The main goal of investing is to earn returns. No investor really looks forward to investments that yield losses and even if such an investor exists, that would not be the norm. However, in reality, losses occur; economies experience downturns and stock prices dip.
How then can you protect yourself from making losses on your investments? While you cannot control the direction of the financial markets or investment prices and returns, you can mitigate against investment risks by diversifying your investment portfolio. One of such ways is through real estate investment.
Even the best diversification strategy does not guarantee a hundred percent protection against total investment losses, however, investment diversification may reduce losses and cushion the impact of any loss experienced by some assets in your portfolio.
Financial markets are volatile and dependent on a lot of factors such as government policies, politics, interest rates, inflation rates, economic cycles and much more. While there are expectations of profits and returns, the uncertainty in investment performance still remains.
Investment diversification is the risk management strategy geared towards mitigating and reducing losses due to market uncertainties and fluctuations by having a diversified portfolio of assets.
For example, if you put all your investments into just one company’s stock, you stand a chance of losing some or all of your money if the company makes losses or goes bankrupt.
Investment diversification in this scenario would mean you making the decision to invest in multiple company stocks so that if one company’s stock value falls and causes you to lose money, your investment in the other companies may not lose value and even yield returns.
Your investment diversification strategy may even include investing in different financial markets and across different industries.
If you want to diversify your investments and broaden your portfolio you may begin by investing in multiple company stocks, exploring alternative assets like real estate, including fixed income assets like bonds or government bills into your asset allocation or buying into commodities.
Diversifying your portfolio doesn’t just mean buying into any and every available stock, fund, bond, property or investment vehicle, it should involve careful consideration of what your financial expectations are, and it should also depend on your investment objectives.
The asset allocation you choose should reflect your risk appetite, expected returns, length or period of investment and your financial status.
If you have little to no knowledge about how these investment assets work, it is recommended to use the services of experienced professionals who advise you on how best to spread your assets in your investment portfolio according to your risk appetite and return expectations.
When you diversify your investment portfolio, you may limit the exposure to losses and the risk of eroding your entire investment principal or any returns you may have made and re-invested.
If you spread your investments across different company stocks or even across different classes of assets such as bonds, commodities or real estate, the chances of you losing all your money across all investment platforms are low. Also, high returns in certain investment assets can offset the losses made in other assets.
Here are a few reasons why you may choose investment diversification:
You want to manage your exposure to investment risks and losses
You want to take advantage of different investment return opportunities
You want investments with different levels of liquidity or maturity
You want to participate across different financial markets and assets
Diversification may indeed help you make the best out of your investments. It is a strategy that may help manage your portfolio and cushion effects of market fluctuations or potential losses.
You can diversify your investments across different asset types and classes. Investment diversification may also be across different countries, terms to maturity, liquidity etc.
Investing in some assets may prove an aggressive growth strategy, they may yield higher returns but in turn have greater risks, on the other hand, some investment assets are more conservative in terms of returns but may be less risky.
Depending on your risk appetite, you can either have a mix of growth and conservative investment assets. An investor with higher risk appetite would most likely invest in more aggressive assets that are expected to yield higher returns even though risky.
You may choose to diversify and invest within or across different financial markets such as: money market, stock market, fixed income market, commodity markets, real estate market.
You can choose to invest across local and international financial markets to diversify and prevent country specific risks. Your portfolio may include a mix of short-term to long-term investments or a mix of fixed income and variable returns investment assets.
Your diversified portfolio can also be spread across different types of funds such as mutual funds, exchange traded funds (ETFs) or real estate funds and trusts. There are a lot of investment diversification options to explore.
The real estate market provides an alternative investment path other than a conventional equity investment or bond investment. Similar to other financial markets, returns are not guaranteed and there could be risks involved.
However, investing in real estate may be a good way to diversify your investment portfolio. The real estate market offers opportunities to invest in either residential or commercial properties or through real estate trusts, funds and programs.
Real estate investments paired with other asset classes can provide an avenue to have a balanced portfolio that mitigates against extreme losses while pursuing returns and capital gains.
If you choose to diversify your investment portfolio through the real estate market, you can do so by: buying properties directly, investing in a real estate trust or fund such as a Real Estate Investment Trust (REIT), the Delaware Statutory Trusts or buying into a real estate program.
Including real estate in your asset allocation is definitely an option to diversify your investment portfolio but you need to be aware of the fact that it is not as liquid as other conventional assets such as stocks and bonds.
In real estate investing, as with other investments, you need to be knowledgeable about the possibilities, risks, opportunities and returns as well as the methodology involved.
Investing in properties requires a high level of expertise or professionalism in order to take advantage of opportunities or maximize returns where applicable.
When choosing a real estate investment company to partner with, it is advisable to consider the following:
A reputable real estate investment company has the required expertise to explain property investment options, carry out adequate due diligence and efficiently manage any properties under their portfolio.
The Stax Capital team is made up of highly experienced professionals who are committed to assisting you achieve financial freedom through your real estate investment portfolio.
Stax capital provides opportunities in real estate investment through the following investment vehicles:
If you want to take advantage of the 1031 exchange and effectively manage your real estate investment returns, Stax capital offers investment opportunities through Delaware Statutory Trusts (DSTs).
DSTs are an attractive channel for real estate investment, they can provide an advantage for deferring capital tax gains through the 1031 exchange for like-kind investments.
Real estate investing through DSTs, while promising, involves complexities and intricacies that can best be managed by professionals such as the Stax Capital team.
If you are looking to make real estate investment into a like-kind property or own fractional ownership in real estate properties, you can explore the Delaware Statutory Trusts managed by Stax Capital. As an investor looking to diversify your investment portfolio, get access to the possibilities and flexibility offered by the real estate market.
Another avenue to take advantage of tax incentives through real estate investment is through Qualified Opportunity Funds (QOFs).
Partner with Stax Capital to help you strategize on real estate investment channels through QOFs based on real estate in Qualified Opportunity Zones (QOZs). As professionals, we help you explore and plug into the advantages of deferring, reducing or even eliminating property capital gains tax.
With over a decade of being involved with Direct Participation Programs (DPPs), The Stax Capital team operates with due diligence and best management practices to provide various effective real estate investment platforms.
Alternative investments in real estate vehicles such as Delaware Statutory Trusts, Qualified Opportunity Funds and Direct Participation Programs provide a means for portfolio diversification.
These investment opportunities may provide potential tax advantages and/or higher investment returns, however, there are associated risks. Some of these risks include liquidity risk, dependence on professionals for decision making, and other market risks.
It is important to work with an investment partner like Stax Capital to help you understand any associated risks while helping you to take advantage of possible benefits in the real estate market.
This website is for informational purposes only. This website does not provide investment advice or recommendations, nor is it an offer or solicitation of any kind to buy or sell any investment products. Securities offered through Stax Capital, Member FINRA & SIPC. Stax Capital is located at 7960 Entrada Lazanja, San Diego, CA 92127. Contact us toll free at 844-427-1031. Private Placements and Direct Participation Programs are speculative investments and involve a high degree of risk. An investor could lose all or a substantial portion of his/her investment. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment in Private Placements and Direct Participation Programs. Private Placements and Direct Participation Program offering materials are not reviewed or approved by federal or state regulators. Investors should not place undue reliance on hypothetical or pro forma performance summaries. Investors must conduct their own due diligence and should rely on the advice of their own financial, tax and legal advisors prior to making any investment decisions.
The contents of this website are neither an offer to sell nor a solicitation of an offer to buy any security which can only be made by prospectus. Investing in real estate and 1031 exchange replacement properties may not be suitable for all investors and may involve significant risks. These risks include, but are not limited to, lack of liquidity, limited transferability, conflicts of interest and real estate fluctuations based upon a number of factors, which may include changes in interest rates, laws, operating expenses, insurance costs and tenant turnover. Investors should also understand all fees associated with a particular investment and how those fees could affect the overall performance of the investment. Neither Stax Capital nor any of its representatives provide tax or legal advice, as such advice can only be provided by a qualified tax or legal professional, who all investors should consult prior to making any investment decision. Pursuant to SEC rule 501 of Regulation D, prior to engaging in substantive discussions regarding DST specific investments, investors must first be qualified as an accredited investor, by way of meeting certain income or net worth requirements.
Past performance is not an indication of future returns.
This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of Stax Capital or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.
There are substantial risks in the DST Investment program. This type of investment is speculative, is illiquid, and carries a high degree of risk – including the potential loss of the entire investment. See the “risk factors” in the Private Placement Memorandum for a complete discussion of the risks relevant to DST offerings. Investors have no control over management of the Trust or the property. There is no guarantee that investors will receive any return. Distributions may be derived from sources other than earnings. The property will be subject to a Master Lease with an Affiliate of the Sponsor. The property will be subject to the risks generally associated with the acquisition, ownership and operation of real estate including, without limitation, environmental concerns, competition, occupancy, easements and restrictions and other real estate related risks. The properties may be leveraged. The Manager, the Master Tenant and their Affiliates will receive substantial compensation in connection with the Offering and in connection with the ongoing management and operation of the property. The Manager, the Trust, the Master Tenant and their Affiliates will be subject to certain conflicts of interest. An investment in the Interests involves certain tax risks.