Multiple Assets

A few days ago I was visiting with a neighbor and we were talking about investing. He mentioned, something I already knew, that he and his wife have zero exposure to stocks and bonds. They have their money in real estate.

I am a big fan of real estate for reasons I will get into in subsequent posts. I am also a big fan, no surprise, of the capital markets. No matter how much you think something is a great type of asset, having all your eggs in that one asset class is a bad idea.

This philosophy is more of a you never know what might happen way of looking at things. Real estate has never gone down a lot and stayed down on a national scale. Some sort of unprecedented decline is always possible. Hey I don't expect that either but anything is possible and if something completely unexpected happens at precisely the wrong time for you, you could be in real trouble, trouble that could have been prevented.

If you are so fortunate as to have a large enough net worth to accommodate stocks, real estate, bonds, commodities, cash and maybe a couple of other things I may be forgetting, you should take advantage of the potential diversification.

Creating one income stream from real estate is great but have other streams of income not tied to real estate could matter at some point in your lifetime.