How Much Of Your Investment Portfolio Should Be In Commercial Real Estate?
Recently, private Canadian investors have been outpacing large funds in acquiring commercial property investments. The attraction is clear, but how much of your savings and investment portfolio should be dedicated to this sector?
To determine, individual investors must understand what these types of investments would do to their portfolio, including advantages and risks, all while comparing it to other types of investments.
According to the Harvard Business Review, the process of investing should reflect your income needs. Below are several investment periods.
1.) Stable Investments – These investments will provide the minimum income you need to live the lifestyle you require.
2.) Slightly Riskier Investments – Investments that fall into this category enables you to generate more disposable income to take your lifestyle to higher levels. However, you are not dependent upon them for your mandatory living expenses.
3.) Risky Investments – These opportunities should make up a small portion of your portfolio, as they have a higher-risk probability. However, these investments can generate large returns on investment if successful.
Commercial real estate classifies as “stable investments” and can provide you with mandatory minimum income.
Analysts estimate that 30 per cent of your portfolio should be allocated to income producing real estate. Of course, that number will fluctuate depending on your disposable income.