| When I was six years old, I didn’t understand what my mother meant when she warned me, “Don’t put all your eggs in one basket.” Hopefully, you know what she meant! Harry Markowitz knew. Seventy years ago he applied this adage to investing when he published what we now know as Modern Portfolio Theory. Using more baskets, aka diversification, you can reduce your risk without reducing expected returns. Some refer to this as the ‘free lunch’ of investing. I was reminded of this when helping a client evaluate approaches to owning a real estate investment. It follows that: * Holding a single property carries the most concentrated risk. (One egg in one basket) * When exchanging a single property for shares of a Delaware Statutory Trust (DST), even if the DST owns several properties, your risk will be concentrated in investments with similar characteristics. (A few eggs in one basket) * If you later exchange shares of the DST for shares of a publicly traded REIT with a large portfolio of investment properties, your ownership will be limited to a single stock concentrated in investments that share common characteristics. (Only eggs in one basket) *Investing in an effectively diversified portfolio of publicly traded securities will reduce your risk by spreading it among many companies with different characteristics. (Many things in many baskets) The same holds true for Restricted Stock or Employee Stock Purchase Plans. Your earnings and investments are concentrated in a single company, your employer. There are many examples of bankrupt companies whose employees invested in their employer. While everyone may have lost their jobs, those who invested in their employer lost everything, but those who diversified their investments kept their wealth. History and logic show that broad diversification is safer than owning one property, company, or type of investment and doesn’t reduce expected earnings. Website: Lifetime Legacy Services  Unlocking Your Property Potential Your real estate holdings are more than assets; they’re the cornerstone of your financial journey. We see beyond properties; we see opportunities. Whether you want to optimize returns, streamline property management, or unlock hidden value, we tailor real estate strategies to your lifestyle and retirement aspirations – whatever they may be. Let us help you turn your real estate portfolio into a powerful engine driving your financial success. Learn more about: Real Estate Strategy Speaking Engagement Over the next few months, I am offering complimentary educational seminars with industry leaders for their clients or employees. A CPA firm we’ve engaged with recently has decided to utilize this opportunity as part of their ongoing education series for their clients. Join us in reviewing a presentation designed to help clients recognize the issues and feel confident with this strategy. Please let us know if you would like to arrange for a presentation or know others who want to expand what they know and provide to their clients. Contact us: Presentation, Webinar, Speaking Engagement Email: client.services@lifetimelegacyservices.com Have you read my book? “Investing 3.0” by Rick Raybin Rick Raybin, CEO & FounderRick Raybin, Managing Director of Lifetime Legacy Services, is a Certified Financial Planner™. Lifetime Legacy Services (LLS) is an independent, fee-only financial planning and advisory firm that focuses on putting the needs of its clients above all else. “This is my purpose in life.” – Rick Raybin Rick has been providing financial advice since he began his career as a CPA. In 2006 he launched LLS as Lifetime Capital Group, a Registered Investment Advisor. In 2017, he published “Investing 3.0: What the Creators of Index Funds Discovered and How to Profit from It”. Rick is passionate about serving his clients well and pursuing excellence in everything he does – from work to developing educational content for investors to spending time with his family and loved ones. About Rick Raybin Did you find this information helpful? If you know anyone you think might benefit from our advise and expertise, please feel free to forward this to them. Thank you! |
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