Real assets are an alternative investment that includes investments in physical assets such as real estate, infrastructure, commodities, and natural resources. Here are some key takeaways about real assets as an alternative investment:
- Real assets can provide diversification benefits: Real assets have historically had low correlations with traditional asset classes such as stocks and bonds, which can provide diversification benefits to an investment portfolio.
- Real assets can offer inflation protection: Real assets can hedge against inflation as their prices tend to rise with inflation.
- Real assets have varying risk profiles: Real assets can range from low-risk investments such as real estate to higher-risk investments such as commodities.
- Real assets can offer steady income streams: Real assets such as real estate and infrastructure can provide steady income streams through rental income or tolls.
- Evaluate the specific investment: Investors should carefully evaluate the specific real asset investment they are considering, including the potential risks and returns.
- Consider the underlying fundamentals: Investors should evaluate the underlying fundamentals of the investment, such as supply and demand dynamics, to determine its potential for long-term value.
- Diversify across real asset classes: Investors should consider diversifying their real asset investments across different asset classes, such as real estate, infrastructure, and commodities.
- Consider working with a professional: Investing in real assets can be complex, and investors may benefit from working with a professional such as a financial advisor or real estate agent.
- Consider the tax implications: Real asset investments can have unique tax implications, and investors should understand these before making an investment.
Real assets can provide diversification benefits, inflation protection, and steady income streams. However, investors should carefully evaluate the specific investment and consider working with a professional to navigate the complexity of real asset investing. Additionally, investors should consider diversifying their real asset investments across different asset classes and understand the unique tax implications of these investments.