Two historic events in the US banking industry unfolded within a 48-hour span in early March 2023. Silicon Valley Bank, boasting $209 billion in assets, succumbed to an unforeseen collapse on the 10th. Merely two days later, the third-largest failure followed, with Signature Bank, holding an estimated $110 billion in assets as of December 2022, folding unexpectedly. These incidents were an alarming wake-up call for millions of Americans who had considered bank deposits the safest refuge for their hard-earned money.
Financial crises like these require us to rethink our ideas about financial security and consider different options. In this article, we will discuss one alternative: investing in real estate. Unlike most financial investments that are abstract and fluctuating, real estate is a tangible asset that offers both greater security and potential for steady growth.
The Security and Tangibility of Real Estate Investments
Investing in real estate presents an avenue to put your money into a physical, touchable asset. Unlike digital banking figures, real estate comprises brick, mortar, land – assets that you can see, touch, and feel. This tangibility can provide investors a significant degree of comfort and security, especially in the face of unprecedented banking failures.
Higher Returns: Beating the Bank Rates
Traditional bank accounts typically yield annual interest rates of less than 1%. In stark contrast, real estate investments offer substantially higher returns. These returns are driven by two major factors: rental income and property appreciation. With an astute investment strategy, consistent cash flow from rental income, coupled with the long-term growth potential of property appreciation, can significantly outweigh the meager interest accrued from a savings account.
Inflation: Real Estate as a Protective Shield
With every passing year, the value of money diminishes, a phenomenon known as inflation. However, real estate prices have historically moved in the opposite direction. Especially in coveted locations, property prices tend to rise, effectively offering an inflation hedge. Consequently, investing in real estate can help you maintain and even grow the real value of your money over the long term.
Tax Benefits: Maximizing Post-Tax Returns
Another advantage of real estate investments lies in the array of tax benefits. Real estate investors can leverage depreciation and deductions for mortgage interest and property taxes. This can significantly reduce your overall tax liability, thus boosting your after-tax returns. In the world of investments, it’s not just about how much you earn, but also about how much you keep after taxes.
Diversification: Spreading the Risk
Investing in real estate allows for portfolio diversification. By spreading your money across various types of assets, you mitigate the risk associated with putting all your eggs in one basket. In light of the recent bank failures, the benefits of diversification cannot be overstated.
Passive Income: Earning Without the Work
One of the most enticing aspects of real estate investments, particularly via syndications such as TEM Capital, is the potential for passive income. By investing wisely, you can generate a regular income stream without actively working for it – a truly appealing proposition for both working professionals and retirees alike.
The recent banking collapses serve as a reminder of the inherent risks within the traditional banking system. These events have shone a light on the potential benefits and security offered by real estate investments. If the prospect of capitalizing on the benefits of passive real estate investing resonates with you, we’re here to help. Let’s discuss opportunities tailored to your specific needs and accreditation status. To start this journey, book a discovery call.
Disclaimer: Please check with your tax and legal professional as Sponsors do not provide tax or legal advice and the above is not intended to or should be construed as such advice. Your specific circumstances may, and likely will, vary.