Why Realty Investment Gets Better As You Age

When your active income stops, investing in stocks becomes risky

- B Venkatesh

The attractiveness of real-estate exposure improves as you age. That is, investment in real estate is more useful as you approach retirement than when you start your career. Here is why.

First, rental yields are low. This is because of the large investment value due to expensive land prices. The expected returns from a portfolio of the same value containing stocks and bonds are higher. So, why invest in real estate when you can improve your risk-adjusted returns on investment?

That said, at retirement, your active income stops. You, therefore, become averse to investing in stocks because you may not be able to bring in additional capital to make good any shortfall in your investment value due to declines in the stock market.