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Real Estate as a Store of Value


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Store of value is a function of an asset that can be saved, retrieved and exchanged at a later time without any risk of losing it and also retains its purchasing power into the future. Wealth is the total of all stores of value monetary and non-monetary assets.

The most common store of value in modern viewpoint has been currency, precious metal (Gold, silver etc.) and real estate. The underlying reason for using this storing medium is that it has a better way of managing the risk associated with it. Most people would say money is one of the best ways to store value because of the ease of exchanging it for other goods and services without time wastage, but it can quickly be affected by hyperinflation mostly in developing world.
However, real estate is a better means of storing value for investors if the property is strategically located in choice areas, well-built (architecturally and structurally) and free from any form of disaster. A good house will gain value with inflation as well as provide passive income for the owner for the number of years it was kept as rental property. What this means is that the day it is sold off the proceeds will have the same or more purchasing power than it possess years back when it was used for buying the property. The passive income generated less maintenance over the years would have served as interest or dividend for the investor. On the other hand if the money is kept in a conservative investment (Treasury bill, note or bond), it will just be barely keeping up with inflation with all the interest added.

The main setback real estate has as a store of value is the time spent looking for a buyer. This is the reason while it is very important to buy properties at choice area where the demand is or will be very high in the nearest future. Properties located in choice area have been known not to decline in value even during financial crunch. Precious metals will likely not be affected by any risk of devaluation because they are rare and have high demand.

Real estate and Precious metal like gold are very good investment when the other form of investment becomes too risky and unstable. The difference between them is that real estate is an income generator while still keeping up with inflation the same way gold keeps up with inflation. The down side of gold as an investment is the ability to store it away safely.

So where would you rather keep your money and have peace of mind either to grow your wealth or to have it available to you in the future when the need arises for liquidity?

 The Relevance of a High Oversite Concrete/Foundation of a House
 What I Wish I Knew Before Investing In Rental Properties
 Pros and Cons of Renovating a House

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Comments

  1. UnknownJuly 16, 2019 at 7:50 AM

    These are good things to know.

    ReplyDelete
  2. UnknownJuly 16, 2019 at 7:54 AM

    Before this, I thought the bank was the best place.

    ReplyDelete
  3. Alen j. WilliumNovember 6, 2020 at 11:32 PM

    Very helpful I found this blog..Thanks
    We buy houses kansas city.

    ReplyDelete
  4. UnknownJanuary 14, 2021 at 5:52 AM

    I am impressed. I don't think Ive met anyone who knows as much about this subject as you do. You are truly well informed and very intelligent. You wrote something that people could understand and made the subject intriguing for everyone. Really, great blog you have got here. Pittsburgh wholesale real estate company,

    ReplyDelete
  5. UnknownJanuary 27, 2021 at 12:15 AM

    Wow, cool post. I'd like to write like this too - taking time and real hard work to make a great article... but I put things off too much and never seem to get started. Thanks though. sell a home in florida

    ReplyDelete
  6. michelJanuary 29, 2021 at 5:21 AM

    clarity on this important subject can be easily observed...
    condo for sale

    ReplyDelete
  7. AnonymousFebruary 14, 2021 at 1:02 AM

    US property, I would like to say that this blog really convinced me to do it! Thanks, very good post.

    ReplyDelete
  8. HarisFebruary 21, 2021 at 6:41 AM

    I admire this article for the well-researched content and excellent wording. I got so involved in this material that I couldn’t stop reading. I am impressed with your work and skill. Thank you so much. real estate forms ontario

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