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It’s the holiday season and for many of us, that means we will be traveling to see our loved ones.

The two main ways we will get there are by car or plane.

Our personal preference is always to travel by plane vs car on any trip that will take over 6 hours to drive.

Why?

Because it is faster to fly.

But many people would prefer to drive regardless of how much longer it would take.

Why?

Because they feel safer.

But is that “feeling” actually true?

According to the NSC (National Safety Council), the odds of dying in a car crash as a driver are 1 in 114, and 1 in 654 as a passenger.

The odds of dying in a plane crash are 1 in 9,821 when you include commercial and personal plane crash incidents.

We are no mathematical geniuses but it looks like the risk of mortality from a car crash is in the range of .15% to .8% whereas the risk of mortality from a plane crash is .01%.

Meaning even on the low end you are 15x more likely to die in a car crash than in a plane crash.

Now let’s flip this scenario into investing.

Why do more people invest in the stock market vs private real estate?

Because they feel safer.

But are they really?

No!

Let’s objectively look at the facts via the Sharpe ratio.

For those that don’t know what the Sharpe ratio is, it is a measure of risk-adjusted return.

It describes how much excess return you receive for the volatility of holding a riskier asset.

Take a look at the 5, 10, and 20-year historical averages of private real estate with, stocks, bonds, and public REITs.

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5 Year

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10 Year

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20 Year

Are you seeing what we are seeing?

Turns out what we all originally thought was dead wrong.

Private real estate has the same risk level as a bond while generating significantly higher annual returns than a bond.

Meaning that when you invest in private real estate you are getting the safety of a bond but the growth of a stock or REIT, is only better.

To take it back to our fly vs drive scenario, you can achieve your wealth goals faster and safer when you invest in private real estate vs if you remain with the standard forms of general investing.

If you want to play around with some numbers you can try out our scenario planning calculator here to see if Anthem might be a good fit in your portfolio moving forward.

And if you like those projections then we encourage you to schedule some time with a member of our leadership team to review your goals and create a blueprint for your success.

Next Steps:

 

  1. Play around in our scenario planning calculator.
  2. Schedule a call with a member of our leadership team.
  3. Register for our upcoming office hour Wednesday, December 21st.
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