I don’t know who needs to hear this, but Elon Musk doesn’t have several billion dollars idling in a bank account somewhere. Part of how he got to have several billions of dollars came from his ability to invest and make his money work for him. You don’t need to be even moderately wealthy in order to send your hard earned dollars out into the world to propagate more money for you, and at the heart of it, that’s what investing is. There’s many different micro-investing apps connected to the stock market you can play with if that’s something that interests you, however, if you want to get the biggest bang for your buck, real estate is the way to go when it comes to making a smart long term investment.
First of all, if you’re viewing buying a home or commercial property as “spending every penny to your name in one go,” you may need to get your perspective checked. Investing in real estate works the same way as investing a set amount of money in your stock portfolio, 401K, or crypto currency. But the thing that makes it feel like a purchase instead of an investment is part of what makes real estate the smartest investment you can make: it’s tangible. I hate to break it to you, but you can’t live in your fancy NFT.
Now, if in your heart of hearts you truly want to invest in an NFT or cryptocurrency, go for it. However, you should make that choice knowing a fundamental truth about it: the value it holds is entirely subjective. Up until the 1800’s, diamonds weren’t seen as valuable, and now they’re one of the more expensive stones you could ever buy. Yes, NFTs have worth for now, but if you want a quick reality check on how subjective their worth is, consider sports memorabilia. One could argue that sports memorabilia is a tangible asset and therefore a wise investment, not unlike real estate. However, who says that rookie card has worth? The people who believe it has worth. What you’d consider a game day ball worth more than its weight in gold could easily get confused by a well meaning spouse or roommate and mistaken for just another baseball.
Stocks, which have a set value that you can see, predict, and measure are more regulated than NFTs and cryptocurrency. However, when you invest in the market, you have to be aware that it’s largely a reflection of the tastes, whims, interests, and actions of many people who aren’t you. You’re essentially playing a game and hoping to win without knowing what the other players will want to do next. For example, the share price for Apple went down when Steve Jobs stepped down. Would you like your money’s ability to make more money be reliant on whether or not one public figure is interested in remaining the CEO of his own company? It’s risky.
Of course, there’s inherent risk in any investment. The trick is picking the risk you want to engage with. What sets crypto apart from the US dollar is that it’s not regulated by the government, but that’s also part of that risk. Your bank will reimburse you if your debit card gets stolen and the thief spends your money. If your digital wallet gets hacked, then what? Who and what is protecting you and your investment? If it’s a substantial amount of money, the FBI will get involved, but if it’s the amount of money an average investor has in their digital wallet? You’re screwed.
Now, what happens if your house is destroyed in a natural disaster? What if you get robbed? You’re protected. Why? Homeowners insurance. Real estate is the smartest investment you can make because it’s tangible and you can protect it in a regulated way, period. During those disastrous circumstances, your homeowners insurance will rebuild your home, pay for a hotel for you to stay in while your home is being repaired, and reaffirm the value of your investment. The money you put into investing in real estate is protected and you don’t get those safeguards in many other investment opportunities. Like any other investment, it appreciates in value and unlike paying rent, you aren’t donating your money to a faceless corporation or landlord that does not care about you – you’re putting your money where it can work for you.
Those were the practical points. Beyond being objectively the best investment you can make with your money – emotionally speaking – everybody needs a place to live. Housing is a human right and nothing beats the feeling of knowing that you own your own home outright; this asset is yours. It opens the doors to many other opportunities to make money and it gives you greater security, a feeling of control, and a sense of belonging in this world. So, if you can invest in real estate, you definitely should.