The Importance of Equity in Your Portfolio

equity in your portfolio archer investors

Here at Archer Investors, we offer amazing alternative investments in the form of Delaware Statutory Trusts (DSTs). DSTs are legal entities where investors own a share in a trust. The trust, in turn, owns property. Thus, investors are called beneficiaries and the properties are known as the beneficiary interests. DSTs are thus considered direct property ownership by the IRS, which makes them great investments for 1031 Exchanges, which is a way to defer capital gains tax on property you’ve sold.

Archer Investors specializes in both DSTs and 1031 Exchanges exclusively as our mission is to bring you the most value in your commercial real estate property investing. Real estate, in general, is considered an alternative investment, which plays an important role in your portfolio. That being said, equity plays a vital role in your portfolio as well. Below, we’ll take a brief look at equity in your portfolio. Contact us today to get started!

THE ROLE OF EQUITY IN YOUR PORTFOLIO

Equity, in a nutshell, is what all of your investments are worth should you need to sell every asset you own. Companies, like individuals, track equity pretty closely, as it is used to help determine the financial health of a company. Equity in investments usually refers to shareholder equity holdings. Equity is the degree of ownership you have in a company minus any debt you hold because of that asset (for example, a loan you took out to pay for it). The most common example people can relate to is the equity in their home.

WHY SHOULD YOU CARE ABOUT A COMPANY’S EQUITY?

Equity is important because if the company whose stock you own is in debt, this will affect how much money you would get if the company went under. Plus, it is a market indicator of how healthy a company is. No company wants to be in debt up to its eyeballs, and if a company is, this is an indication that it is in severe financial trouble. This is also a clue to you, the shareholder, that it might be time to sell your stock in that company in order to ensure you do get your money back.

Owning equity in a company is also the portion of that company that you own. This can allow you voting privileges in board of director elections if your equity is of a sufficient amount. Equity is also a good indicator of a company’s risk. Thus, a positive equity in a company (having enough assets to cover its liabilities) is a good thing. Too much negative equity can make that company a risky investment, which is something you may want to avoid based on your personal risk factor.

BALANCING EQUITY IN YOUR PORTFOLIO

A company having a negative equity doesn’t necessarily exclude it from investing in it. In essence, it all comes down to the total amount of positive equity you have in your portfolio. Obviously, you want a good majority of positive equity in order to have a healthy portfolio and protect yourself from risk. Balance is the key.

CHOOSE ARCHER INVESTORS FOR YOUR PORTFOLIO

Archer Investors can help balance out your equity in your portfolio with DST investments. Call us today to learn more!