Finding Investment Income in a Low Yield Environment
Interest rates have been falling since the early 1980s to their current all-time low levels. Unfortunately for investors in fixed income interest rates could always fall further. There’s nothing stopping U.S. bond yields from going negative as they have in other developed countries all across the globe.
Investors in fixed-income assets basically have two choices in this environment: (1) You can adjust your return expectations accordingly by planning for lower returns in bonds than investors have become accustomed to; or (2) You can invest in riskier bonds or bond funds that pay a higher yield, such as corporates, mortgage-backed securities, or junk bonds. All this from a recent article in Forbes.
But there’s a third option for investors seeking income generating assets: multifamily real estate. This asset class has long delivered strong stable returns with low risk and unique tax advantages. These characteristics have led some investment professionals to call multifamily real estate the perfect investment. Still many investors are not familiar with multifamily real estate or aware that investment in this asset class can be made passively via private firms. For other investors who know — multifamily real estate is the key to their financial independence.
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Note: Note: I am a partner and investor with OpenPath Investments, a social impact real estate investment firm. OpenPath investment opportunities are for accredited investors. The numbers used in the above example are for illustrative purposes. Actual results from OpenPath real estate investments can vary. I am not a CPA or professional financial advisor. All opinions are my own.