As Inflation Bites, Investors Can Hedge With Real Estate

CEO Patrick Carroll explores how real estate can offer attractive risk-adjusted returns during volatile financial markets.

By Patrick Carroll, founder and CEO of CARROLL

With inflation at four-decade highs, construction costs soaring, and mortgage rates being driven higher by a U.S. Federal Reserve battling to avoid stagflation, you might think that real estate is a poor investment. But you’d be very wrong.

It’s been a stressful year for most investors. The classic 60/40 stock/bond portfolio has struggled amid highly volatile financial markets. A recent report from Goldman Sachs noted that “today, a 60/40 portfolio [split between equities and bonds] yields less than 2% — a far cry from the 5%-plus offered in the ’70s, ’80s, and early ’90s.” One reason for those lackluster returns has been the fact that both stocks and bonds fell this year — an occurrence that is quite rare.

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