Ben Fraser, Author at Aspen Funds
Get Started
Get Started Investor Login

Author: Ben Fraser

Ben Fraser is the Managing Director and Chief Investment Office of Aspen Funds. Prior to Aspen, Mr. Fraser was a commercial lender at First Business Bank specializing in government backed loan originations (SBA & USDA), for one of the top SBA lenders in the nation. Prior to that he was a commercial credit underwriter for Crossfirst Bank, personally responsible for underwriting over $125MM in C&I and CRE loans across a variety of industries. Read more about Ben

The Tax Advantages of Investing in Real Estate and Industrial Properties: What High-Net-Worth Investors Need to Know

by Ben Fraser

Key Takeaways

  • Real estate offers significant tax advantages, reducing an investor’s tax burden.
  • 1031 exchanges provide opportunities to defer capital gains taxes.
  • Depreciation deductions are a powerful tool to lower taxable income.
  • High-net-worth investors can access numerous tax deductions.

Why Real Estate Tax Advantages Matter for High-Net-Worth Investors

Real estate isn’t just about location, location, location—it’s about strategy, leverage, and, importantly, real estate tax planning. For high-net-worth (HNW) investors, real estate, particularly industrial properties, serves as a robust vehicle for wealth accumulation. Its tangible nature offers stability, while its tax benefits offer enhanced returns.

From deductions on mortgage interest to the ability to defer capital gains, real estate investments provide layers of tax perks. Whether investing in sprawling warehouses or mixed-use spaces, the tax-free gains in real estate are undeniable. In this article, we’ll explore the essential tax benefits that savvy investors can use to their advantage, especially those that boost financial outcomes for those with substantial portfolios.

Core Tax Advantages of Investing in Real Estate

The true brilliance of RE investment lies not in the predictable flow of real estate passive income, but in its multi-dimensional tax advantages. HNW investors don’t just benefit from what they collect—they benefit from what they save. Real estate provides a suite of tax treatments that cater directly to the needs of those looking to preserve wealth while minimizing tax exposure.

Key Tax Advantages

  1. Passive Income Treatment: Rental income is often classified as passive income, which is typically taxed at a lower rate than ordinary income. For investors looking to keep more of what they earn, this creates a natural tax shelter.
  2. Mortgage Interest Deductions: One of the most appealing aspects is the ability to deduct interest paid on loans used to purchase property. High-net-worth investors leveraging financing to acquire real estate can significantly reduce taxable income through this deduction alone.
  3. Property Tax Write-Offs: Local and state property taxes, while sometimes burdensome, can be fully deducted from taxable income. This creates a direct pathway to savings that increases the overall return on the investment.
  4. Insurance Premiums and Fees: All those little costs—insurance premiums, property management fees, maintenance expenses—add up. But in RE, those “necessary evils” are deductible. The ability to write off these recurring costs can transform a seemingly average investment into a tax-optimized goldmine.

Depreciation in Real Estate Investing: A Tax-Saving Strategy

Depreciation: the silent financial ally that keeps your tax bill on its toes. While your property may be gaining value in the real world, in the IRS’s universe, it’s treated as a slowly crumbling asset. This paradox is one of the most brilliant tax strategies available to real estate investors. For HNWIs, depreciation deductions are a way to effectively “lose” money on paper while your net worth is quietly skyrocketing.

Here’s how it works:

  • Annual Deduction: The IRS allows you to deduct a portion of the property’s value each year as if it were physically deteriorating—even though it may be appreciating. This annual deduction reduces taxable income without requiring you to part with any actual cash. In other words, you can claim a loss without experiencing a loss.
  • Phantom Expense: Depreciation is often referred to as a “phantom expense” because it doesn’t reflect real-world losses. Yet it functions as a powerful shield, protecting your income from the taxman. When applied to industrial property depreciation, this shield becomes even more robust. Bigger properties mean bigger deductions, and bigger deductions mean less taxable income.

Accelerating the Benefits with Cost Segregation

Depreciation’s power can be further amplified with the strategy of cost segregation. Think of it as slicing up your property into its component parts—each with its own depreciation timeline. Elements like lighting fixtures, flooring, or HVAC systems are depreciated faster than the overall structure. Why wait 39 years (the standard depreciation period for commercial real estate) to enjoy the full benefits when you can front-load the deductions in the first few years?

  • Maximizing Early Gains: By accelerating depreciation through cost segregation, you can claim larger deductions upfront, optimizing your tax position early in the investment. It’s like getting a head start in a race where you’re already favored to win.
    Depreciation is more than just a tax-saving strategy; it’s a fundamental wealth-building mechanism that works quietly in the background, maximizing returns while keeping more cash in your hands.

1031 Exchange for Real Estate: Deferring Capital Gains Taxes

The 1031 exchange is the stealthy magician of the real estate world. With a wave of its regulatory wand, it makes capital gains tax deferral—at least for the time being. Named after the mystical Section 1031 of the Internal Revenue Code, this strategy allows investors to sell a property and reinvest the proceeds into a “like-kind” property, all while deferring the capital gains taxes they would otherwise owe. It’s a game of chess in the world of taxes, and for industrial and commercial real estate investors, it’s a checkmate move.

 

Source: 1031Gateway

The power of the 1031 exchange is that it enables continuous reinvestment without interruption. Normally, selling a property triggers a capital gains tax liability, reducing the cash you can reinvest. But with a 1031 exchange, you defer that tax, keeping more capital working for you. This creates a compounding effect—as you upgrade from one property to the next, your wealth can grow while the tax man is kept waiting at the door.

Precision Is Key

However, the 1031 exchange isn’t a casual transaction—it requires precision and timing. Here’s the play-by-play:

  1. Sell the Property: First, you sell your existing property. Easy enough, right? But here’s where it gets interesting.
  2. Identify a Replacement: Within 45 days of selling, you must identify potential “like-kind” replacement properties. This doesn’t mean they have to be identical, but they must be similar enough in nature—so an industrial warehouse can be swapped for a distribution center, but not for a luxury yacht.
  3. Complete the Purchase: You have 180 days to close the deal on your new property. Time is ticking, and if you miss this window, you’re back to square one, with capital gains taxes staring you down.

This strategy is particularly valuable for industrial and commercial investors. Imagine an investor selling a manufacturing facility—by using a 1031 exchange, they can reinvest the proceeds into a larger logistics hub without being burdened by capital gains taxes. The result? They continue scaling operations while keeping their wealth compounding, untaxed, and poised for future growth.

The Infinite Deferral

The magic of the 1031 doesn’t end with a single swap. Investors can use this strategy over and over again, exchanging one property for another in a perpetual game of real estate musical chairs, continually deferring taxes. Uncle Sam doesn’t get paid until the music stops—if it ever does.

For High Net-Worth investors, the 1031 exchange is a ticket to building a massive real estate empire while keeping capital gains taxes in a permanent state of limbo. The result? A portfolio that grows tax-deferred, enabling reinvestment and wealth generation on an impressive scale.

Tax Benefits of Industrial Real Estate Investments

When it comes to tax benefits, industrial RE isn’t just playing the same game as residential—it’s playing an entirely different sport. Industrial properties, like warehouses, manufacturing plants, and distribution centers, offer a treasure trove of tax advantages that HNW investors can exploit to both shield their income and supercharge their returns.

One of the crown jewels of industrial property depreciation tax strategy is accelerated depreciation. Unlike residential properties, where you’re stuck with a predictable (and slower) 27.5-year depreciation schedule, industrial real estate lets you speed things up. Like I mentioned earlier, certain components of an industrial property—machinery, equipment, even high-tech security systems—can depreciatebe depreciated far faster than the building itself. This means you get to claim bigger deductions earlier, which reduces taxable income and improves cash flow right when you need it most: the initial stages of investment.

Bigger Deductions, Faster Returns

But it doesn’t stop at depreciation. Industrial real estate is a haven for property tax write-offs that residential investors can only dream of. Operational expenses, maintenance costs, and capital improvements all open the door for significant write-offs.

Consider a scenario where you upgrade a warehouse’s technology system, install state-of-the-art climate controls, or retrofit the facility with energy-efficient machinery. The costs of these improvements don’t just add value to the property—they can be written off, putting more cash in your pocket year after year.

In addition, industrial properties often require heavier upfront investments in infrastructure and equipment, which lead to larger and more immediate deductions. Security upgrades, utility improvements, even the maintenance of massive loading docks and HVAC systems—these all offer opportunities for tax savings that far exceed what you’d see in the residential sector.

Appreciation Meets Depreciation

Perhaps the most striking advantage of industrial real estate is how it marries fast appreciation with enhanced depreciation. While industrial properties tend to appreciate in value at a healthy clip—thanks to the increasing demand for logistics hubs, warehouses, and production spaces—the tax code allows investors to simultaneously depreciate these assets more aggressively.

In short, HNW investors can deploy their capital into industrial real estate, reaping the rewards of faster growth while strategically using tax benefits to lower their liabilities. The result? A wealth-generating machine where the government foots part of the bill.

Maximizing Real Estate Tax Deductions

Maximizing deductions is critical to squeezing every tax advantage out of real estate investments. Beyond the usual suspects—interest, property taxes, and depreciation—high-net-worth investors have other options to optimize their RE investment strategies.

Interest paid on loans to purchase real estate is deductible, but investors can also claim deductions for repairs and upgrades. If you’re repainting, repairing a roof, or installing new HVAC systems, these expenses can all chip away at your taxable income. Professional fees, such as those paid to property managers, legal advisors, or accountants, are also deductible.

For hands-on investors, the deductions don’t stop there. You can claim deductions for travel expenses related to inspecting properties or managing assets, as well as office expenses if part of your business operates from home.

These seemingly minor deductions add up over time, creating a comprehensive tax strategy that high-net-worth investors can wield to their benefit.

Frequently Asked Questions

A 1031 exchange is a tax-deferral strategy that lets investors sell a property and reinvest the proceeds into a similar (“like-kind”) property without immediately paying capital gains taxes. By kicking the tax bill down the road, investors can keep more of their capital working for them, growing their portfolio and compounding wealth.

Depreciation is a handy trick that allows you to treat your property like it’s losing value over time—at least on paper. The IRS lets investors deduct a portion of the property’s value each year, reducing taxable income. Residential properties are depreciated over 27.5 years, while commercial and industrial properties get a 39-year schedule. It’s a tax shield, letting you write off a “loss” while your property might actually be gaining value.

Industrial properties are a tax advantage playground. Not only do they allow for accelerated depreciation, which means you can claim bigger deductions upfront, but they also offer massive write-offs for upgrades, maintenance, and operational costs. Plus, selling an industrial property can trigger lower tax rates on capital gains compared to residential properties. All of this makes industrial real estate a tax-efficient vehicle for building wealth.

Conclusion: Optimizing Tax Strategies for Real Estate Investors

Real estate’s tax advantages are more than just perks—they’re wealth-building tools. From the silent power of depreciation deductions, which allows investors to lower taxable income without touching their cash flow, to the strategic wizardry of the 1031 exchange, which defers capital gains taxes while growing portfolios, these mechanisms are invaluable for high-net-worth investors.

But these benefits don’t happen by accident; strategic planning is key. Knowing how and when to leverage tax deductions, depreciation schedules, and reinvestment strategies can turn a good investment into a tax-optimized, wealth-compounding machine.

Whether it’s industrial real estate with its accelerated depreciation or continual portfolio growth through 1031 exchanges, a smart tax strategy is the engine that drives long-term success in real estate investing. The bottom line? Make the tax code work for you, not against you.

Listen to our podcast episode on Top Trends to Watch in Industrial Real Estate 

Listen Now

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

5 Key Insights into Private Credit Market Dynamics in 2024

by Ben Fraser

The Rise of Private Credit Markets

Private credit markets have exploded in recent years, transforming from a niche field to a powerhouse in finance. Here we look at the history of private credit, its recent trends, comparisons with traditional lending, current private credit market size, and forecasts for private credit beyond 2024.  

A Brief History and Emerging Trends

Private credit dates back to the early 1900s, when non-bank entities started lending directly to companies. The 2008 financial crisis was a game-changer. As banks tightened their lending belts, private credit funds jumped in, filling the void. Over the last ten years, private credit growth has blossomed, fueled by a thirst for alternative financing and regulatory shake-ups, like the Dodd-Frank Act, which added stiff rules to traditional bank lending.

The COVID-19 pandemic turbocharged this growth, as businesses clamored for flexible money to bounce back. With interest rates low and stock markets shaky, investors have been drawn to private credit for its high yields and diversification perks. This era is often dubbed the “golden age of private credit.”

Private Credit vs. Traditional Lending

Private credit stands apart from traditional lending in several ways. It typically offers higher returns to offset higher risks, such as illiquid investments and the looming threat of defaults. Unlike banks, private credit operates in a less regulated space, allowing for more inventive deal-making but also introducing additional risks.

Private Credit Market Size and Growth Projections

As of 2024, the private credit market is valued at over $1.5 trillion—more than double its size from just a decade ago. The growth isn’t slowing down, with expectations of a steady annual growth of 10-12% in the next five years. The reasons? A continuing appetite for alternative financing, investors hungry for yield, and economic conditions that lean toward non-traditional lending. This outlook suggests that investing in private credit isn’t just a passing trend.

Source: Heron Finance

Case Study of Market Growth

A standout moment came in 2022 when a group of private credit funds, spearheaded by global alternative asset manager Ares Management, poured $3 billion into software firm Epicor. This deal exemplifies the flexibility and scale direct lending private credit can offer compared to standard banks, highlighting how it’s becoming a crucial player in high-stakes financing, especially in sectors like tech, where companies need quick, tailored funding.

Key Drivers Fueling Market Growth

Several key players are pushing the private credit market engine forward:

Investor Demand for Bigger Returns

With traditional fixed-income investments struggling in a low-yield environment, investors are eyeing private credit for its higher returns, a result of its greater risk and illiquidity. Compared to other alternative investments like private equity or real estate, private credit often offers more stable cash flows and lower volatility, making it an attractive prospect for investors looking for income. This has led to a surge of capital into private credit funds, further driving market expansion.

Borrowers Embrace Private Markets

Companies are increasingly moving away from public debt, drawn to the flexibility, reduced regulatory scrutiny, and swifter execution that private credit provides. For example, PetSmart and Ancestry.com opted for direct lending private credit to fund acquisitions, benefiting from customized solutions and faster deal closure.

The Rise of Non-Bank Lenders

Non-bank lenders, such as private credit funds and asset managers, are stepping into the limelight, offering the kind of flexible financing traditional banks can’t match. Their ability to pursue riskier opportunities, especially in the middle-market and distressed debt sectors, has allowed them to capture market share. This competition has sparked innovation in the lending landscape, which benefits borrowers but also intensifies market dynamics.

Regulatory Transformations

Since the 2008 crisis, regulations like the Dodd-Frank Act have constrained traditional lending, paving the way for private credit to thrive. While rules vary across regions—tougher in Europe than in the US—they influence both investor and borrower strategies as the hunt for less regulated territory continues.

The Influence of Institutional Investors

Institutional investors like pension funds and insurance companies are diving into private credit, bolstering liquidity and stability. Their involvement has led to more partnerships with private credit firms and has contributed to market growth by improving overall credibility and reducing volatility. 

Risk Management in Private Credit

Navigating Credit Risks

Understanding credit risk in private markets is crucial. The biggest threat is default risk–borrowers failing to meet their obligations. Several factors come into play, including the financial health of borrowers, market conditions, and broader economic factors.

Private credit involves less transparency and standardization than public markets, so investors need to carefully evaluate borrower profiles and market conditions. Investors should also pay attention to borrower leverage, economic downturns, and sector-specific challenges as they delve into evaluating credit risk in 2024 and beyond.

Strategies for Mitigating Default Risk

To combat default risk, thorough due diligence and detailed credit evaluations are vital. Investors should scrutinize the borrower’s financials, management, and the industry outlook as a whole. Protective clauses, known as covenants, help safeguard investments. Diversification across sectors and regions also reduces the impact of any single default.

The Role of Covenants and Structuring

Covenants are essential for managing risk. These contractual agreements impose financial and operation standards on borrowers–sea maps guiding lenders through choppy waters. Common types include financial covenants (e.g., debt-to-equity ratios) and performance covenants (e.g., revenue targets). Effective deal structuring, including the priority of debt and collateral agreements, also plays a key role in risk management.

Macroeconomic Influences

Larger economic factors—like fluctuating interest rates, economic cycles, and geopolitical uncertainties—cast long shadows over private credit. Rising interest rates can hike borrowing costs, potentially squeezing borrowers. Economic downturns may lead to higher default rates, while geopolitical tensions can create uncertainty in credit markets. Investors should stay tuned in to these macro influences to navigate the market’s ebbs and flows.

Tools to Aid Risk Assessment

New and advanced tools like AI and data analytics are transforming credit risk assessment. This tech can provide deeper insights, which helps in evaluating creditworthiness, and it can also make more accurate predictions, which helps in monitoring portfolio performance. 

Opportunities Abound for Investors

​​Private credit is ripe with o​​pportunities fueled by sector growth, emerging markets, and innovative strategies.

Spotting Good Investment Opportunities

Investors should look for solid credit quality, borrower reliability, and collateral offerings. Many high-growth areas emerge, such as technology, healthcare, and real estate. While emerging markets can promise high rewards, they come with their own risks. Mature markets, on the other hand, often provide a more stable investment backdrop. Investors may be drawn to one market over the other, depending on their appetite for risk.

Sectors Leading the Private Credit Boom

Private credit is booming across several key sectors:

  • Tech and Innovation: Fueling growth capital for advancements.
  • Healthcare and Life Sciences: Riding the wave of medical innovation demand.
  • Real Estate and Infrastructure: Particularly in industrial real estate, urban development and sustainable projects.
  • Consumer and Retail: Financing for expansions, acquisitions, and restructures.

Geographic Hotspots

Private credit opportunities vary significantly by geography. North America leads the charge with a robust market, followed closely by opportunities burgeoning in Europe, albeit with complex regulations. The Asia-Pacific region is emerging rapidly, especially in tech and manufacturing, while Latin America and Africa reveal untapped potential, albeit with higher stakes.

The Role of Private Equity in Private Credit

Private equity firms are increasingly integrating with private credit, creating synergies that maximize returns. Co-investment strategies allow for optimized deals, particularly in tech and healthcare through leveraged buyouts, showcasing the strength of these partnerships. The intersection of private equity and private credit allows for more sophisticated financing solutions, which benefits both investors and borrowers.

ESG Considerations in Private Credit

Investors are weaving Environmental, Social, and Governance (ESG) criteria into their strategies, guiding borrower selection. This alignment with sustainable practices is gaining traction, attracting socially conscious investors to dedicated ESG-focused private credit funds.

Private Credit Investment Strategies for 2024

Based on the current private credit landscape in 2024 and looking toward 2025, there are some standout strategies to consider for navigating this market.

One option is distressed debt, which lets investors focus on companies that are facing financial challenges, offering the chance for high returns if they bounce back. Another important decision is whether to choose direct lending or syndicated loans, as each presents different risks and rewards to think about. Then there’s mezzanine financing, which acts as a bridge to equity and can provide higher returns compared to senior debt, though it comes with added risk.

Source: SafeRE

Challenges and Future Outlook

With all this growth, challenges remain on the horizon. Investors will need to brace for market volatility due to fluctuating interest rates and geopolitical tensions, like trade disputes and conflicts. Investors will need to brace for market volatility due to fluctuating interest rates and geopolitical clashes.

Potential Regulatory Shifts and Their Impact

Looming regulatory changes could also have a large impact on the private credit industry. For example, ​​in the US, regulators are considering stricter rules on leverage ratios and enhanced disclosure requirements for private credit funds to help address concerns about systemic risk. The SEC is also evaluating new rules that could require more detailed reporting on fund performance and risk exposure in an effort to bring more transparency. Investors should stay in the loop about policy developments and create contingency plans to navigate these potential regulatory shifts.

Market Forecast for the Next Decade

The private credit sector is expected to grow and become an integral part of the global financial system. Emerging markets in Asia, Latin America, and Africa are anticipated to drive future growth due to expanding economies and infrastructure needs. Monitoring these regions and evolving market dynamics will be crucial for identifying opportunities.

Learning from Market Leaders

Insights from leading private credit firms provide invaluable lessons in risk management and investment strategies. Current case studies highlight effective practices for navigating the dynamic landscape, emphasizing the importance of adaptability.

Conclusion

As we wrap up our journey through the private credit market, several insights stand out:

  • Growth Drivers: A surge in investor demand for yields, a shift toward private markets, non-bank lender expansion, and evolving regulations are reshaping the landscape.
  • Opportunities Galore: Investors can capitalize on promising sectors like tech and healthcare, hot geographical markets, and innovative strategies in 2024 and beyond, such as distressed debt and mezzanine financing.
  • Navigating Challenges: Keeping an eye on market volatility, regulatory changes, and technological advancements is essential for managing risks effectively.
  • Future Growth: The private credit outlook is set to soar, with emerging markets likely playing a vital role. Adapting to technological advances and regulatory landscapes will be crucial for future success.

Staying informed will be key in this ever-changing world of private credit. Embracing these insights and forecasts will help investors navigate complexities and seize promising opportunities in the road ahead. As we look toward 2025, the private credit landscape brims with both challenges and exciting prospects, demanding careful strategy and proactive engagement.

FAQs About the Private Credit Market

Private credit is all non-bank lending, where private investors or institutions, like private credit funds, provide funds directly to borrowers. Unlike traditional credit, which typically follows a set structure, private credit often involves more personalized loans with terms that can vary. 

In general, private credit tends to carry higher risks and the potential for higher returns than traditional credit. Traditional options usually come with stricter guidelines and more regulatory scrutiny, while private credit can offer the chance for better returns due to its unique nature and illiquidity. Types of credit like mezzanine financing, distressed debt, and direct lending are common in private credit, each with its own blend of risks and rewards.

Private credit is on the rise because it offers the potential for greater yields in a landscape of low-interest rates. Investors are on the lookout for alternatives to traditional fixed-income investments, which just aren’t delivering strong returns anymore. The recovery of the economy after the pandemic has also boosted the private credit market, increasing the demand for customized financing solutions.

Investor feelings toward private credit are increasingly positive, thanks to its potential for higher returns and diversification. There’s a noticeable uptick in interest from institutional investors, spreading into various sectors and helping to propel private credit’s popularity even further.

While investing in private credit can be appealing, there are some risks to keep in mind:

  • Credit Risk: The chance of borrower default is higher than with traditional credit because private deals are less standardized.
  • Liquidity Risk: Typically, private credit investments can be harder to sell or turn into cash quickly.
  • Market Risk: Economic slowdowns or geopolitical issues can affect how private credit investments perform.

To manage these risks, it’s wise for investors to diversify across different sectors and locations, carefully research potential borrowers, and keep a well-balanced portfolio that includes various types of assets. Using strategies like investing in high-quality credit and employing risk assessment tools can also help.

Private credit is growing fast in a variety of sectors. The technology and innovation space is a big player here, as companies are eager for funding to boost their growth and advancements. Healthcare and life sciences are thriving too, driven by a consistent demand for medical innovation and infrastructure. Real estate and infrastructure projects, especially those focusing on urban development and sustainability, are also popular choices for private credit investments. Plus, the consumer and retail sectors are seeing more financing activity, especially around acquisitions, expansions, and restructuring.

The future looks bright for the private credit market, as it’s expected to keep growing thanks to rising investor interest and the expansion of emerging markets. Technological progress and changes in regulations will be key to shaping the market moving forward.

For long-term investment strategies, it’s important for investors to think about trends like the growing significance of ESG factors, the impact of technological changes, and the possibility of increased regulations. Staying updated on market shifts and being ready to adjust strategies will be essential for navigating the future of private credit.

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

How to Get Started with Industrial Real Estate Investing

by Ben Fraser

Industrial real estate refers to properties used primarily for manufacturing, production, storage, and distribution of goods. These properties are often large-scale and include warehouses, manufacturing plants, distribution centers, and other facilities essential to the supply chain. Industrial real estate plays a crucial role in the global economy by enabling the efficient movement of goods from manufacturers to consumers.

Investing in industrial real estate is gaining popularity among investors due to its stability, long-term leases, and growing demand driven by e-commerce and global trade. With the ongoing evolution of supply chains and the rise of online shopping, industrial properties have become a cornerstone of commercial real estate investment portfolios, offering strong potential for both income and appreciation.

If you’re new to industrial real estate investing, it’s important to understand the different types of industrial buildings and how industrial properties fit into the broader category of commercial real estate. 

Before we get into the specifics though, let’s explore why investing in industrial real estate is a smart choice in the first place.

Why Invest in Industrial Real Estate?

Investing in industrial real estate offers several advantages:

  • Stable Income: Industrial leases are typically long-term (ranging from 5 to 15 years), providing consistent cash flow.
  • Low Vacancy Rates: Industrial properties often have lower vacancy rates compared to other sectors due to high demand, especially in logistics and warehousing.
  • Resilience to Economic Cycles: Industrial real estate tends to perform well even during economic downturns, as businesses continue to require storage and distribution facilities.
  • E-commerce Boom: The rise of online shopping has increased the demand for warehouses and distribution centers, making industrial real estate a hot investment.

Compared to other real estate sectors, industrial properties often provide higher yields. Industrial real estate generally offers higher yields compared to residential and office properties.

Another benefit of investing in industrial real estate is lower maintenance costs; industrial buildings typically have lower maintenance and management costs, making them more cost-effective. Furthermore, adding industrial properties to a real estate portfolio can increase portfolio diversification, reducing overall risk.

Source: Willowdale Equity

Typical Returns and ROI

Historically, industrial real estate has shown strong performance. Over the past decade, industrial properties have consistently outperformed other commercial real estate sectors in terms of rental growth and capital appreciation. For instance, according to recent studies, industrial real estate has seen average annual returns of 10-12%, driven by demand from the logistics and e-commerce sectors.

The growth potential of industrial real estate is promising. As e-commerce continues to expand, the need for modern, strategically located industrial facilities is expected to rise. Investors can anticipate robust returns, particularly in regions with strong logistics networks and growing populations.

Understanding Industrial Buildings

An industrial building is a property primarily used for manufacturing, warehousing, and distribution of goods. Key characteristics of industrial buildings include large floor spaces, high ceilings to accommodate machinery and storage racks, loading docks for easy loading and unloading of goods, and proximity to transport networks for efficient logistics.

Source: Peak Frameworks

Types of Industrial Buildings

Warehouses

Warehouses are used for the storage of goods. They can vary in size from small storage units to large distribution hubs and often include loading docks, high ceilings, and large open spaces.

Manufacturing Facilities

These buildings house the production of goods and include space for assembly lines, machinery, and sometimes office areas. Manufacturing facilities are typically customized to the needs of the business.

Flex Spaces

Flex spaces are versatile industrial properties that can be adapted for various uses, including office space, warehousing, and light manufacturing. They offer flexibility for tenants, making them attractive for small and medium-sized businesses.

Distribution Centers

Distribution centers are specialized warehouses designed to efficiently move goods from manufacturers to retailers or directly to consumers. They are often located near major transportation hubs and feature advanced logistics systems.

Cold Storage Facilities

Cold storage facilities are industrial buildings designed to store perishable goods at controlled temperatures. These are essential for the food industry, pharmaceuticals, and other sectors requiring refrigerated storage.

Market Trends in Industrial Real Estate

The industrial real estate market is currently experiencing strong demand, driven by the growth of e-commerce and the need for more sophisticated logistics infrastructure. Urbanization and the expansion of global trade networks are also contributing to the sector’s growth.

"E-commerce has been a huge driver of the industrial boom over the past several decades. As e-commerce has grown, the need for keeping inventory and for distribution and warehousing has massively increased."

-Bob Fraser Tweet

E-commerce, in particular, has fundamentally changed the landscape of industrial real estate. The need for rapid delivery and large-scale distribution has led to a surge in demand for warehouses and fulfillment centers, especially in urban areas. This trend is expected to continue as online shopping becomes more prevalent.

Looking ahead, the future of industrial real estate looks bright, with continued growth expected in e-commerce, global trade, and supply chain optimization. Innovations in technology, such as automation and robotics, will likely drive further demand for modern, high-tech industrial facilities. 

Economic factors, such as interest rates and global trade policies, will influence industrial real estate, while technological advancements, including the rise of smart warehouses and the Internet of Things (IoT), will play a significant role in shaping the future of this sector. Our analysis of growth trends in the industrial and manufacturing sectors highlights expected growth over the coming years as industrial vacancy has dropped and demand has soared.

How to Get Started Investing in Industrial Real Estate

Public Market Options for Investing in Industrial Real Estate

For those looking to invest in industrial real estate through the public markets, there are several accessible options, including Real Estate Investment Trusts (REITs), Exchange-Traded Funds (ETFs), and mutual funds. 

  • REITs allow investors to buy shares in companies that own and manage industrial properties, offering a way to gain exposure to the sector with the added benefit of liquidity. 
  • ETFs, which often track indexes of industrial real estate companies or REITs, provide a diversified and cost-effective way to invest in this sector,
  • Mutual funds offer professionally managed portfolios that may include industrial properties as part of a broader real estate strategy. 

These public market options are ideal for investors seeking diversification, liquidity, and lower entry barriers compared to direct property ownership.

Private Market Options for Investing in Industrial Real Estate

Another way to get started in industrial real estate investing is by investing through private channels, such as Aspen Funds. These private investment firms work directly with operators who manage, renovate, and lease industrial properties. 

Investing through private channels offers several advantages compared to public markets like ETFs or REITs. 

First, private investments often provide access to unique opportunities that are not available in the public market, including off-market deals and properties with higher potential for value-add through renovations or strategic leasing. Additionally, private investments typically involve working closely with experienced operators who have in-depth knowledge of the industrial sector, leading to more hands-on management and potentially higher returns. 

However, it’s important to consider factors such as the investment horizon, liquidity, and the credibility of the operator. Private investments often require a longer commitment and are less liquid than publicly traded options, so it’s crucial to align them with your financial goals and risk tolerance. By choosing a reputable firm like Aspen Funds, you can gain access to well-managed industrial properties and leverage our expertise to enhance your investment portfolio.

Next Steps in Industrial Real Estate Investing

Before diving into industrial real estate investing, it’s important to clarify your long-term and short-term investment goals. Are you seeking income, capital appreciation, or a combination of both? Your goals will guide your investment decisions. Additionally, consider whether adding industrial real estate to your portfolio mix is the right investment strategy. Industrial real estate can provide diversification and stable returns, but it’s essential to assess whether it aligns with your financial goals.

Once your goals are clear, identify the right type of industrial real estate fund to support your investment objectives. Depending on your needs, you may choose to invest privately in industrial real estate funds, or through REITs, ETFs, or mutual funds. Each option has different risk and return profiles, so selecting the right investment vehicle is crucial.

Conclusion

Investing in industrial real estate offers a range of benefits, including stable income, strong growth potential, and diversification. By understanding the types of industrial properties, market trends, and investment options available, investors can make informed decisions that align with their financial goals.

Frequently Asked Questions About Investing in Industrial Real Estate

The minimum investment required for industrial real estate can vary widely depending on the type of investment. If you’re purchasing an industrial property directly, the cost can range from hundreds of thousands to millions of dollars, depending on the location, size, and type of property. However, if you’re investing through a Real Estate Investment Trust (REIT) or an exchange-traded fund (ETF) that focuses on industrial real estate, the minimum investment can be much lower. For instance, you can start investing in REITs or ETFs with just the price of a single share, which could be as low as $50 to $100, depending on the fund.

Investing in industrial real estate, like any investment, comes with risks. Some of the key risks include:

  • Market Risk: The industrial real estate market can be influenced by economic downturns, changes in trade policies, and fluctuations in demand for industrial space.
  • Tenant Risk: Industrial properties often have single or a few tenants with long-term leases. If a major tenant defaults or vacates, it can significantly impact your rental income.
  • Location Risk: The value and demand for industrial properties are closely tied to their location. Investing in a less desirable area may result in lower returns and higher vacancy rates.
  • Maintenance and Operational Costs: While industrial properties generally have lower maintenance costs compared to other real estate sectors, unexpected repairs or operational issues can still arise and affect profitability.
  • Regulatory Risk: Changes in zoning laws, environmental regulations, or property taxes can impact the profitability of industrial real estate investments.

The industrial real estate market differs significantly from the residential real estate market in several ways:

  • Tenant Profiles: Industrial properties are leased to businesses rather than individuals, leading to longer lease terms and more stable income streams. Residential properties, on the other hand, typically have shorter leases and are more susceptible to turnover.
  • Market Demand: Industrial real estate is driven by factors such as e-commerce, global trade, and logistics, whereas residential real estate is influenced by population growth, employment rates, and housing supply.
  • Return on Investment: Industrial real estate often provides higher yields compared to residential real estate, but it also comes with different risks, such as reliance on single or few tenants. Residential real estate, while typically offering lower yields, can benefit from steady demand for housing and appreciation over time.
  • Management Requirements: Managing industrial properties generally involves less hands-on work compared to residential properties, which require ongoing tenant relations, maintenance, and turnover management.

Evaluating the potential return on investment (ROI) of an industrial property involves several key steps:

  • Analyze the Location: Assess the property’s location in relation to major transportation networks, supply chains, and demand for industrial space in the area. A prime location can lead to higher rents and lower vacancy rates.
  • Examine the Lease Terms: Review the length and terms of existing leases, including rental rates and any escalation clauses. Long-term leases with creditworthy tenants can provide stable income.
  • Calculate the Cap Rate: The capitalization rate (cap rate) is a common metric used to evaluate industrial properties. It is calculated by dividing the property’s annual net operating income (NOI) by its purchase price. A higher cap rate indicates a potentially higher return, but also higher risk.
  • Consider the Property’s Condition: Assess the property’s physical condition and any required maintenance or upgrades. Unexpected expenses can impact your ROI.
  • Evaluate Market Trends: Stay informed about local and national industrial real estate trends, including supply and demand dynamics, economic factors, and emerging technologies that could influence the property’s value and rental income.

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

Mastering Private Credit Funds: A Step-by-Step Guide to Investing

by Ben Fraser

In today’s complex financial landscape, private credit funds have emerged as a compelling investment opportunity for investors seeking alternative avenues beyond traditional fixed-income options. Private credit funds provide capital directly to private companies or borrowers, bypassing traditional financial institutions like banks. This alternative source of financing caters to companies that may not qualify for traditional bank loans or prefer private funding for various reasons.

What are Private Credit Funds?

Private credit funds are investment vehicles that pool capital from investors to provide direct loans or other forms of debt financing to private companies or borrowers. These funds operate outside the public markets, offering bespoke financing solutions tailored to the needs of borrowers who may not access traditional bank loans due to risk profiles, sector focus, or specific financing requirements.

The Growing Popularity of Private Credit Investments

In recent years, private credit investments have gained traction among institutional investors, high-net-worth individuals, and family offices seeking to diversify their portfolios and enhance returns. Unlike traditional fixed-income securities, private credit funds offer the potential for higher yields and provide investors with exposure to a diversified portfolio of private debt instruments.

Chart showing the growth of private credit in the alternative investment market.

Source: https://fortune.com/2023/12/28/2024-investing-ai-private-credit-small-cap-resurgence/ 

Who Should Consider Investing in Private Credit Funds?

Private credit funds are suitable for investors looking for stable income streams and attractive risk-adjusted returns. Institutional investors seeking to diversify their portfolios beyond public markets, high-net-worth individuals interested in alternative investments, and entities requiring specialized financing solutions can benefit from allocating capital to private credit funds.

Understanding Private Credit

Private credit encompasses various forms of debt financing provided to non-public entities:

Graphic shows the breakdown of the capital stack in alternative investments.

Source: https://www.arborcrowd.com/real-estate-investing-learning-center/capital-stack-and-equity-debt/ 

  • Direct Lending: Providing loans directly to private companies, often to support growth initiatives, acquisitions, or refinancing needs. Direct lending allows investors to earn interest income from loan repayments and fees.
  • Mezzanine Financing: Offering subordinated debt that combines elements of debt and equity. Mezzanine financing provides higher potential returns through interest payments and equity participation, often used to fund leveraged buyouts or expansions where traditional financing is insufficient.
  • Distressed Debt: Investing in the debt of financially troubled companies or distressed assets at discounted prices. Distressed debt investing aims to capitalize on potential recovery through restructuring or liquidation processes.
  • Specialty Finance: Providing financing to niche sectors or specialized industries that require customized funding solutions. Specialty finance includes areas such as real estate finance, infrastructure projects, and healthcare financing, among others.

Private credit differs for investors from traditional fixed-income investments in several key ways:

  1. Risk and Return Profile: Private credit investments generally offer higher yields compared to traditional fixed-income securities like government bonds or corporate bonds. This higher yield compensates investors for the additional risks associated with private credit, including credit risk and liquidity risk.
  2. Investment Structure: Private credit funds often have longer investment horizons and less liquidity compared to publicly traded bonds. Investors typically commit capital for a specified period, during which they receive periodic interest payments and eventual return of principal.
  3. Direct Exposure: Unlike traditional fixed-income investments that trade on public exchanges, private credit provides direct exposure to the underlying borrower or project. This direct relationship allows investors to potentially negotiate better terms and have more control over risk management strategies.
  4. Diversification Benefits: Including private credit in a diversified portfolio can enhance overall risk-adjusted returns by reducing correlation with traditional asset classes. This diversification can mitigate portfolio volatility and potentially increase income stability over the long term.

How to Invest in Private Credit Funds

Now that we’ve covered the basics of what private credit funds are and the benefits of investing in them, let’s talk about next steps. Investing in private credit funds requires a structured approach to navigate opportunities and potential risks effectively, so it’s important to keep the following considerations in mind as you prepare to invest in private credit funds.

Accessing Private Credit Funds

First, let’s review where you can invest in private credit funds. These funds can be accessed through various channels, including:

  • Direct Investment: Accredited investors and institutions can directly invest in private credit funds offered by fund managers or financial institutions, like Aspen Funds Private Credit Fund. Direct investment provides direct exposure to fund strategies and potential returns, but typically requires substantial minimum investment amounts.
  • Financial Advisors: Working with experienced financial advisors or wealth managers specializing in alternative investments can provide access to curated private credit fund opportunities. Advisors can offer insights, due diligence support, and portfolio allocation recommendations tailored to investor preferences and risk tolerance.
  • Private Equity Firms: Private equity firms often manage diversified investment portfolios that include private credit strategies. Investors can gain exposure to private credit funds through private equity firms’ offerings, benefiting from their expertise in alternative asset management and access to institutional-quality investments. Learn more about the differences between private equity and private credit.

Investment Minimums and Fee Structures

Once you’ve identified the best channel for investing, it’s time to consider your principal. Private credit funds typically impose minimum investment thresholds, which can range from several hundred thousand dollars to several million dollars per investor. These minimums ensure fund viability and may vary based on fund size, strategy complexity, and investor qualifications.

  • Fee Structures: Understanding fee arrangements is essential for evaluating the cost-effectiveness of private credit investments. Common fees include management fees, performance-based fees (often referred to as “carry” or “performance allocation”), and administrative expenses. Fee transparency and alignment with fund performance are critical considerations for investors.

Building a Diversified Private Credit Portfolio

One final consideration for investing in private credit funds is diversification. Allocating assets across private credit funds and strategies can optimize risk-adjusted returns and mitigate specific investment risks by providing a buffer against market volatility. Two primary strategies for this are

  • Asset Allocation: Allocating capital across different private credit strategies, such as direct lending, mezzanine financing, and distressed debt, diversifies risk exposure and enhances portfolio resilience. Each strategy offers unique risk-return profiles and may perform differently across economic cycles.
  • Sector and Geographic Exposure: Considering sector-specific opportunities and geographic diversification can further enhance portfolio stability and capture market inefficiencies. Investing in diverse industries and regions mitigates concentration risk and aligns with broader investment objectives.

Practical Steps to Start Investing

Now that you’ve got a handle on the strategy and preparation for private credit investing, let’s outline how you can begin investing in private credit funds with the  following practical steps:

  1. Set Investment Goals: Define investment objectives, risk tolerance, liquidity preferences, and return expectations to establish clear guidelines for portfolio construction and fund selection.
    • Some questions to ask at this stage: What do I want my investment to do for me? How liquid does the investment need to be? What is my investment time frame?
  2. Perform Due Diligence: Conduct thorough due diligence on prospective funds, including reviewing offering documents, historical performance, fund manager track records, and investment strategies. Assessing fund manager expertise, credit underwriting processes, and risk management practices is critical for informed decision-making.
    • Some questions to ask at this stage: What is your firm’s investment philosophy? How do you source and evaluate potential investment opportunities? How do you manage risk?
  3. Execute the Investment: Committing capital to selected private credit funds involves completing subscription documents, meeting minimum investment requirements, and complying with fund-specific terms and conditions. Fund managers may provide guidance on investment timing and capital deployment strategies based on market conditions, and should offer at least an annual portfolio review, if not more.
    • Some questions to ask at this stage: How often do you report to clients? How frequently are return distributions paid out? How is my portfolio diversified? What trends do you think are on the horizon? How do you plan to mitigate risk moving forward?

Private credit funds offer investors an alternative to traditional fixed-income securities, providing direct loans and debt financing to private companies for stable income streams and attractive risk-adjusted returns. 

By adopting a structured approach that includes due diligence, fee analysis, and strategic portfolio diversification, investors can effectively navigate private credit investments to enhance their portfolios and achieve financial objectives.

Sign up for Aspen Funds’ free masterclass on investing in private credit to learn how to unlock the power of your money.

Private Credit Masterclass

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

Private Credit vs. Private Equity: Key Differences in Real Estate Investing

by Ben Fraser

In the world of real estate investing, investors will often hear of two different options for investing their capital: Private Credit and Private Equity.

While both methods offer opportunities for substantial returns, they operate on distinct principles, each with its own set of advantages and considerations. Let’s review the nuances of Private Credit and Private Equity in real estate investment.

Understanding Private Credit

Private Credit refers to a form of financing where investors extend loans or investment to real estate developers or property owners. Private credit funds can be structured debt or preferred equity investments, both offering fixed payment terms over predetermined time periods. 

Unlike traditional bank loans, Private Credit transactions are negotiated directly between investors and borrowers, bypassing the stringent regulations and requirements of financial institutions. As the banking industry consolidates, the availability and creativity of traditional lenders continues to tighten, allowing for more flexible, non-bank lenders to take advantage of the market.

Key Characteristics of Private Credit Funds:

  1. Fixed Payment Financing: Private Credit provides capital to real estate projects in exchange for some combination of regular interest payments, back-end profit accrual, and repayment of the principal amount.
  2. Control Rights: To mitigate risk, Private Credit transactions often have priority over common equity investors and must be paid back prior to those investors receiving their capital back. Additionally, many times Private Credit investors have certain control rights, similar to a traditional lender, they can enforce if the owners do not meet their obligations.
  3. Flexible Terms: Unlike conventional bank loans, Private Credit funds offer more flexibility in terms of repayment schedules, interest rates, and structuring options, tailored to the specific needs of the borrower.

CTA banner private credit webinar

Exploring Private Equity

On the other hand, Private Equity entails acquiring ownership stakes in real estate assets or development projects. Investors pool their funds to purchase equity interests, gaining a share of ownership and potential profits generated by the underlying properties. 

Private Equity investment funds often involve active management strategies, such as property development, repositioning, or asset enhancement, to maximize returns.

Key Characteristics of Private Equity Funds:

  1. Equity Ownership: Private Equity investors acquire direct ownership stakes in real estate assets, entitling them to a portion of the property’s income and appreciation. This can provide higher potential upside, but comes along with additional risks.
  2. Active Management: Unlike passive investment vehicles like Real Estate Investment Trusts (REITs), Private Equity entails active involvement in property management and strategic decision-making to enhance asset value.
  3. Value Creation: Private Equity firms focus on generating value through operational improvements, asset optimization, and strategic initiatives, aiming to achieve superior returns for investors upon exit.

Differences in Features and Considerations – Private Credit vs. Private Equity

While both Private Credit and Private Equity offer attractive prospects for real estate investors, they differ significantly in terms of risk exposure, return profiles, and investment horizons.

Risk and Return Profile:

– Private Credit: Typically offers lower returns compared to Private Equity, but with greater security and downside protection due to the priority repayment status before common equity investors.

– Private Equity: Involves higher risk and volatility, but offers the potential for significant upside through capital appreciation and profit-sharing upon successful property monetization.

Investment Horizon:

– Private Credit: Often characterized by shorter investment horizons, with investment terms typically less than 3 years, providing investors with relatively quicker liquidity options.

– Private Equity: Requires a longer-term commitment, as property acquisition, development, and value enhancement strategies may take several years to materialize before realizing investment gains.

Risk Mitigation Strategies:

– Private Credit: Relies on conservative underwriting practices and investing with priority to common equity to minimize default risk, prioritizing asset protection and cash flow stability.

– Private Equity: Emphasizes proactive management and value-added strategies to mitigate risk, such as diversification, asset repositioning, and active portfolio oversight.

Conclusion

Both Private Credit and Private Equity serve as valuable vehicles for real estate investors seeking alternative financing solutions.

While Private Credit offers stability, security, and shorter investment horizons through more debt-like financing, Private Equity provides the potential for higher returns, albeit with increased risk and longer-term commitments through equity ownership.

Ultimately, the choice between Private Credit and Private Equity depends on investors’ risk tolerance, investment objectives, and time horizons. By understanding the distinct characteristics and considerations of each option, investors can effectively leverage these financing methods to optimize their real estate investment portfolios and achieve their financial goals.

Ready to learn more about diversifying your investment portfolio with private credit?
Explore Aspen’s Private Credit Fund, an open-ended and high-yield fund focused on providing credit to commercial real estate properties.

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

Strategies Ultrahigh Net Worth Individuals Use To Build And Keep Their Wealth

by Ben Fraser

Originally published by Ben Fraser on Forbes.com.

Ben Fraser helps investors navigate the alternative investment world as the Chief Investment Officer at Aspen Funds and co-host of Invest Like a Billionaire Podcast.

Many people chalk up the success of ultrahigh net worth individuals (UHNWI) to luck or trust funds, but the truth is, most of these people have common characteristics and strategies when it comes to guarding and growing their wealth.

And I’m not talking about obvious habits like “start investing early,” which I’ve read in countless lists. There are real, practical tools that multimillionaires and billionaires use.

We’ve studied the methods of these individuals for a while and found that many strategies are applicable to ordinary Americans also seeking to build wealth. So, that’s what I’m going to share today—the UHNW investor’s top keys to success.

Dominate The Tax Game

Propublica published an article releasing data from the tax returns of the wealthiest Americans. What it revealed is the overwhelmingly small percentage of taxes these individuals pay.

While there may be lots of opposing viewpoints on extreme wealth and wealth disparity in this country, the truth is that all of these top-earners found perfectly legal ways to, as a percentage, pay less in taxes than average American workers.

If you want to keep the wealth you’ve built, there are a few things we can learn from these tax strategies.

Focus on growing your “balance sheet” versus your W-2 income. This means focus on things that grow your net worth, rather than the income you earn from a job. For example, owning a rental property is an asset that adds to your total net worth through increased equity and appreciation over time, and comes with its own set of tax advantages. You will pay less in taxes for things like this than the income you earn from your 9-to-5 job.

Understand Economic ‘Tides’

Economic tides is my term for describing the bigger economic undercurrents that affect the short-term “waves” or activities. We write big economic updates with predictions for the coming year at the end of each year, and our advice is always the same: Look at the bigger fundamental drivers of supply and demand that will impact the economy over many years, not current oscillations of the stock market or latest doom-and-gloom headline.

These tides are things like long-term trends in inflation, unemployment, consumer and business sentiment, housing market supply and demand, interest rates and tax policies. Understanding the underlying trends and their trajectories will help you make solid long-term decisions for investing and protecting your wealth.

Consider Investing In Alternatives

Most UHNWIs have large portions of their investment portfolios allocated to alternative investments—or things other than stocks and bonds. Data from KKR shows that the allocation percentage the ultrawealthy have in alternatives is usually over 50%, compared to the 5% average investors put in alternatives.

While there are of course risks, as an asset class, alts tend to provide higher returns with less volatility than other markets. A balanced portfolio with true diversification is key.

If arguably some of the most successful investors invest heavily in alternatives, there is lots of potential there.

Use Debt As A Tool To Their Advantage

I won’t name any names, but we’ve all heard the financial gurus who paint all debt as the ultimate evil. But it’s simply not true. Good debt or “leverage,” i.e., debt used to buy assets, can actually be a significant tool for building wealth.

This is a hallmark move of the ultrawealthy. Even though UHNWIs certainly have the money or access to the money to purchase something they want, like a business or apartment building, instead, they borrow against their net worth and take out a loan to buy these assets.

Why?

Well, first of all, this allows them to keep their capital in their investments, which are ideally earning them additional returns.

Secondly, this debt they take on generally has a lower interest rate than their tax liability would be after liquidating an investment (another tax advantage like strategy No. 1).

And thirdly, debt is one thing that doesn’t adjust for inflation. With even moderate inflation, that debt is devalued over time, making that borrowed money even cheaper to borrow in terms of real money than the interest rate indicates.

Understand Risk-Adjusted Returns

If there’s one thing that too few investors take into consideration that the ultrawealthy understand, it’s that not all returns are created equal.

At face value, two different investment opportunities can have the same return. Say there’s a private alternative that returns 9% annually. To get a similar return in the public markets, you might have to turn to junk bonds. Well, junk bonds are notoriously risky, which means that the returns can be very volatile, leading to significant fluctuation, and potential loss of value.

To truly compare two investment options as apples to apples, you need to apply some qualitative analysis to normalize the potential returns, adjusting by risk factor.

Use Your Network To Find Good Opportunities

This strategy is probably the most obvious one among the list, but is not usually given the importance it deserves.

Your network can be an invaluable source of tools and resources, and of course, potential opportunities. The ultrawealthy are adept at leveraging their relationships to find new places to invest, as well as pulling on the experience of those they know to evaluate those opportunities.

While the majority of us will never be mega-millionaires, that doesn’t mean we can’t still apply some of the strategies that help the wealthy reach financial success.

Investment Opportunities with Aspen Funds

We have several private funds for accredited investors on our Offerings page. Regardless if you know which fund is right for you, our Investor Relations team would like to get to know you, your interests, and your timeline so that we can best serve you on your alternative investment journey. You can start by scheduling a call here.

 

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

The Best Types of Investments in an Unpredictable Economy

by Ben Fraser

When the economy is unpredictable and tumultuous, a few things happen… 

The stock market (and retirement accounts) can have drastic fluctuations, often wiping out years of gains overnight. 

People’s ‘risk meters’ go into overdrive – keeping them in jobs they don’t like, scaring them away from continued investing. Unfortunately, in this current environment, because inflation is high, the future value of their savings is being chiseled away. 

Navigating the complexities of a challenging economy without a crystal ball is tough – and knowing where to focus your investments to keep earning returns can be difficult. 

Here’s something to consider. The best types of investments to focus on when the economy is unpredictable have 2 primary features: lower risk and income-producing. 

Top features for investment opportunities in an unpredictable economy

Lower Risk

Oftentimes, inexperienced investors view stock market investing as “low risk.” After all, if millions of other investors are doing this, it has to be safe, right? The truth is, the stock market has inherent volatility that many investors don’t consider. 

And volatility kills the power of compounding. That’s why, when the economy is not stable, you want to focus on investment vehicles that are stable and carry lower risk. 

How do you find lower-risk investments?

Finding investments that are lower-risk may seem daunting. Of course, you need to do your own research and due diligence, but here are a few steps to consider that can help you identify opportunities that are less risky:

  1. Look for inflation-protected investments. In our current economic environment, high inflation is a key factor in the instability. And when inflation is high, it can have a big impact on your cash. Let’s say your money is tied up in a 5-year investment that doesn’t adjust for inflation, like bonds. By the end of that period, you may have “technically” made money on your investment, but the value of the dollar has decreased – and your debt terms didn’t adjust with inflation. So in reality, you made much less. Looking for inflation-protected investments, or investment vehicles that naturally adjust to inflation, can mitigate a lot of risk and protect your capital. One of the best inflation-protected vehicles is real estate. Mortgage rates, property prices, and rent historically track (and beat) inflation. Other asset classes that can be a hedge of protection against inflation because they aren’t as sensitive to public equity markets are commodities like oil and gas.
  2. Look for investments backed by actual assets. Investments whose value is (at least partially) based on a physical asset are almost always going to be less risky than investments where this isn’t the case. Venture capital, for example, is a riskier investment because you’re betting on the future success of a business. Owning a share of a valuable piece of artwork, on the other hand, gives you the collateral of the actual piece of art. Maybe its value changes, but it most likely won’t go to zero. Common investment vehicles that are backed by assets include art, collectibles, and – most notably – real estate. Real estate can include everything from multifamily syndications to industrial properties to mortgage note investing.
  3. Look for a track record. Aside from the actual investment opportunity itself, it’s also paramount to evaluate the risk associated with the operator of the investment. When the economy is unpredictable and you’re looking to lower risk, it’s especially important to invest with operators that have a solid track record. Key things to look for in a track record include length of time in operation, total assets under management, whether any return payments have been missed or delayed, past capital losses and historic performance during challenging economic environments, like during Covid. While past performance doesn’t guarantee future performance, positive indicators in all these areas can help mitigate some risk.

Want to learn how you can earn 9% passively? Learn about our Income Fund.

Income-Producing

Finding investments that produce regular returns in the form of monthly or quarterly checks are always top of mind for investors. But this becomes especially important in periods of economic uncertainty. 

Income-producing investments can help supplement earned income or provide a financial buffer if you hit any road bumps during an economic downturn.

Types of income-producing investment assets

Alternative investments:

  • Real estate. One of the easiest places to find investments that will generate regular income is real estate. There are crowd-favorite options like syndications in multifamily, commercial, and retail properties. There are also lesser-known real estate investments like mortgage note investing. 
  • Oil & Gas. Investing directly into existing oil fields can produce strong yields. While these types of investments can have more volatility given the ties to commodity prices, generally the risk-adjusted returns can be compelling. And similar to real estate syndications, these types of investments can be available to accredited investors.

Other less-common alternative investments that can produce income are things like investing in farmland that generates dividends or buying catalogs of music that produce royalties. 

Public markets:

  • Dividend stocks. Dividend stocks pay investors dividends usually on a quarterly basis, based on company earnings. The dividend amount varies and is determined by the company’s board of directors each quarter.
  • Bonds. Bonds are essentially loans to the government at a fixed-interest rate. You receive payments at this fixed amount on a fixed schedule according to the loan terms. 
  • REITs. Real estate investment trusts are publicly traded shares in a company that owns physical real estate (like office buildings), collects rent from tenants, and distributes the majority of its earnings as dividends. 

Investment Opportunities with Aspen Funds

One of the first funds we created at Aspen is our Income Fund, which was designed to provide 9% current income for investors. That fund has been operating for 9 years, and we have never missed a preferred return payment. To learn more about the fund, register to watch the webinar. 

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

Investing in Industrial Real Estate in 2023

by Ben Fraser

Investing in industrial real estate has been an investor favorite for decades, especially for institutional investors. The industrial sector has consistently demonstrated resilience, even during economic downturns, making it an attractive opportunity due to its stability and profitability. 

With the rise of e-commerce and the increasing demand for warehousing and distribution centers, the industrial real estate market is thriving. In this article, we will delve into the economic trends behind industrial real estate (including a new driver of growth) and look at some of the key benefits and risks of investing in this asset class.

What is Industrial Real Estate?

Before we go too far, let’s first set the stage – what is an industrial property? Industrial real estate refers to properties used for industrial purposes, such as manufacturing, warehousing, distribution, and research and development. These properties can be standalone buildings or multi-building complexes, and can include features such as loading docks, high ceilings, and heavy power supplies. You’ve probably driven by them and not even realized what they were used for. But this sector of real estate is essential to the growth and vitality of the U.S. economy.

And if you haven’t been following trends for this asset class in recent years, it’s actually experiencing a huge boom. What is happening?

Growth Trends in the Industrial and Manufacturing Sector

Industrial real estate values have been flourishing in recent years, far outpacing other forms of commercial real estate like retail and office buildings. 

Graph showing Industrial, Office, and Retail real estate compared to inflation since 1980. Industrial real estate has skyrocketed since 2020.

There was an initial boost to industrial real estate in 2008-2009, rising in pace with retail and office. We can also see in the chart above, that inflation (the dashed blue line) has been growing steadily over the past 40 years. All forms of commercial real estate have been pretty close to the inflation line over all that time. But over the last 10 years, industrial real estate has been skyrocketing, now surpassing retail in the last few years. So, what’s been causing this surge in valuations?

This next chart shows the supply and demand trends for industrial real estate. 

Graph showing industrial real estate supply and demand trends, where vacancy rates are now at just 2.9%.

The gray bars are the number of completions (or newly constructed properties) in a given year, being brought to the market. The orange bars show net absorption, meaning the properties being leased up (or absorbed), and taken off the market. In the past two years we’ve seen record absorptions. 

Even with record levels of  industrial real estate being developed, these properties are being absorbed even faster. If you follow the yellow line, we see the net vacancy rate is dropping. Vacancy rates now are hovering around 2.9%. 

So what’s going on?

Key Drivers of Growth in Industrial Real Estate

The large growth for industrial real estate can be attributed to several factors: the rapid rise in eCommerce, supply chain disruptions, and the reshoring of manufacturing to US soil. 

Rising E-commerce Strengthens Demand for Industrial and Manufacturing Space

E-commerce has been a huge driver of the industrial boom over the past several decades. As e-commerce has grown, the need for keeping inventory and for distribution and warehousing has massively increased. 

Graph showing growth in e-commerce since 2015, with a large spike in 2020 due to Covid, and a leveling off of growth since then.

In the above chart, you can see e-commerce sales spiked substantially in 2020 as the pandemic hit and people weren’t able to leave their homes and instead needed to get things delivered to them. 

But after that spike, it very quickly dropped and then started to plateau. We believe that e-commerce growth as a percent of total sales will probably continue to increase, but at a much slower pace, as people still prefer to shop in person for certain things. 

E-commerce growth, which has been one of the biggest drivers of industrial real estate for so long, is starting to slow down. But at the same time, we’re now seeing several new trends causing a resurgence of industrial growth –  bringing manufacturing back to America and the “re-inventorying” of critical manufacturing components. And we believe that’s going to be another big rocket booster to industrial real estate.

Supply Chain Disruptions Highlight Importance of Resilient Operations

We have all seen plenty of headlines in the last few years about supply chain disruptions. Here’s an interesting case study.

Picture of a new article about Ford's new truck inventory sitting stuck because of missing microchips due to supply chain issues.

Ford, like many other automakers, has been dealing with the effects of a severe microchip shortage. Tens of thousands of Ford trucks are sitting in parking lots, unable to be sold. The missing microchips, which are needed to complete the cars, have been held up by supply chain disruptions. This is a byproduct of having outsourced the manufacturing of these critical components overseas.

Because of this, Ford has over $2 billion of potential revenue that they can’t capture just sitting in parking lots. So the question is, “how valuable is it to Ford to control the manufacturing of this critical component?” The answer is very important! 

And Ford isn’t just an isolated case, this is happening all across U.S. (and even European) manufactures. Supply chain disruptions have had a significant impact on industrial real estate in recent years. The pandemic has disrupted global supply chains, leading many companies to reassess their logistics and storage strategies. This has resulted in increased demand for industrial real estate as companies look to bring their supply chain operations closer to the end customer.

Reshoring Manufacturing Drives Need for Industrial Real Estate

For decades, we shipped our manufacturing jobs overseas for the most. But it has started to shift in the last few years. The number of manufacturing jobs that will be brought back to the US is projected to hit 350,000. 

Graph showing the growth of US manufacturing jobs, now at 350,000.

Here’s another chart showing manufacturing employment. 

Graph showing that US manufacturing jobs are rising for the first time in decades.

If you look back to the 1990s, the manufacturing employment trend was pretty clearly heading downward. But instead of continuing to see a decrease, we’ve started to see an uptick in US manufacturing jobs in the last 10 years.

Outlook on Industrial Growth

Despite very strong underlying growth factors over the long-term, stubbornly high inflation and economic slowdown concerns may make for slower growth in the short-term. Commercial Property Executives (CPE) research highlights that “although both investor and occupier demand is still high, absorption, rent growth and sales activity are simmering down.” Though CPE expects labor shortages and rising construction materials to be some of the biggest challenges for industrial developers this year, it also forecasts that “industrial assets are anticipated to be among top performers across the commercial real estate sector in 2023.”

Deloitte’s research is also showing a positive outlook for commercial real estate in 2023 from survey results. “When it comes to real estate fundamentals—cost of capital, capital availability, property prices, vacancy levels, leasing activity, transaction activity, and rental rates—most respondents (66%) expect improving or stable conditions for next year. Respondents point to leasing activity, tightening vacancies, and rental growth as having the strongest potential for improvement.”

From An Investor’s Perspective – Is Industrial a Good Investment?

When it comes to assessing the actual opportunity for investors in industrial real estate, there are several things to consider.

Risks of Investing in Industrial Real Estate

  • Risk of vacancies: Many times these properties can be occupied by a handful or even a single tenant. If that tenant stops paying or becomes insolvent, that impacts potential cash flow in the short-term.
  • Build-to-suit risk: When a developer undertakes building an industrial property to the specifications required by the tenant, that’s called build-to-suit. This customization means the property may be harder to lease out again should the tenant ever leave or stop paying rent.
  • Speculative Development: On the other side of the development coin are “speculative” developments, meaning no tenant(s) are identified prior to construction. This could result in a vacant property if not developed correctly or it’s in a non-growth market.
  • Modernization risk: The industrial sector is always evolving, meaning requirements for machinery, loading docks, HVAC equipment loads, or building access could change. This can potentially leave the building outdated and in need of expensive modernization. 

Benefits of Investing in Industrial Real Estate

  • Strong demand: The demand for industrial space has been growing due to e-commerce growth and the increasing need for warehousing, manufacturing and distribution centers.
  • Long leases: Because moving large-scale operations to another industrial facility can be a big undertaking, most tenants stay put for a while, and leases can be much longer than in other types of commercial real estate.
  • Long-term appreciation: Industrial properties tend to appreciate in value over time, and as shown in previous charts, values have significantly outpaced other asset classes and inflation.
  • Inflation hedge: Inflation can increase operating costs, but rental income from industrial properties can also increase, offering protection against inflation.
  • Tax benefits: Industrial real estate investments can offer favorable tax benefits, including deductions for depreciation and operating expenses.
  • Less oversupply risk: While other real estate asset classes may hit market saturation with more available properties than demand, this is less likely in the short term for industrial real estate, given the steady e-commerce trends, historic undersupply, and growing industrial space needs with the reshoring of manufacturing processes.

Investment Opportunities in Industrial Real Estate

While we are not investment advisors and you should speak with your own financial counsel, at Aspen, we are very excited about the opportunity in Industrial real estate, both in 2023 and in the longer-term. 

If you’re curious to hear more about these trends and a specific investment opportunity, register for our webinar on Thursday, Feb 16, 2023 at 2pm Central.

Register for the webinar

 

*Please note nothing contained in this communication constitutes tax, legal, insurance or advice of any kind, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument.  If you are not the intended recipient of this message, any use, dissemination, distribution or copying of this communication is strictly prohibited.  Investors should conduct their own due diligence, not rely on the financial assumptions or estimates displayed in this email or on the website, and are encouraged to consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity. Investments in private placements involve a high degree of risk and may result in a partial or total loss of your investment. Private placements are generally illiquid investments. Investors should consult with their investment, legal, and tax advisors regarding any private placement investment. Please review the Private Placement Memorandum for a full explanation of this investment along with key risks.

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

8 Recession-Proof Investment Strategies To Weather Any Economic Storm

by Ben Fraser

Just hearing the word “recession” can make any investor freeze up a little.

When the economy takes a dive – where should you park your capital? Should you pull all of your money out and hunker down? Will any opportunities weather the storm?

As investors, our goal is to make a return on our investment and preserve capital. This can certainly become more difficult in a challenging economic environment like a recession – but it’s possible.

While many investors are inclined to think there’s little money to be made through these times, the reality is that there are many viable opportunities that surface during a downturn. 

The Keys to Investing During a Recession

All Recessions Are Different

While most recessions might feel the same in the sense that we tighten our belts as the stock market dips, the economy slows down, and unemployment spikes – the reality is that every recession is different. 

What caused the last recession is not going to be what causes the next recession. The economic factors are never the same. The key to successfully navigating investments during a downturn is to understand what’s causing the economic shift.

Understanding the Economic Tides

One of the things we talk about all the time on our podcast is understanding economic tides – the big, long-term economic trends creating opportunities. 

Anyone can be a successful investor when the economy is on a tear. After all, a rising tide lifts all boats, right? But if you also want to make money when other boats are sinking and the market isn’t piping hot, you have to understand what’s going on beneath the surface. 

Some current examples of these “tides” are the state of supply and demand in housing, the emerging energy crisis, and how stimulus measures during the pandemic affected savings, spending and employment. These will give you insight into what will happen in the economy long term. Check out our 2022 special economic report for a fantastic overview on these trends. 

There are always opportunities to profit during a recession if you align yourself with long-term trends that will continue despite headwinds. 

“Be fearful when everyone else is greedy. Be greedy when everyone else is fearful.” –Warren Buffett

Have Liquid Reserves

Generally speaking, it’s good to have liquid reserves. Cash is necessary for personal living expenses and opportunities, especially if any surprises come your way. But cash is also important because some of the most significant investing opportunities will happen during a recession. If you have available cash, you can take advantage of those investment opportunities when they arise. 

8 Recession-Proof Investment Strategies to Evaluate Opportunities

So if you have capital you’re looking to deploy, but are concerned about recession – what should you be looking for when you’re evaluating investment opportunities? 

  1. Emphasis on current cash flow. It’s not uncommon to find investments that offer a big return. But for most of them, that return is built into the backend – and may not for years into the investment before the business plan is achieved. During a recession, it’s important for investors placing their capital to emphasize investments with existing cash flow. If a real estate investment comes up against renovation obstacles because of a slowing economy or supply chain issues, or leasing the property is slower, cash flow can help weather that storm and continue making debt payments until circumstances shift. 
  2. Multiple exit strategies. It’s important even in the best of economic times to not have your strategy be contingent on one particular outcome. This is even more true during a recession when investments are more susceptible to unforeseen changes. Look for opportunities that include multiple ways to generate a positive return on your investment.
  3. Overall leverage. When you’re considering an investment, evaluate the underlying capital stack (if you’re unfamiliar with this term, I have a very in-depth article that breaks this down). Deals with lower leverage will have more sustaining power during a recession because they have less debt service requirements. It should be easier to generate cash flow against lower debt payments. Higher leverage deals should be viewed with caution.
  4. Diversification. Every recession impacts different asset classes differently. Even with a deep understanding of economics and investing, it’s impossible to fully predict  what will happen. Diversifying and having exposure to a variety of asset classes will reduce your risk.  
  5. Big allocation in private alternatives. Private alternatives have many benefits, and if you’re diligent in searching for diversification, emphasis on cash flow, and multiple exit strategies, putting a portion of your investment dollars here can be advantageous. The hidden strategy here is that illiquidity, often considered a downside of many private alternatives, can actually be helpful during a recession. The temptation for many investors who do have liquid investments to sell during a recession is high, even though it’s usually a bad time to sell. Lack of liquidity removes the emotional reaction of selling at a bad time and can create better outcomes in the long run. 

Three bonus strategies for investing in our particular current economic environment:

  1. Inflation-protected assets. We believe inflation is going to remain higher for a while, so look for inflation protected assets like multi-family, self-storage, and residential housing; assets that will benefit from higher inflation.
  2. Energy space. There is also a unique opportunity in the energy space, due to inflation and the brewing global energy crisis. Supply is extremely low, there has been little capital investment over the last decade, and though there’s been a strong effort to transition to ‘green’ energy, we cannot yet meet that demand and still rely heavily on oil and fossil fuels. 
  3. De-globalization. Supply chains have been majorly disrupted both during and post-Covid. The cost to deliver goods is high, driving many companies to bring manufacturing distribution back to the US. This will create additional opportunity in the industrial space, as US companies look to fulfill demand. 

If you’d like to learn more about diversifying your portfolio with our funds, get started and schedule a call with investor relations today.

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

4 Financial Moves to Make Before Year-End – There’s Still Time

by Ben Fraser

As we near the end of the year, many people start evaluating their finances and thinking about how to prepare for the coming year. If you still haven’t made any financial moves, don’t worry – there’s still time. But you’ve got to move fast.

And with the unique economic circumstances – post-pandemic supply chain issues, headline inflation numbers peaking, and impending tax changes – it is important to evaluate how you can be set up for financial success. So how can you best prepare your finances to come out ahead?

Here are 4 things you can do to help you prepare financially for the end of the year and heading into 2022.

1. Focus on tax-advantaged investments

With taxes possibly rising next year, it’s a good time to not only be thinking about your investment strategy and the asset classes you think will perform well over the next several years, but also paying attention to an investments’ tax-advantages.

Tax-favorable investments can help lower your tax liability come tax season, which allows you to keep more of your wealth. And if you can deploy cash into certain investment vehicles before the end of the year, you may be able to apply those tax write-offs to your 2021 income.

One of the main tax advantages to look for is depreciation. When your investment portfolio includes assets that depreciate, whether something tangible like a property or intangible like a patent, that depreciation can reduce your taxable income or allow you to defer income taxes into future years. One of the best ways to get depreciation is by investing in private real estate syndications or funds. These have the advantage of being passive and many are still available to invest in before year-end. The best options are often available for accredited investors only, but if you aren’t, there are still some great choices available in Reg A+ funds.

Another tax-advantage to look out for is one where the earnings of the underlying investment are taxed as long-term capital gains, which can save you significantly on your tax bill compared to investments generating short term capital gains. Long-term capital gains taxes are on a graduated scale for taxable income at 0%, 15% or 20%. Capital gains tax rates may increase in the coming year, but they’ll still be lower than ordinary income tax rates.

And finally (my personal favorite), look for investments that can take advantage of opportunity zones. These zones are geographic areas designated as economically distressed, where investment is encouraged to spur economic growth and job creation. Money invested in these areas for certain lengths of times can reduce your cap gains to 0%, and also defer your taxes on previously earned capital gains. Again, many are available as passive syndications fundable this year.

It should be apparent, but never make an investment based solely on its tax advantages. That should only be one factor among many to consider. Also, it is important to discuss with a CPA how these tax advantages can work in your favor. There are certain rules and limitations on how these can be utilized in your personal situation.

2. Max out your IRA or solo 401K

If you have not yet maxed out your IRA or solo 401K account for the year, now is the perfect time to do it.

There are a few reasons to do this. Firstly, with traditional retirement accounts, you’re contributing pre-tax money, which means you’re investing more upfront than if you invested after-tax dollars. This gives your account a greater chance to grow over time.

The other primary benefit is that, because these are tax-deferred investments, you can reduce your taxable income by the same amount you contribute.

You can contribute up to $6,000 per year, or $7,000 if you’re over 50. If you’re a business owner with no employees, you can create a solo 401K and contribute up to $58,000 in 2021.

We would also recommend opening a self-directed IRA or 401K which provides much greater flexibility and options for investment.

3. Refinance your mortgage and take out your equity

We know many people find this topic controversial. Some people don’t feel comfortable with this strategy and would rather pay off their housing debt. But with inflation running at 6% and mortgage rates at 3%, “real” interest rates are below zero, meaning you are essentially being paid to borrow. This is one of the best strategies to make inflation work for you.

Inflation has a two-fold impact here. First, inflation works in favor of borrowers by deflating the value of your mortgage debt. Over the course of 15 or 30 years, as you pay back your mortgage, you are paying it with dollars that are worth less than dollars today. For example, if you take out a 30-year fixed-rate loan for $300,000, and inflation continues at 6%, you will pay only $120,000 in today’s inflation-adjusted dollars. See this fun inflation mortgage calculator here. Second, inflation generally increases asset prices, meaning your home may be worth more today than it was even a year ago. A cash-out refinance allows you to capture that extra equity and put it to use.

The key here is to invest the equity you pulled out into something that is stable and that can generate additional growth or income. And if the income or earnings from that investment are higher than the interest fees you’re paying on your mortgage, it’s a net positive.

It’s important to mention that before you embark on a change like this, you need to understand the additional risk you create by increasing your leverage. But as long as you have additional income coming in to cover your higher expenses, your risk is significantly reduced.

4. Deploy cash into inflation-protected assets

Last year we recommended that you keep some cash on hand, as the looming economic recovery post-pandemic and political transition added much uncertainty to the market.

This year, we’re recommending you deploy your cash (including the cash you pull from your home equity) into assets that provide protection against inflation. Those who lose the most in a high-inflation environment are those with hordes of cash, as the value of cash continues to decrease as inflation increases. 

Assets that provide protection against inflation are assets whose value continues to grow over time, like real estate, which is our personal favorite. Others can include gold, cryptocurrencies, commodities, and even much of the stock market.

So, to wrap up…

Whether you are already fairly protected against future unknowns or plan to take action, the end of the year is always a great time to reevaluate your portfolio, current exposure to risk, and make changes heading into the new year.

Join Our Mailing List

Get the latest in investing advice, industry news and updates on our current and new offerings
  • This field is for validation purposes and should be left unchanged.

x

5700 W 112th St, Ste 110 • Overland Park, KS 66211 • Privacy Policy