Scared of Stocks? Buy a House Instead
New research shows that real estate is both a better and safer investment than previously believed.
Safe haven.
Photographer: Preston Mack/Getty Images North AmericaReal estate may be a better — and safer — investment than I thought. This is my conclusion after reading a comprehensive study published this month titled, “The Total Risk Premium Puzzle.”
To revisit our previous understanding, it has been widely accepted that equities yield real returns much higher than those of government securities. By most estimates that gap is about 6.5 percentage points; while government bonds might offer an average return of about 1 percent a year, for example, equities return about 7.5 percent a year (the precise figures depend on the data sample). Equities, however, are much riskier, and so there is a trade-off between risk and return. So far, so good.