In 2012, the Standard & Poor’s 500 index was trading at the same levels as it had in 1999. That year, the industry celebrated a four-year high, which really just meant that people who invested money before the downturn of 2008 had finally restored the original value of those investments. However, the value of this amount actually decreased due to inflation, meaning that investors still lost money during those years.
Between 1999 and 2012, a period of 13 years, zero return was achieved; in fact, negative returns occurred when one factors in inflation. Many people believe that mutual funds provide a safer investment than other vehicles, but more than 80 percent of mutual funds performed even worse than the market during this period.
Part of the insecurity involved in such investments relates to the fact that they can dissolve virtually overnight because of ethics violations, or even rumors on the trading floor. However, hard assets, such as multifamily apartment buildings, do not come with the same insecurity. These assets will not disappear overnight, and in the event of disasters like fire or flood, they are protected by insurance. Furthermore, hard assets like commercial real estate provide excellent tax benefits that are not linked to less tangible investment options.
