Monday, February 6, 2017

why people love real estate...



Generals are known to burn the bridges by which they have come or ships on which they have travelled to ensure that their men understand that there is no option other than winning.
If they lose, they have nowhere to run. It increases their chances of victory.
In case of real estate, this is precisely the reason that makes investment in real estate profitable.
It is like this battle; you have no option but to win. Keep fighting till victory kisses your feet.
Tbis is because once you buy your house and the moment you step in to live in it, willy nilly it becomes a illiquid asset.
This is because, since you live there, you cannot sell it. So you land up living for long ; in fact very long. 
Whenever, I have asked people about the duration of ownership of their houses, the answers I get range from 15 years to 50 years. Now that is serious investing period.
In the same breath, if I ask them about their mutual funds ownership period, the answers are usually 3 to 4 years. Clearly this kind of investing duration is a losing battle.
Hence building bridges is a great strategy but this cannot be applied in mutual funds investing because of the liquidity it provides.
Liquidity which was meant to be of assistance to investors lands up as the raison d’etre for poor returns.
Since an investor cannot do anything about liquidity (which will continue to be great for mutual funds), the least he could do is hire an advisor and invest through the advisor.
This is because the least that the advisor would do is to stop the investor from redeeming as far as possible.
This may appear trivial but is in fact is one of the Advisor’s key jobs.
So if we can’t burn ships and bridges we might as well hire a Financial Advisor to prevent us, from retreating.
Let’s go all out and win.

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