Stability vs. Returns
Experienced investors understand that diversification is critical to optimizing portfolio performance. In the face of recent economic uncertainties—rising inflation, fluctuating interest rates, and instability in banking systems—many individuals have become hesitant to invest. However, history demonstrates that those who pursue stable investment avenues, such as multifamily real estate, during volatile times often achieve lower risk and higher long-term growth potential.
Volatility Analysis
Public Investments: Greater Risk, Higher Volatility
Analyzing annual returns from 2000 onward across various asset classes—including stocks (S&P 500), bonds (Bloomberg Aggregate), publicly traded real estate trusts (NAREIT), private commercial real estate (NCREIF), and multifamily real estate (CoStar Multifamily)—shows a clear disparity in risk levels.
While stocks and publicly traded REITs have achieved impressive historical highs, they also endured some of the sharpest losses, particularly during events like the Great Recession. Over the past 20+ years, these assets have shown significantly higher volatility compared to private multifamily real estate.
Multifamily real estate investments offer less volatility than stocks and REITs, are not correlated to the stock market, and offered better annual returns than bonds in all but two years since 2000.
Returns Comparison
Comparing $10,000 investment performance
Returns Comparison
Multifamily Real Estate: Consistent Stability and Strong Returns
Multifamily real estate investments demonstrate reduced volatility compared to stocks and REITs. They are also less correlated with the stock market, offering a reliable alternative. Since 2000, multifamily investments have consistently outperformed bonds in nearly every year,
Performance Over Time
The $10,000 Test: Multifamily Outpaces Other Investments
A hypothetical $10,000 investment made in 2000 showcases how multifamily real estate delivers superior growth while maintaining greater stability than traditional stocks or REITs. This steady performance highlights its value as a cornerstone of a well-balanced portfolio.providing a more dependable and rewarding option for investors seeking both stability and growth.
Most investors will benefit from a diverse portfolio with a mix of high-growth and stable investment types. If private multifamily investments aren’t part of your asset mix, it might be time to revisit your strategies.
Diversify for Success
Most investors benefit from a portfolio that blends high-growth opportunities with stable assets. If private multifamily investments are missing from your strategy, now may be the time to reassess and incorporate this essential component for balanced, long-term growth.
Sources
- “CoStar”
- “REIT Data.” Nareit, May 8, 2023. Link
- “S&P 500 Historical Annual Returns.” MacroTrends. Accessed May 5, 2023. Link
- Thompson, Michael. “Bloomberg US Aggregate Bonds Annual Returns.” UpMyInterest. Accessed May 5, 2023. Link
- “U.S. NCREIF Property Index Returns 2022.” Statista, February 23, 2023.
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