REAL ESTATE INVESTMENT

Franck Nicolas

Chapter 8 in Investment Strategies for Retirement, 2019, pp 233-258 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Whilst traditional asset classes make up the bulk of most portfolios, other assets can complement them, adding additional sources of return and enhancing diversification. Alternative investments, include non-traditional assets such as:Commodities: The commodity universe includes three broad categories:Energy such as oils, gas, coalMetals with industrial metals (such as copper and iron) and precious metals (such as gold, silver, platinum)Agriculture such as grains (wheat), softs (sugar) or livestock (cattle)Private equity: refers to companies whose securities are not listed on the stock exchange. Private equity is a risk asset. Its risk level and potential returns are higher than thoses of public equities.Hedge funds: Hedge funds are not really an asset class. They are a group of actively managed funds with various specificities (asset classes, investment technique, short selling, underlying, liquidity, leverage).Infrastructure: Infrastructure is essentially buildings and structures required for the functioning of the economy. It includes systems of transportation (roads, railways), water, electricity, telecommunication, energy and sewage.Property: Property investing can play both a role in our investment portfolio and as a separate retirement solution. Owning our house and a portfolio of residential properties are two long-term savings solutions. One challenge of property investing is that each property is expensive. The two common means to solve this are property funds, investing in direct Commercial Real Estate (CRE, direct property fund pools together the money of many investors to purchase a diversified portfolio of CRE), and Real Estate Investment Trust (REIT’s that pay high dividends, so they can fulfil a role of an income source in portfolios) that can be considered as two separate asset classes…

Keywords: Retirement Investment Strategies; Pension Financing; Retirement Planning; Personal Finance; Retirement Savings; Asset Management (search for similar items in EconPapers)
JEL-codes: D14 J13 (search for similar items in EconPapers)
Date: 2019
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