- Forex 40 +
Anyone who wants to start investing in tangible assets usually uses their real assets as an investment and protects their assets from inflation.
But how profitable and, above all, how safe are these investments? Which real assets are worthwhile at all? That’s what this article is about.
Before we jump too deeply into the subject, we should clarify the term material value. Real assets are values that have a real value that one could theoretically touch with one’s hands.
The best-known tangible assets are real estate or raw materials such as gold.
However, tangible assets, which have a collector’s value due to their rarity, also belong to such investments. There are numerous stories on the internet from collectors who auctioned off rare and unimportant things like comic books at unbelievable prices and were thus able to generate spectacular returns.
But as already mentioned, most people are interested in these investments because of the value retention, especially in uncertain economic times such as the corona pandemic .
In which real assets can you actually invest ? In the following, we take a look at the most diverse forms of investment in such assets.
Gold has offered proven protection against inflation for centuries .
Gold is a valuable precious metal that is used for jewellery and in the electronics industry. Gold is particularly suitable as a protection against inflation due to its limited occurrence .
That is why the gold price rises whenever the bid price falls or the prices on the stock exchange fall. The gold price also increased significantly during the corona pandemic.
Nowadays, investors can easily invest in precious metals such as gold or their little brother silver through providers such as ETFinance.
However, gold is also a speculative investment as its price also depends on fund managers and speculators. In addition, gold does not make a profit , such as the share of a company that pays dividends.
Real estate is also a very classic investment. The prices are rising constantly, and if this property is rented, it meets monthly rental payments from. Oftentimes, people take out large loans in order to be able to afford their property.
In fact, this is not necessary if you invest with the help of so-called REITs , which you can trade on ETFinance just like precious metals.
However, real estate can also form a bubble, which can significantly decimate the real estate value if it bursts. Just think of the 2008 financial crisis. Expertise or good advice is therefore an advantage.
Collectables offer an unusual investment option. Classic collector’s items are postage stamps, comic booklets and action figures.
There are numerous extraordinary stories about this form of investment. For example, people who discovered an old collection of stamps in their attic sold it to a collector for several thousand dollars.
With these collector’s items, however, it should be remembered that they are anything but liquid, as only collectors buy such values at high prices.
A far more complicated investment is raw materials . Raw materials are, for example, crude oil, gas, water, but also corn, wheat, rice and soy.
As a rule, it is not easy to invest in such tangible assets, right? Where should the raw materials be stored? On the stock exchange, these values are often only available in the form of risky futures contracts.
This can be remedied by commodity stocks or ETFs, which instead of direct investments, invest in companies that specialize in the respective value.
Land also offers an investment opportunity, mostly in the form of arable land or land . This investment, if managed, can generate income.
This is somewhat reminiscent of investing in real estate. In the case of land, however, there are no rents – unless you opt for a long-term lease – but plant-based raw materials, which in turn are subject to the price on the stock exchange.
It is therefore a real asset that is not recommended for beginners or penniless investors.
Land prices are very different in SouthAfrica. In some places, prices have exploded, like in Berlin or Munich, but here too, specialist knowledge is required. Pests can ruin a crop and land can be expropriated.
Forests are similar to investing in land. Research shows that many wealthy investors invest in forests. In SouthAfrica, however, currently there are national forest areas available for purchase.
As a result, the price has skyrocketed, so many people are also investing in forests abroad.
When managed by forestry, forests produce goods and deliver potential dividends in the form of wood. In addition, returns can be achieved through price increases .
These are usually very high when projected over decades , but forests can also be destroyed and devalued by pests or droughts.
An unusual real asset investment is a rarity . Theoretically, everything that is rare and sold out can be passed off as a rarity. The best-known values are works of art, whiskeys, vintage cars and Lego. A 70 year old classic car is priceless these days.
But not everything will develop into a rarity in the long term, which is why such values are highly speculative for inexperienced investors. In addition, it should be noted that the price of rarities depends largely on the item’s condition.
A small scratch on the surface of the classic car can significantly affect its value .
In some cases, a material asset cannot be bought directly, for example raw materials. In this case, investors also have the opportunity to invest in shares of companies that produce or process precisely these raw materials.
Oil companies and food giants such as Nestlé deliver stable stocks that are growing continuously and producing dividends.
These corporations are also successful because their goods are needed around the clock, and they, therefore, have a stable cash flow that does not dry up even in times of crisis.
The shares of companies fluctuate in value depending on daily events. The oil price fell sharply during the corona pandemic, as the lockdown severely restricted mobility.
The food industry, on the other hand, even recorded an increase in sales. In the long term, it can be seen that many large corporations are a safe haven for protecting their assets.
Let’s be clear: investors can invest in many tangible assets . In the case of material assets, the purchase price and the item itself are also important.
You have to decide for yourself in which material assets you should invest. It also depends on your situation and your available capital. You should not take out loans for this type of investment.
If you want to invest in real classic assets, such as gold or real estate, you can do this in three steps with the online broker ETFinance.
Investors can invest in physical gold or real estate REITs without any problems, which is a real speciality for such a platform.
First of all, you need to create your own profile on ETFinance. Various information about the user is requested.
You also have to answer various questions about your profession, your experience with the stock market and your willingness to take risks.
Usually, this only takes a few minutes .
Now you pay the desired amount free of charge into your ETFinance account and wait until the money is ready for use in your depot.
Various forms of payment are available for this. PayPal or Sofortüberweisung are likely to be the preferred variants. New customers should only note the minimum deposit of $ 250 .
|Investing in real assets with a credit card||✔️|
|Invest in real assets with PayPal||✔️|
|Invest in real assets with Skrill||✔️|
|Invest in real assets with a bank transfer||✔️|
|Invest in real assets with Neteller||✔️|
|Invest in real assets with UnionPay||✔️|
Now nothing stands in the way of your investment. In the ETFinance search field, you simply enter a commodity, another material asset or a stock code.
In the case of gold, you are offered physical gold as an investment option, in which you can now invest with just a few clicks.
When it comes to REIT, however, some research is necessary: Although there are very few REITs in SouthAfrica, the situation is different globally.
There are REITs for private real estate, commercial real estate, industrial real estate, office real estate, etc. With such a wide range, you should first find out which REIT is best suited to your portfolio.
As soon as you have found a suitable REIT, type in its name in the search field at ETFinance and invest with no problems.
The selection of ETFs, such as oil ETFs or water ETFs, can also help here.
Real assets provide support in times of crisis by maintaining their monetary value while the capital market is experiencing massive price drops.
However, a distinction should be made between tangible assets that continuously produce value and those that only gain in value over the years or even stagnate.
Real estate and farmland are an example of tangible assets that produce value through rental income or crops. Collectables produce no value and only experience an increase in value over the years.
Therefore, the different property values for different goals are suitable: w he is assets only protect or want to keep may well invest in tangible assets that produce no further goods or values , as this is associated with a reduced workload.
However, if you want to build up a fortune, you should primarily invest in high-yield tangible assets.
A major disadvantage of real assets is that they often take up a lot of space or are not liquid.
Anyone who seriously invests in tangible assets and uses these tangible assets as financial investments must have specialist knowledge and be able to care for these tangible assets properly. Otherwise, their value would be impaired.
In addition, many regional and national regulations must be observed when buying forests, real estate and land.
In addition, capital is bundled in a value that can be adversely affected by environmental influences.
Some investors invest parts of their assets in exceptional values such as sneakers, watches or even Lego sets.
They buy real assets that are still available at normal retail prices and speculate on a high collector’s value in the future.
But is it wise to use this material asset as an investment for the future? Which of these real assets are worthwhile at all?
When it comes to sneakers, the condition and the rarity and the background count: A limited-edition is often worth thousands of dollars after decades, whereas perfectly normal sneakers cannot show any significant increase in value.
The same applies to watches and whiskey: The most important thing here is the brand and condition.
A good whiskey should be stored in a cool place, and an old brand watch must not have a single scratch to not lose its value. Those who are not familiar with this area should keep their hands off such investments.
Lego is another collector’s item. There are larger Lego sets worth 500 euros twenty years ago and could be sold for several thousand euros today.
Although this sounds good in theory, there are only a few buyers for this. Only die-hard Lego lovers and collectors would pay such sums.
Bonsai trees are also a precarious investment. While these trees are worth a lot on the market, they also require intensive and complicated care.
If you are not an expert in this field, you should again leave your fingers behind. After all, a dead tree does not bring any returns.
Investing in real assets for beginners?
In which real assets should you invest as a beginner if you are interested in this topic?
The safest tangible asset for beginners is REITs. Although there are duds and rivets here, too, REITs are considered safe because they represent real value, and your properties produce monthly rent from your property.
We recommend larger REITs that have been on the market for a long time.
Commodities, on the other hand, are always a risky investment for beginners. Apart from precious metals, these are also hardly available on the stock exchange.
While you can be sure that gold will gain in value in times of economic crisis, it will fall again quickly as soon as share prices rise or other market movements take effect.
Real value stocks are easy to obtain and not as speculative as other real assets, but they are subject to market fluctuations and can lose value in the short term.
Some real value stocks from large corporations such as Nestlé, Nike or Exxon Mobil offer good protection against inflation . They enjoy a long-term price increase and pay dividends, so they produce real value.
But some real value stocks, such as recently stocks of gold mine operators or alternative energies, have suffered massive and long-term price drops in the past .
So put your horse on established large corporations, which will not go away anytime soon.
We compare the fees of the largest brokers with the following example:
With these assumptions, we now compare the fees of Libertex, ETFinance & Plus500 :
|Deposit||for free||free||for free|
|Purchase fees||€ 2.20||free||€ 3.80|
|Holding fees||for free||free||0.05%|
|Sales charges||€ 2.20||spreads||€ 3.80|
|Total fees||€ 4.40||Reasonable||€ 27.10|
Anyone who invests in real assets does so primarily for reasons of security, which a real asset offers. Therefore, investors should also invest their money in safe tangible assets and avoid speculation.
Anyone who follows this advice will certainly not be disappointed by material assets. You should also diversify. The safest are liquid tangible assets that require little or no maintenance and tangible produce real values such as goods or rents.
Beginners can invest in REITs or safe real asset stocks for this. These real assets will always retain a certain real value and serve an important purpose.
In the case of other tangible assets such as raw materials, collectables or high-maintenance investments, it is often a matter of luck. If you don’t know your way around here, it is easy to fall on your face.
It is essential to recognize that not all material assets are the same. Real assets differ in their liquidity, maintenance and security.
In addition, some tangible assets produce other real assets and thus generate a cash flow. Beginners are best placed to invest in safe and liquid assets.
But even a speculative real asset investment for fun, for example, in a single Lego set, is not wrong as long as the budget is limited.
However, almost all tangible assets have one thing in common: They are only effective and profitable in the long term. Such an investment hardly makes sense in the short term. Every investor should be ready to hold their real value for more than ten years.
We recommend investing via the well-known and popular online broker ETFinance, which has commodities in its repertoire and numerous stocks and ETFs that can map real assets.
Real assets have an absolute value, which theoretically is always preserved. Thus, its value is not linked to stock market events and offers protection against inflation. In the long term, such investments provide an opportunity to build up a fortune. However, only certain tangible assets are suitable for most people.
Liquid and safe investments such as REITs or real asset stocks are worthwhile for the secure accumulation of assets. However, in general, investments in real assets are only profitable in the long term.
Real estate prices are constantly rising, but they can also burst with a real estate bubble and cause a loss in value. In addition, real estate causes a lot of additional costs, such as repairs. Finally, if you cannot find tenants for your property, you will lose another source of income.
Gold generally offers protection against inflation, but it is also subject to fluctuations. In addition, an investment in physical gold causes custody costs. In addition, the gold price can sometimes fall by 50 per cent during an economic boom, as historical prices show.
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