(This article is NOT investment advice)‍

Investing is increasingly being talked about in the Czech Republic. And that's a good thing. According to official surveys However, 37.4% of Czechs consider it the best option to value their money in savings accounts. Despite the fact that financial literacy is increasing domestically, most investors focus on only one type of asset. It's much more efficient to diversify money smartly and take the best from each category. In today's article, we look at a comparison of the performance of the S&P 500, the most well-known stock index in the world, versus the real estate offering at Investown.

Let's look at the United States of America, for example. For citizens of this country, investing in the stock market is an absolutely normal part of life (working Americans secure funds for retirement with the help of special programs that work on the principle of investing in stock portfolios). In our country, the situation is quite different.

🇨🇿 Only 12% of the Czech population invests their money in stocks or bonds. He invests 8% in real estate. In cryptocurrencies or precious metals, then equal 6%. We at Investown have a clear mission — to bring real estate investing closer to a wider audience and show the public that “it goes” even without millions in the account.

‍

Is the stock market in a “bubble”?

Let's simplify it — when talking about the stock market in general, most of the time a benchmark is used precisely in the form of the U.S. S&P 500 Index. He monitors 500 largest companies in the United States.

That, admittedly, doesn't even happen to account for all the stocks in the world. But when we consider that most of the advances in human knowledge have been made in American companies in recent decades (these days mainly those of technology like Nvidia or Microsoft), this benchmark can serve us quite well.

This index ascribes an average annual return of 10-11% over the last 20 years. Looking at the numbers from recent times, it is noticeable that the results are quite extreme. In the last month alone, the S&P 500 has gained 4.20%. Since the beginning of the year, it is a whopping 16.38%.

This is great news for equity investors, but we should also look at this issue from the other side, a little off. Such high returns are definitely not common in the stock market. After all, it is not cryptocurrencies or other assets for which significant price fluctuations are typical.

The stock market is prone to bubbles and reacts sensitively to current events. When Covid-19 struck in March 2020, it quickly became The S&P 500 fell 30%.. A similar situation occurred at the turn of the new millennium, when the Internet fever ended and people realized that not every company that does business on the Internet has a bright future ahead of it.

It is necessary to remember that Volatility is inherent in investing. Therefore, at different periods it is more profitable to invest in different assets — in some more, in others less.

‍

Real estate offers stable diversification for your portfolio

A lot of people still consider them not very dynamic investments. We would fence in here, with permission. Looking at the real estate market and its evolution in recent years, it doesn't seem like a completely quiet ride either...

Central banks around the world are adjusting their interest rates today. As soon as our Czech National Bank succeeds to tame inflation to a long-term target of around 2%, it is virtually certain that house price growth will slow down. And mortgage rates will get cheaper.

Meanwhile projects on the Investown platform they still offer a yield of around 8-10% p.a. To this we add that the maturity of these offers is often in the order of several years. Thus, we have before us one of the most reliable options for ensuring a stable and long-term return on your investments.

‍

So who wins?

None versatile The investment portfolio does not exist, nor can it exist.

IN A well-diversified investment portfolio Real estate as well as shares or other instruments have their place. Market cycles are constantly changing. The stock market, for example, is now near its all-time highs.

This fact motivates more and more people to invest in stocks, But in the long run it is unsustainable.. At least according to statistics.

We at Investown believe that It is investment in real estate that should be presented to the public on a wider scale. We have been trying to do this since 2021. And over 100,000 active investors on our platform shows us that we have stepped in the right direction.

‍