Smart Diversification

As the stock market and the energy sector are seen as risky investments for accredited investors in Canada, real estate remains a top pick for those seeking yield and wealth preservation.

The real key to successfully ensuring ongoing passive income streams and wealth preservation is diversification. It is what has enabled the wealthy to grow their net worth even when markets take unexpected turns.

A great place to start diversifying is with your own home. Warren Buffett continues to be adamant that his best investment was the purchase of his own home. Aside from the equity appreciation it can provide, we all need somewhere to live and it can be one of the best vehicles for passing on an inheritance and ensuring provision for the next generation.

It is also wise to expand and separate true investments from personal use assets. City condos have been a trendy choice in recent years. However, recent grumblings about Toronto developers changing their minds about selling individual units and converting to rentals suggests that multifamily rentals or mixed use properties might be a better choice right now.

For Canadian business owners, purchasing business premises may also be a sound move. If you plan to be in business for several decades, there can be substantial perks associated with owning your own building. Variations of this may include partnering to invest in office or retail buildings or acquiring multi-tenant properties; which means others help pay for the investment and operating costs.

Consider a mixture of established stronghold markets and growing up-and-coming areas, as location diversification will be extremely important for Canadian investors. Consider which areas are likely to produce the best incomes and have the greatest prospects for appreciation. Lastly, measure specific investments based on their individual merits and select those you’d be happy to hold long term given any market fluctuations.