Investing in real estate: 5 reasons

Please raise your hand if the following situation sounds familiar:

You are in your mid-20s and have just taken your first permanent job. The financial scarcity during your studies or training has finally come to an end and you no longer have to live in a small shared room. You earn your first real salary that you can actually live on. The world is yours and you don't think about tomorrow. Especially not about topics like old-age provision or investments.

Invest in real estate

Why invest in real estate?

Do you know this situation from yourself or do you know someone who is in this situation right now?

It is unfortunately a widespread habit to postpone one's old-age provision when one is still young. As a young person, you often think to yourself, "Oh, I still have so much time. But I'll take care of it soon enough."

But "soon" is a very elastic term, and so years often pass without any real thought being given to the financial future. Sometimes you don't have time, sometimes you don't feel like it, ... There are many reasons for putting off the topic of old-age provision. Procrastination seems to be THE buzzword in 2021.

But why are finances among the things that are most often put off?

Financial education: Missing

Germans, and especially German youths, do poorly when it comes to financial literacy.
A study by comdirect has shown that most young people do not know what inflation means or what is meant by liquidity. (Source: https://www.comdirect.de/cms/ueberuns/de/presse/jugendstudie-bildung.html)

Financial education is not on the curriculum at German schools, and even among adults, knowledge of financial products is rather modest.
And precisely because this is the case, many people think that financial knowledge is very complex. This, in turn, makes it difficult to deal with the topic and find an entry point, as it initially seems like too extensive an undertaking.

The situation is aggravated by the fact that Interest rates are currently at a record low. And even those who are not well acquainted with investment opportunities know:

If financial investments do not generate interest, then the investment is not worthwhile.

And so the issue continues to be postponed until at some point it dawns on you that time is slowly running out.

It is better to read up a bit on the subject yourself. The subject of finances is less scary once you have dealt with it.

After all, if one day you realise that too much time has already passed, you may be inclined to trust a bank advisor who may care more about his own finances than yours.
And then you invest your money to line his pockets but not your own. This is a risk if you have not dealt sufficiently with the subject of finances yourself.

Does real estate as an investment suit you?

Investment criteria

Imagine that you had parked your money in a safe investment parked. It increases year after year. You have diversified your assets so that financial crises do not worry you. You have also used both short-term and long-term forms of investment and have a portfolio that also has relatively liquid forms of investment so that you can achieve quick liquidity in an emergency. With the fixed sums invested, on the other hand, you benefit from the famous compound interest effect.

In the best case, you have no work with your money investment. You can sleep soundly at night knowing that your money is safe and working for you every day.
No matter what the investment, you only want to invest once and then not have to worry about it again.
You have provided for yourself and can leave your descendants not only cash assets but also tangible assets in the form of real estate.

To get this dream scenario, you need to expand your financial knowledge. You are already taking the first step by reading this article. In this blog article, we would first like to show you why it is important to absolutely include real estate in your portfolio.

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5 reasons why you should invest in real estate

1. diversification - the security booster

Real estate is a safe form of investment. A good portfolio always includes shares. However, the risk of a loss is very high with shares. To compensate for this risk, it is advisable to also make safe investments that nevertheless achieve a corresponding return. This undoubtedly includes real estate, as it combines security and return.

2. protection against inflation

Based on the study mentioned above, we would first like to explain what inflation is in the first place. It is not a complicated construct. It is simply the increase in the price level. Prices increase and thus money loses purchasing power. With the same money you can buy less this year than last year. That is the meaning of inflation.


On average it is around 2% - currently it is even significantly higher. So in order to invest your money profitably, you need to achieve a return that is well above 2%, otherwise your money will be eaten up by inflation.
However, if you buy your first property and rent it out, you can make inflation work FOR you. In most leases there is a regular rent adjustment. This means that the rent increases in line with inflation. This means that you are not a victim of inflation, but can even profit from it.

how can you invest in real estate?

How does it work: investing in real estate?

3.double return

A property achieves, if you like, a double return. What is meant by that?
There is a return that lies in the monthly rental income. But then there is the return on investment that Increase in the value of the property is made. If you buy a property today, the value of the property will increase over the years. You can profit from this in two ways: On the one hand, you can sell the property at a correspondingly higher price and thus achieve a high Tax-free profit gain.
On the other hand, you can link the rental prices to the increase in value and increase them accordingly. You can thus decide whether you want to collect a higher sales price or a higher monthly rental income.

Crisis? What crisis?

If you invest in the real estate market, you are relatively crisis-proof - exceptions prove the rule, as always. But think about how a market comes into being. A market is created by supply and demand. As far as real estate is concerned, there will always be demand because everyone needs a home. Of course, prices may fall for a short time, but in the long run, real estate investment will always be worthwhile.
In addition, prices have not fallen for years, and further increases in value can be expected in the future.

5. tax advantages

A property has so many advantages that they even extend to tax law. With a property, you can actually save taxes. You can deduct a wide range of costs for tax purposes. We have already published a separate article for this, as the possibilities are really numerous. You can get an overview in the blog article "Save taxes with real estate".

We would like to state that there are many good investment options and that it is important to diversify. For this, you need to know all the options and gradually build up your financial knowledge. We are happy to contribute to this and inform you regularly about the opportunities that are available to you on the financial market.

Real estate as an investment

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