Recently, Archer Investors discussed the importance of equity in your portfolio. We discussed that when you invest in companies, you want to choose companies that have a positive equity value more so than a negative value. When choosing investments, you want a good variety in order to spread out your risk (commonly known as diversification). Asset allocation is the amount of a particular type that you hold, which is another way to manage your portfolio.
Archer Investors specializes in 1031 Exchanges and DSTs (Delaware Statutory Trusts) exclusively. DSTs are legal trusts whereby you, as an investor, own an interest in. This trust then owns property, which is then eligible for a 1031 Exchange. A 1031 Exchange is a legal way to avoid paying taxes on the sale of a piece of property by the IRS. In essence, you can change your property for another one without having to report it to the IRS for tax purposes. This can save you a lot of money in the long run because your investment can continue to grow tax-free for perpetuity no matter how many times you exchange it. Below, we’ll take a look at why holding equity in your portfolio is a great diversification and real estate investment strategy. Contact us today to get started!
THE VALUE OF OWNING EQUITY IN YOUR PORTFOLIO
Equity is basically the amount of shares you own in a company. This can also be called stocks. Equity can also refer to the actual value of your investment should you sell it and then pay off all of your liabilities. Thus, for accounting purposes, equity is calculated as the difference between assets and liabilities. Most of us can relate to this as homeowners. The equity in your home is the amount of money you’d get if you sold it after you paid off your mortgage. Private equity is the amount of stake you have in a private company. For our purposes, we’ll take a look at equity as stocks.
Stocks As Growth Investments
With greater risks come great rewards. Thus, stocks have a higher long-term growth potential because stocks are inherently more risky than money in a money market fund, for example. Over the long haul, if you buy stocks and hold them, you will most likely earn money barring any significant market force outside the norm.
Stocks as Diversification Assets
Stocks can play a key role in your diversification strategy of your portfolio. You need some risk in order to make a return that will outpace inflation, and stocks serve that purpose. You can either invest in individual stocks, or you can choose to invest in mutual funds, which are a bunch of different stocks managed by a fund manager. The great thing about mutual funds is that you get a top-notch financial advisor for literally pennies on the dollar and with little work on your part.
Stocks Mixed With Other Investments
To be truly diversified, you need to have a good mix of investments, from the traditional investments of stocks and bonds to alternative investments of real estate and precious metals. You also will want a good bit of extremely safe debt, such as money market funds as well. By partnering with a financial advisor, you can have your risk factor analyzed and begin to put together the perfect well-diversified portfolio, including commercial real estate investing, for you.
HOW DOES DSTs AND 1031 EXCHANGES HELP WITH DIVERSIFICATION?
Real estate in general plays a very important role in diversification. For one part, real estate tends to be one of the more stable alternative investments, being that there is only a certain amount of land, and land tends to hold its value considerably well, despite the twists and turns of the economic climate. Real estate is a great way to also generate great passive income as well by renting your residential or commercial properties out.
When you invest in a DST and/or a 1031 Exchange, you can not only defer capital gains tax potentially indefinitely, but you can periodically review your real estate holdings and decide if you need to diversify them. You can invest in multiple DSTs, which can hold multiple real estate properties, further helping you diversify your portfolio and property investment strategy. The sky’s the limit when it comes to DST and 1031 exchanges.
CONTACT ARCHER INVESTORS TODAY
Archer Investors focuses exclusively on DSTs and 1031 Exchanges, feeling that we can provide you with the best investment advice and real estate investment strategies on these financial instruments versus when we have all of our hands in different baskets. If you do a 1031 Exchange with our real estate investment opportunity, we invest your money in institutional-grade commercial properties that have a “hands off” management style and provide a higher cash flow. This is another great way we can help you diversify your portfolio and garner you an on-average higher rate of return. We have seen all of the commercial properties that you will be investing in, providing a level of investment security unmatched in the industry. We truly care about your financial well being, and it is our immense desire to see you all succeed.
If you are looking for a higher cash flow, better tax shelters, and a higher rate of average return, contact Archer Investors today. We help you move from a residential property investor to a commercial property investor easily. By using DSTs, you can own a large, institutional commercial property as an owner in the trust. This allows the smaller investor a chance to earn a bigger piece of the real estate investment pie. Some of our many offerings that we offer commercial investments in include office buildings, self storage units, assisted living, apartment communities, and more, all of which are located throughout the United States.
With higher income and growth potential and the benefits of diversification that DSTs offer, you can rest assured that not only will you see more growth, but that your needs will be taken care of with us. Contact our commercial real estate investing team today!