Vancouver real estate investing should be in balance with its alternatives. Return and risk should be balanced. The following article provides an example of an alternative. The article is excerpted from Real Estate Investing for Dummies Canada.
Vancouver real estate is the topic of most conversations in BC. Duncan’s Vancouver mortgage business is gives him the insight to provide topical articles on the state of Vancouver real estate.
Vancouver real estate typically stands out from other investments because of its stable and long-term nature, and the chance to derive a steady income from assets month by month. These three characteristics make it a preferred choice for many, but if you’re not up for the risks inherent in real estate investments you might be safer with an alternative.
We’re all for you making real estate your primary investment choice, but a mix of modesty and sheer prudence compels us to recommend a balanced portfolio. Because real estate carries its own measure of risk, having a diversified portfolio that includes a mix of investment vehicles is in your interest – just so your entire nest-egg isn’t wiped out by, say, fire, flood, locusts, or a band of determined termites. If you need help, consult one of the many reference works available, such as Investing for Canadians For Dummies by Eric Tyson and Tony Martin (Wiley).
Fixed-term Investments
Bank accounts, guaranteed investment certificates (GICs), and bonds are stable investments with minimal risk and a guaranteed return. Fixed-term investments are great if you don’t have a lot of cash to play with or need readily accessible funds, but if you’re holding a lot of them, consider real estate a step up to a more sophisticated form of investing.
The difference in return can be significant, with real estate often appreciating at a rate three to five percentage points above inflation. And unlike real estate earnings, interest received on term deposits and bonds is fully taxable as income and also subject to inflation. A GIC may offer a 4-percent return on your cash, but if inflation is 3 percent, you’re seeing an effective return of just 1 percent on those dollars. Even if you’re in the lowest tax bracket, you’re probably just breaking even.
About the Reviewer
Vancouver mortgage insights is provided by Duncan Seward a registered Vancouver mortgage broker with TMG. He helps clients in North Vancouver, Surrey, Vancouver, Coquitlam, Maple Ridge, Burnaby and Langley with their mortgage questions. He is an expert in BC mortgage matters. You can check out regular mortgage updates at his blog page Vancouver Mortgage Rates.