It’s been a rough year for the S&P 500 index, which is generally considered to be a measure of how the stock market is doing as a whole. As of this writing, the S&P 500 is down about 19% year to date, but the index has also plunged into bear market territory several times this year, which is indicative of a 20% drop or more.
Now the reality is that this isn’t the first time the market has gone through a rough patch. And historically, investors who have loaded their portfolios with S&P 500 index funds have fared pretty well in the long run, even with years of poor performance in the mix.
But if the idea of putting more of your money into the S&P 500 doesn’t seem like an appealing option right now, it could be time to look at investing in real estate. Not only is that a great way to diversify, but you might enjoy your share of profits by investing outside the stock market.
A solid alternative
Stocks have long been a good bet for investors with a long-term wealth-building strategy. But right now, stocks are in a serious slump, so it pays to look at real estate instead.
In fact, many people have seen their portfolios lose value since the start of the year. But homeowners have seen the opposite. Property values are up right now across the board. And in May, home sale prices were up almost 15% from one year prior, according to the National Association of Realtors. So if you’re able to find an affordable rental property, you could set yourself up to enjoy a steady stream of income.
Right now, the demand for rentals is high because homes have become so difficult to afford. We can thank a combination of sky-high prices and rising mortgage rates for that. So if you’re able to scoop up a rental, there’s a good chance you’ll be able to command a nice amount of rent for it. And if you hold on to your rental for many years, there’s a strong chance the value of that property will increase in time.
You can also look at buying a property in disarray and flipping it at a profit. The real estate market currently lacks housing inventory in a serious way, so if you’re able to pull off renovations at an affordable price point, you might manage to squeeze out a nice profit with a quick fix and flip.
Don’t limit yourself to stocks alone — especially now
There’s no reason to assume that the S&P 500 is doomed. Right now, it’s going through a rough patch, and while that could last awhile, it shouldn’t be a cause for panic. But if you’re eager to stay away from the broad stock market right now, it pays to look to real estate as a viable investment alternative, whether that means buying a rental property and becoming a landlord or purchasing a fixer-upper, rehabbing it, and marketing it to an eager buyer.