How Can You Protect Your Investments From Events Like Brexit?

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Today I wanted to talk a little about Brexit, the U.K.’s decision to leave the European Union. The night before the vote, Wall Street predicted that the U.K. would stay but those who wanted to stay lost by a 2% margin.

Wall Street does not like uncertainty and, if you have a 401K, you probably felt some real pain the Friday after the vote came through, especially considering that the market fell by 800 points. That’s why today, I want to talk about building wealth.

As a society, we’re trained to put money into our 401Ks when a single event, like Brexit, can entirely decimate your portfolio. How can you make yourself immune to global events or insane behavior on the stock market?

I am fortunate to know many multi-millionaires. These people have made money in the real estate market, not the stock market. They understand the stock market and they do not like not having control of their money.

Stocks are a very important part of any portfolio, but I think you also need to invest in some real estate. No matter what is happening in the world, someone still has to rent an apartment. Not only that, real estate is tangible wealth. You can even add value to it by making certain upgrades.

In fact, I’m closing in two days on a multi-family rental. That property will have huge positive cash flows. If I bought that building for $170,000 in cash, my return would be 13.75%, even after I pay out taxes, insurance, and more. I would still have a better return than I would in the stock market, and that’s not even including appreciation on the building! That’s the beauty of real estate.

As money flows out of stocks and into bonds in the wake of Brexit, mortgage rates have come down. Now is a great time to take out a 15 to 30-year mortgage.

If I buy that building, which is 20% down and figure $5,000 or $6,000 in closing costs, that’s about a $40,000 investment. After I pay my debt service on that mortgage and my property taxes, my return is 40% on that $40,000. In about two years, I will have my entire investment on that property back. Again, that is not including appreciation.

When you figure in the equity build-up, appreciation, and positive tax returns over the course of that mortgage, my return on investment is close to 50% on that building.

If you’re not investing in real estate right now, I really think you should consider it. It’s a great way to diversify your portfolio and become more immune to the stock market and other events that could decimate your 401K.

I also wanted to share my latest Barbara Corcoran commercial with you. Watch the video above to check it out!

If you have any questions, just give me a call or send me an email. I would be happy to help you!