Real Estate vs. Stocks

[vc_row][vc_column][vc_column_text]Which investment does 145 years of data prove to be better?

Every asset class and company has their reasons for why they are unequivocally the correct choice for investors. In an environment like this, it is natural to become distrustful and overwhelmed.
[/vc_column_text][gem_quote style=”4″ no_paddings=”1″]One of the toughest things to do in the investing world is separate fact from fiction.[/gem_quote][vc_column_text]So what should you do? Your best bet is looking at third-party data. Doing so eliminates much of the bias you find from those standing to profit off of you and allows you to make the best decisions for your future.

The Rate of Return on Everything

You don’t have to sift through massive amounts of data to come to valuable conclusions. Researchers have done it for us in the famous “The Rate of Return on Everything” paper. The basis of the study is a simple question: Which investment has yielded the highest returns over the past 145 years?

To answer this popular question, researchers analyzed 16 countries and used a variety of mathematical techniques to normalize data over time. What they found was a winner, a close second, and two more classes bringing up the rear.

Their returns rates are as follows:

Real Estate – 7.05%
Equities – 6.89%
Bonds – 2.5%
Treasury Bills – 0.98%

The Risk Vs. Reward Trend

Financial analysts often speak in cliches. One of the most common is higher risk investments lead to higher returns. If you look at our bottom three assets, you see this trend take form.

The lowest return is the treasury bill, with almost no risk associated. A step up bonds, providing a slightly higher return percentage. Lastly, we have equities gaining much more than the other two over long periods but presenting with a significant amount of downside.

Sharpe Ratios

Fortunately, you don’t have to crunch the numbers yourself to understand risk and reward. Nobel Memorial Prize winner, William Sharpe, created a system that does just that. The resulting value is called the Sharpe ratio. The way it works is that a higher number signals a better investment.

The following are ratios for three of the assets discussed above:

Real Estate – 0.7
Equities – 0.27
Bonds – 0.2

The result is clear: Real estate is a much smarter investment than any of its competition. But, what does this mean in the real world?

Real Estate: The Best of Both Worlds

Now, let’s talk about why real estate is such an excellent investment without complex ratios. It comes down to two factors.

First, real estate has the highest returns because it generates income and also experiences appreciation. This effect gives you consistent passive income throughout your investment and allows you to sell for more than your purchase price if you choose to do so.

Second, the risk is low. Investors generally expect to be subjected to elevated risk for the gain of higher returns. While that idea applies equities, it doesn’t apply to real estate.[/vc_column_text][gem_quote style=”4″ no_paddings=”1″]Real estate is one of the safest investments.[/gem_quote][vc_column_text]A few factors contributing to this effect are income generation, appreciation, consistent demand, and inflation resistance. Ultimately, the reason real estate is the best of both worlds is it has incredibly high returns and surprisingly low risk.

What It All Means For You

The conclusion of the data is quite clear. Real estate is one of the most secure investment options. As a result, people are increasingly buying Luxury Homes and apartments to rent out and generate passive income. Even so, some people do not know whether real estate investments are safe. The answer to that question will depend on your financial goals, but it is likely a no.

The following are a few reasons why:

Diversity: Though real estate is incredibly safe; you still might want to diversify your investments with other types of assets. In theory, doing so will make your portfolio more resilient.

Capital: If you have a relatively small amount of money to invest, you might find the barrier to real estate too high. One way to avoid this hurdle is through private real estate investment funds.

Investment Length: You might invest a chunk of money with the intent of using it in just a few years. In this case, you would likely opt for a more liquid asset with little to no risk associated.

While you may want to diversify with other assets, the most prudent way to grow your portfolio with low risk and high returns is to prioritize real estate as your highest allocation. Real estate allows you to build streams of passive income that will enable you to create generational wealth.

When in doubt, trust hard data from third parties over the marketing teams at various investment companies. The data doesn’t lie.[/vc_column_text][/vc_column][/vc_row]

DISCLAIMER

This is neither an offer to sell nor a solicitation of an offer to buy the securities described herein.

THE OFFERING IS MADE ONLY BY THE PRIVATE PLACEMENT MEMORANDUM. THIS MATERIAL MUST BE READ IN CONJUNCTION WITH THE PRIVATE PLACEMENT MEMORANDUM IN ORDER TO UNDERSTAND FULLY ALL OF THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES TO WHICH IT RELATES AND MUST NOT BE RELIED UPON TO MAKE AN INVESTMENT DECISION.

The offering of securities described herein will not be registered under the Securities Act of 1933 (the “Securities Act”) or the securities laws of any state and the securities are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and such laws. Neither the Securities and Exchange Commission nor any other federal or state agency has passed upon the merits of or given their approval to the offering of the securities, the terms of the offering or the accuracy or completeness of the offering materials. The offering of securities is being made only to Accredited Investors, as defined in Rule 501(a) of Regulation D of the Securities Act. An investment in the securities is highly speculative and involves substantial investment and tax risks. All prospective investors must review the Private Placement Memorandum in its entirety, including the section entitled “RISK FACTORS” before investing.

An investment in Four Peaks Capital Partners, LLC is highly speculative and involves substantial risks, including, but not limited to: (1) Four Peaks Capital Partners, LLC success depends upon the performance of the Manager in managing Four Peaks Capital Partners, LLC and its investments, including decisions involving investment of Four Peaks Capital Partners, LLC’s capital and the acquisition and disposition of properties and there is no guarantee Four Peaks Capital Partners, LLC will raise enough capital to perform its investment objectives; (2) There can be no assurance that a prospective investor will receive any return on investment in Four Peaks Capital Partners, LLC and/or realize any profit on a prospective investor’s investment in Four Peaks Capital Partners, LLC and a prospective investor could lose all or a substantial portion of its investment; (3) The Manager has limited or no net worth and there can be no assurance that the Manager will have sufficient funds to meet its obligations to Four Peaks Capital Partners, LLC or to otherwise financially support Four Peaks Capital Partners, LLC; (4) The Class A members and Class B members have no power to take part in the management of Four Peaks Capital Partners, LLC and have limited voting rights and will not have the opportunity to evaluate or approve any of Four Peaks Capital Partners, LLC’s investments; (5) The Class A Interests and Class B Interests will be illiquid, and the transferability of the Class A Interests and the Class B Interests will be substantially restricted; (6) Four Peaks Capital Partners, LLC may not have the cash flow necessary to make distributions to its members; (7) Four Peaks Capital Partners, LLC will not diversify its investments and, therefore, the success of Four Peaks Capital Partners, LLC will be dependent upon the success of the properties; (8) There are substantial risks associated with real-estate investments and ownership of storage facilities and mobile home parks; (9) There are various potential conflicts of interest among the Manager and its Affiliates and their principals.
Investors must read and carefully consider the discussion set forth under the section entitled “RISK FACTORS” in the Private Placement Memorandum for a complete discussion of these and other risks pertaining to this investment.

These projections are speculative and based on specific assumptions, which, if incorrect, would cause the actual returns to differ materially from the projected returns. You should review the entirety of the assumptions and risks set forth in the Private Placement Memorandum.

Any underlying assumptions and any forward-looking statements herein may not be accurate, the projections herein shown may not occur, and actual results could differ materially due to risks and uncertainties that are beyond the Company’s ability to control or accurately predict. To the extent, the information in this communication conflicts with the information in the Private Placement Memorandum, the information in the Private Placement Memorandum shall govern.

The securities offered are an illiquid investment and involve a high degree of risk; Investors should be able to bear the loss of some or all of their investment. Investors should read and understand all of the risks and the entire Private Placement Memorandum before making a decision to invest. Past performance is no indication of future results and there can be no assurance that Four Peaks Capital Partners, LLC will be able to execute the investment objectives for the Properties or the Offering.

This material is for general information purposes only and does not constitute legal, tax, investment or other professional advice on any subject matter. Information provided is not all-inclusive and should not be relied upon as being all-inclusive.
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