Real Estate, Precious Metals and Collectibles
Investing in real assets (real estate, precious metals, and collectibles) is essentially equal to investing in financial assets in which the investor has expectations of return be it through incomes and / or appreciation of capital.
The greatest differences that exist in investing in financial assets and real assets are the requirements of specialized knowledge and the lack of centralized markets.
Specialized knowledge in real estate and collectibles are essential in order to get benefits through this kind of investment. Investors in financial assets can be managed with less specialized knowledge through investment in mutual funds and exchange-traded funds to be able to count with the advice of professionals in finances. Specialized knowledge in real estate, art, precious metals, coins, and antiques are essential to allow you make a good buy and sales at right prices. There is almost no transparency in prices with real assets because there are no formal markets such as those existing for stocks (stock exchanges).
Real assets prices can be gotten through the specialized magazines and other publications, but these also can be difficult to compare because of the different features, characteristics and quality. Therefore, price comparisons are not really at hand, so a specialized knowledge about a particular type of real asset is necessary to protect the investor from an excess in payment when buying and getting a lesser value when selling the asset.
The greatest advantages at investing in real assets are that these generally have a better performance than financial assets during periods of great inflation and that along with financial assets offer a better portfolio and a larger variety.
The greatest disadvantages of real assets are that they are not so negotiable as stocks and some bonds that can be sold in minutes, and that they do not have liquidity.
The investor could never get the ask price and in order to sell a real asset he would have to incur in a significant concession in price.
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