On Thursday, I hosted the latest session in Apprise’s “Ask Me Anything” webinar series: “Are You Missing Roth IRA Opportunities?” Please click this link Passcode: oF4L52#h if you would like to view the recording.
Interest in real estate investing is common. Clients and prospects like the idea of generating passive income by diversifying into real estate. If you own the right property, real estate investing can be profitable. But it also comes with many stresses and risks, including the following:
· Can you find a tenant?
· Who will manage the property?
· What if you have a bad tenant?
· Can you get a low-rate mortgage?
Other than our family home, we have limited our real estate investments to publicly traded real estate investment trusts (REITs). According to data cited in this week’s first article, publicly traded REITS generated stronger returns than private real estate investments during the period from 1987-2016. Those of you who may want to be landlords may want to read this week’s first article. I also consider this week’s fifth article – “The Algebra of Wealth” – a must read.
Some technology stocks have lagged recently amid fears of higher inflation and rising bond yields. The Nasdaq briefly fell into correction territory (down at least 10%) on March 4th. After falling a bit lower on March 5th, the tech-heavy index has rallied sharply. It ended Thursday up more than 8% above its closing low.
Why the turnaround? Recently released muted inflation data has calmed nerves about the interest-rate outlook. New data released this week showed that the consumer-price index, which measures what consumers pay for everyday items, only increased a seasonally adjusted 0.4% in February, in line with expectations.
While technology shares have fallen from their highs, the S&P 500 Index closed Thursday at a record-high high. So far this month, the S&P has gained about 3.4%. For the year it has increased by 4.9%.
Value shares, which have lagged their growth counterparts for a considerable period, have shown some recent signs of life. As hope for the re-opening of the economy increase, businesses that struggled during the pandemic have rallied. A better economy can also lead to increased profits.
We continue to believe it best to maintain our process and remain focused on the long-term.
Here are the links to this week’s articles as well as a brief description of each:
1. Opinion: The Downsides of Being a Landlord in Retirement. Many clients and prospects I speak to either already invest in real estate or want to. I have limited my real estate investments to owning publicly traded real estate investment trusts (REIT). According to this article, private landlords on average earn weaker returns than REIT owners such as me. Private landlords face greater costs, risk, and hassles. Being a landlord also takes more time and can add stress. The passive income real estate investments provide sounds attractive. But it comes with a cost. If investing in private real estate interests you, I recommend reading this article. It can give you a better understanding of the risks and costs.
2. One Year Later: 15 Ways Life Has Changed Since the Onset of the COVID Pandemic. Thursday, March 11th, marked the one-year anniversary of the NBA shutting down its season after the first player was diagnosed with COVID. Many businesses shut their offices a few days earlier. Our lives have changed in many ways since then. I don’t know about you, but the discussion about a “distorted sense of time” rings true to me. At first, time passed slowly. Over the last several months, it is racing by even faster than ever. As the article suggests, being busy plays a big role. I know one of my sons is having the diminished college experience referred to in the article. We enjoy having him home, but he would be happier if he were at school this year.
3. Berkshire Hathaway Shareholder Letter. Some of you may have already read this as it came out on February 27th. If you haven’t, I recommend reading Warren Buffett’s 2020 annual letter. In one of my favorite sections, he breaks Berkshire’s shareholder base down into several buckets, including index funds, active institutional investors, active individual investors, and long-term individual investors. I’m in the last category. I bought my first “B” share in 1998 and still hold it. Buffett also shares thoughts on stock buybacks – Berkshire spent $24.7 billion repurchasing its own shares last year. He also discusses the mistake he made when he overpaid for Precision Castparts in 2016.
4. Which Vaccine? If given the choice, should you favor one of the three coronavirus vaccines over any of the others? There are differences in the efficacy shown in test results. Differences in the delivery mechanism exist as well. The J&J vaccine was also tested in a period when there were more variants of the virus. The article suggests that while you might prefer Pfizer’s or Moderna’s vaccine, you should take whichever one is available. For a more technical view, you can also review information from the Mayo Clinic or the American Medical Association.
5. The Algebra of Wealth. I am a regular reader of Scott Galloway’s blog and listen to most of the two podcasts he appears on. But I haven’t shared any of his content before. I decided to share this blog as soon as I read it. In it, Prof. Galloway shares his thoughts about how to increase the odds of reaching economic security. He believes there are four factors in the algebra of wealth:
· Focus on what matters.
· Be a stoic in the face of temptation.
· Use time to your advantage.
· Diversify your investments.
If you only have time to check out one of this week’s articles, read this one.
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Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
