, ensures that you earn a higher return on investment as the value of your property increases with time.

#2. The risk level is considerably low.

Agreeably, there are some measures of risk associated with real estate. But when compared with stocks, it is very low. This low-risk factor makes it ideal to hold real estate investment for a more extended period. This is especially true for conservative investors. If your risk tolerance level is pretty low, then real estate investment is the perfect long-term asset for you.

#3. Real estate investment is not highly volatile.

The high volatility of some assets makes it very risky to invest considerable amounts in them for an extended period. This is, however, not the case with real estate. The industry is relatively steady and predictable. As a result, you can project your income in the long run.

#4. Real estate is ideal for long-term wealth building.

An average physician desires to retire in comfort. Retiring in comfort is a long-term financial goal, and real estate is a vehicle to take you there. If you purchase a property with an initial down payment of 20%, the cash flow will be lower at the beginning. But once you can pay off the mortgage, the cash flow will increase massively and bring in a high return with time.

#5. Appreciation in value.

The value in real estate is better appreciated if it is done with the long run in mind. Land as an asset appreciates with time. The same goes for property. So, when you buy a property today, you can rest assured that it will be worth more in years to come. This makes real estate a good place to store value.

Long-Term Asset

Why Do Investors Invest in Long-term Assets?

So many factors can influence an investor’s choice to invest in a long-term asset such as real estate. Let’s take a quick look at some of those factors.

  • Lower volatility: Assets held over a long period are less volatile than investments with a short maturity period. Most highly volatile assets on a short-term basis tend to bring higher returns in the long run.
  • Investing, in the long run, helps to weather the storms in the market: An average investor who is not so knowledgeable about the market will pull out at the first sign of turbulence in the market. But history has shown that those who manage to stay in the market weather these storms and make higher returns. The higher returns are a sure reason why people opt for long-term investment.
  • Tax advantage: There are tax advantages associated with long-term investments. The tax rate on the returns on long-term investment is way lower than that of short-term investments, taxed at the same rate with regular income.
  • Investors choose long-term investment to bypass transaction cost: Actively trading or holding your investment for a more extended period can also mean lower transaction costs.
  • Meeting long-term goals: Investors choose long-term investing to meet long-term financial goals. These goals could be retirement savings, buying a house, or funding your children’s college education. Whatever the long-term financial goal you are aiming to achieve, long-term investing may be your way out.
  • To beat inflation: If your goal is to beat inflation, then investing on a long-term basis is vital. This is because long-term assets yield higher returns in the long run than other assets. The higher the returns, the more you will be able to maintain the value of your money.

How Can Doctors Benefit from Real Estate as A Long-term Asset?

Having real estate a long-term asset can be beneficial to doctors in the following ways:

  • It ensures a steady flow of cash: There are so many things that affect the value of a real estate property. One of such is the location of the property. If you can get it right from the start, you can be sure of a steady cash flow. This is because the value of properties with the right maintenance appreciates with time. More value, therefore, means more money over time.
  • Tax advantages: The tax advantages attached to break estate investing cannot be ignored. It is one reason why many high earners, including Doctors, opt for real estate portfolios. Doctors earn high, and as a result, the amount deducted as tax from their earnings is on the high side. But with real estate, you can write off some expenses before tax deductions to your advantage.
  • Value appreciation: Investing in real estate helps you to take advantage of the appreciation of the property. Who wouldn’t want to get higher returns from their investment?
  • Immunity against inflation: Your investment in real estate will keep increasing. This is because if the properties are properly maintained, their value will appreciate as time goes on. So, you do not have to worry about possible economic fallout as a result of inflation.

Conclusion

A long-term investment is what every physician entrepreneur should consider. This is especially if you want to build wealth in the long term. Notwithstanding the fluctuations that are witnessed in the market, you can build a robust portfolio with real estate investment and secure your financial future.

 

Here at PhysicianEstate, we welcome all physician entrepreneurs to learn about commercial real estate investments, rental property investments, and wealth generation. We encourage all physicians to eventually become real estate physician investors. We know a great deal about Who – What – Why – How. 

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Legal Disclaimer: This is not investment advice. I am not a legal and/or investment advisor. This is my personal blog, and all information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, or stock picks, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. These are my views, it is not a production of my employer, nor is it affiliated with any broker/dealer or registered investment advisor. While the information provided is believed to be accurate, it may include errors or inaccuracies. To the maximum extent permitted by law, PhysicianEstate disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. You should consult with an attorney or other professional to determine what may be best for your individual needs. Your use of the information on the website or materials linked from the Web is at your own risk. 

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Authored by Harsha Moole, M.D., MBBS

Hey there! I hope you enjoyed reading this blog. PhysicianEstate is my brain child and passion project. I run this platform to empower entrepreneurially motivated physicians to make financially educated investment decisions and discuss asset protection strategies. Lots of important but free content here and here! If you have any questions or if you are interested in partnering with me, let’s connect! hmoole@physicianestate.com

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