A financial advisor could guide you in making real estate investment decisions during a recession.

Is Real Estate a Good Investment in a Recession?

A recession is marked by a shrinking economy. People spend less money on discretionary purchases, focusing instead on essentials. Companies may slow down hiring or begin laying off workers to bolster their bottom lines. Stock prices may drop in the face of uncertainty about the economy.

While it’s not exactly a rosy picture, real estate can offer some stability for investors when the economy slows. There are three primary factors that can make real estate a good buy if you’re looking for an alternative to the market in a recession:

• Low correlation to stocks: Historically, real estate has a low correlation to the stock market. That means that even if stocks are experiencing increased volatility because of a recession, there’s very little carryover to the real estate market.
• People still need housing: Even when the economy is in a downturn, people still need a place to leave. If demand for rental properties remains steady or even rises during a recession and there’s a limited supply of housing to go around, property investors are better positioned to be able to count on a steady stream of rental income.
• Recessions create bargains: A recession doesn’t automatically precede a drop in home values. But if a recession causes a hot housing market to cool off, that could open up opportunities for investors to purchase rental properties at a discount.

Real estate can also act as a hedge against inflation in the event that a recession leads to stagflation. Stagflation is marked by high inflation and high unemployment. Real estate prices tend to keep pace with rising consumer prices, making them a more inflation-proof investment.

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Best Real Estate Investments for a Recession

If you’re interested in getting started with real estate investing during a recession, the first thing to consider is what types of properties might work best for you. Buying a rental property might be an obvious choice. As long as you’re able to keep tenants, renting out property can generate income through a recession.

There are different types of rental properties you might consider, including:

• Single-family homes
• Tiny homes
• Duplexes, triplexes and quadplexes
• Apartment buildings
• Condos

The more units you’re able to rent out, the more rental income you can generate. But more units can mean higher maintenance costs and more responsibilities overall. You can higher a property manager to oversee your rentals for you but you’ll have to pay them a fee, which can detract from your profits.

If you’re not interested in owning rental property for the long term, you might try flipping real estate instead. Flipping means finding a property, fixing it up, then reselling it for more than what you paid. Flipping properties in a recession can be tricky since the pool of ready homebuyers might shrink.

The longer the home sits on the market, the more you might pay toward the mortgage if you took out a loan to purchase it. But if you’re able to find a qualified buyer relatively quickly, flipping homes could allow you to pocket significant profits if you’re buying homes at rock-bottom prices.

It’s not just residential real estate that can be a good buy during a recession either. Certain types of commercial property, such as warehouse space and farmland, may continue to do well during a downturn. As with housing, people still need basic commodities like wheat and corn products during a recession, which are things farmland investments can be used to produce.

Student housing and senior housing can also be good investments since students still need a place to live while attending school. The aging population in the U.S. means that demand for senior housing isn’t likely to go away any time soon, whether there’s a recession going on or not.

Investing in commercial properties can be attractive since you don’t need to get a loan or buy property. Instead, you could invest in a real estate investment trust (REIT) or through a real estate crowdfunding platform. REITs and real estate crowdfunding can offer the benefits of property ownership without having to actually own it. You can also invest in real estate stocks or exchange-traded funds (ETFs) without having to buy any property

Example of an Investment Portfolio During a Recession

A balanced portfolio during a recession can include a mix of REITs, stocks, bonds and cash reserves to focus on steady income and minimize losses. Below is an example of how an investor with a $100,000 portfolio might allocate funds during a recession.

1. Real Estate Investment Trusts (REITs): 40% ($40,000)

REITs provide exposure to real estate without directly owning property. These investments can generate dividend income and remain relatively stable in downturns:

• Residential REITs ($15,000): Focus on apartment buildings and student housing, where demand remains steady.
• Healthcare REITs ($10,000): Invest in medical facilities and senior housing, sectors that remain in demand.
• Industrial/Warehouse REITs ($10,000): Support logistics, e-commerce, and storage, which tend to perform well.
• Retail REITs ($5,000): Select grocery-anchored or discount retailers that remain essential.

2. Defensive Stocks and ETFs: 30% ($30,000)

Defensive sectors provide stability and steady returns during a downturn:

• Consumer staples ETF ($10,000): Companies that sell essential goods like food and household products.
• Utility stocks ($10,000): Electricity, water and natural gas providers that generate consistent revenue.
• Dividend-paying blue-chip stocks ($10,000): Large, stable companies with strong balance sheets and reliable dividends.

3. Bonds: 20% ($20,000)

Bonds offer stability and consistent income, making them a safe choice during recessions:

• Government bonds ($10,000): U.S. Treasury bonds provide security and predictable returns.
• Municipal bonds ($5,000): Tax-advantaged investments that support public projects.
• Corporate bonds ($5,000): Bonds from well-established companies with strong credit ratings.

4. Cash Reserves: 10% ($10,000)

Holding cash provides flexibility and protection against unexpected expenses or investment opportunities:

• High-yield savings account ($5,000): Earns interest while keeping funds easily accessible.
• Money market funds ($5,000): Low-risk, short-term investments that maintain liquidity.

This portfolio example balances income, stability and long-term growth with REITs for real estate exposure, defensive stocks for market participation, bonds for security, and cash reserves for flexibility. By focusing on dividend-generating investments and recession-resistant sectors, investors could position themselves strategically to weather economic downturns and set themselves up for future growth.

Other Ways to Invest in Real Estate With a Small Budget

You can also diversify your portfolio with additional real estate investments. Besides REITs, here are five common ways you can invest in real estate without making a large downpayment:

1. Real estate crowdfunding: Platforms like Fundrise or RealtyMogul allow investors to pool money with others to buy properties. Investments can start with as little as $500 to $5,000 per project.
2. Real estate syndications: Private investment groups allow investors to contribute funds to buy rental properties or farmland. Minimum investments range from $10,000 to $50,000.
3. Tenant-in-common (TIC) investments: This allows multiple investors to co-own a property while keeping separate shares. Some TIC investments require as little as $25,000.
4. Partnerships and joint ventures: Investors can team up with others to split the down payment and costs of owning a rental or multi-unit property.
5. Farmland investment platforms: Services like AcreTrader allow people to buy fractional shares of farmland, providing passive income from crops or land appreciation. Minimum investments start around $10,000.

Instead of buying a property alone, these options can help you get real estate exposure with smaller amounts of money.

Tips for Real Estate Investing During a Recession

Investing in real estate during a recession can feel risky, but downturns often create unique opportunities for disciplined investors. Property values may decline, competition can ease and motivated sellers may be more willing to negotiate. Success, however, depends on preparation, patience and a strong financial foundation. If you’re interested in exploring real estate investments in a recession, here are three helpful tips to keep in mind:

• Consider location: Location is always an important factor in choosing real estate investments. If you’re looking at rental properties, get to know the area and take the temperature of the overall market. Ideally, you should be looking for rental property investments in areas where demand is high and rental rates would allow you to maintain the kind of profit margin you’re seeking.
• Weigh cash flow: Cash flow refers to how much money you pocket after deducting expenses from rental incomes. In a recession, it might be necessary to keep a larger amount in cash reserves to cover expenses as they come up, especially if inflation remains high.
• Compare financing options: If you need to finance an investment property, pay close attention to interest rates and loan options. Rates may start offer higher at the beginning of a recession and then drop as the Federal Reserve adjusts rate policy to encourage spending and borrowing. The timing for when you borrow can make a big difference in the cost of the loan overall.

It’s also important to do your due diligence and research any properties you’re interested in thoroughly. You don’t want to get into the buying process and find out the property has a sizable lien or the area where the property is located is scheduled to be rezoned.

If you’re looking at REITs and real estate crowdfunding instead of rental properties, consider the fees you might pay and the return potential for each one. Also, remember to take the holding period into account. With real estate crowdfunding, for example, your money might be tied up for five to seven years in a single property or handful of properties.

When investing in real estate stocks or ETFs, pay attention to commission trading fees and expense ratios, respectively. Also, consider the overall performance history of a stock or ETF and its risk profile to determine whether it’s a good match for your goals and risk tolerance.

Investing in real estate during a recession can offer attractive opportunities, but it requires discipline, due diligence and a long-term mindset. Prioritizing cash flow, maintaining liquidity and focusing on strong markets can help reduce risk in uncertain economic conditions. While downturns may create favorable pricing, not every discounted property is a smart investment.

The reason is inflation, which describes the gradual rise in prices and slow decline in purchasing power of your money over time. Here’s how to understand inflation, plus a look at the steps that you can take to protect the value of your money.

How Does Inflation Work?

Inflation occurs when prices rise across the economy, decreasing the purchasing power of your money. In 1980, for example, a movie ticket cost on average $2.89. By 2025, the average price of a movie ticket rose to $16.08.

Don’t think of inflation in terms of higher prices for just one item or service, however. Inflation refers to the broad increase in prices across a sector or an industry, like the automotive or energy business—and ultimately a country’s entire economy.

The chief measures of U.S. inflation are the Consumer Price Index (CPI), the Producer Price Index (PPI) and the Personal Consumption Expenditures Price Index (PCE), all of which use varying measures to track the change in prices consumers pay and producers receive in industries across the whole American economy.

Though it can be frustrating to think about your dollars losing value, most economists consider a small amount of inflation a sign of a healthy economy. A moderate inflation rate encourages you to spend or invest your money today, rather than stuff it under your mattress and watch its value diminish.

Inflation can become a destructive force in an economy if it is allowed to get out of hand and rise dramatically.

What Is Deflation?

When prices decline across a sector of the economy or throughout the entire economy, it’s called deflation. While it might seem nice that you can buy more for less tomorrow, economists warn that deflation can be even more dangerous for an economy than unchecked inflation.

When deflation takes hold, consumers delay purchases in the present as they wait for prices to decline even further in the future. If left unchecked, deflation can diminish or freeze economic growth, which in turn decimates wages and paralyzes an economy.

Extreme Inflation: Hyperinflation & Stagflation

When inflation isn’t kept in check, it’s commonly known as hyperinflation or stagflation. These terms describe out-of-control inflation that cripples consumers’ purchasing power and economies.

What Is Hyperinflation?

Hyperinflation occurs when inflation rises rapidly and the value of the currency of the country tumbles rapidly.

Economists define hyperinflation as taking place when prices rise by at least 50% each month. Though rare, past instances of hyperinflation have taken place during civil unrest, during wartime or when regimes have been taken over, rendering currency effectively worthless.

Perhaps the best-known example of hyperinflation took place in Weimar Germany, in the early 1920s.

What Is Stagflation?

Stagflation occurs when inflation remains high, but a country’s economy is stagnant, and its unemployment is rising. Usually, when unemployment increases, consumer demand decreases as people watch their spending more closely. This decrease in demand lowers prices, helping to recalibrate your purchasing power.

When stagflation happens, however, prices remain high even as consumer spending decreases, making it increasingly expensive to buy the same goods.

We don’t have to look abroad to find examples, as the U.S. experienced stagflation in the mid to late 1970s. High prices from the Organization of the Petroleum Exporting Countries (OPEC) oil embargoes in the 1970s drove inflation higher as a recession lowered gross domestic product (GDP) and increased unemployment.

What Causes Inflation?

The gradually rising prices associated with inflation can be caused in two main ways: demand-pull inflation and cost-push inflation. Both come back to the fundamental economic principles of supply and demand.

Demand-Pull Inflation

Demand-pull inflation is when demand for goods or services increases, but supply remains the same, pulling up prices.

In a healthy economy, people and companies increasingly make more money. This growing purchasing power allows consumers to buy more than they could before. In turn, this increases competition for existing goods and raises prices while companies attempt to ramp up production. On a smaller scale, demand-pull inflation can be caused by sudden popularity of certain products.

For example, at the start of the Covid-19 pandemic, the increase in demand for indoor, socially distant activities combined with the highly anticipated release of Animal Crossing: New Horizons saw the price of the Nintendo Switch gaming system almost double on some secondary markets. Because Nintendo could not increase production, due to factory production halts from Covid-19, Nintendo could not raise its supply to meet rising consumer demand, resulting in increasingly higher prices.

Cost-Push Inflation

Cost-push inflation is when the supply of goods or services is limited in some way. But demand remains the same, pushing up prices. Usually, some sort of external event, like a natural disaster, hinders companies’ abilities to produce enough of certain goods to keep up with consumer demand. This allows them to raise prices, resulting in inflation.

For example, think about oil prices. You—and pretty much everyone else—need a certain amount of gas to fuel your car. When international treaties or disasters drastically reduce the oil supply, gas prices rise because demand remains relatively stable even as supply shrinks.

How Is Inflation Measured?

The U.S. inflation rate is measured by the CPI, PPI and PCE indexes. Because no single index captures the full range of price changes in the U.S. economy, economists must consider these multiple indexes to get a comprehensive picture of the rate of inflation.

The basic formula to calculate the inflation rate is as follows:

Consumer Price Index (CPI)

The U.S. Bureau of Labor Statistics calculates monthly based on the changes in prices consumers pay for goods and services. The CPI uses a “basket of goods” approach, meaning it tracks changes in the costs of eight major categories people spend money on: food and beverages, housing, apparel, transportation, education and communication, recreation, medical care, and other goods and services.

Many consider CPI as the benchmark for measuring inflation in the U.S.

CPI is especially important because it is used to calculate cost of living increases for Social Security payments and for many companies’ annual raises. It is also used to adjust the rates on some inflation-protected securities, like Treasury Inflation-Protected Securities (TIPS).

Producer Price Index (PPI)

Also published by the Bureau of Labor Statistics, PPI tracks the changes in prices that companies receive for the goods and services they sell each month. Costs can rise when producers face an increase in tariffs, higher oil and gas prices to transport their items, or other issues, such as the impact of a long-lasting pandemic or environmental changes, like a rise in hurricanes, wildfires or flooding.

The PPI plays an important role in business contracts. Businesses that enter long-term contracts with suppliers frequently use the PPI to automatically adjust the rate they pay for raw goods and services over time. Otherwise, suppliers would lock themselves into yearslong contracts at rates that might lose their purchasing power over the long term.

Personal Consumption Expenditures Price Index (PCE)

Published by the Bureau of Economic Analysis (BEA), PCE tracks how much consumers pay for goods and services in the economy.

PCE considers a broader range of consumer expenditures than CPI, like healthcare spending. It also updates the basket of goods it uses for calculations based on what consumers are spending money on each month, rather than limiting data to a fixed set of goods.

PCE is an especially important measure because it’s the Federal Reserve’s preferred measure of inflation when making monetary decisions, such as rate hikes or cuts.

Inflation and the Fed

The Federal Reserve is the central bank of the U.S., and the Fed—like central banks around the world—is tasked with maintaining a stable rate of inflation.

The Federal Open Markets Committee (FOMC) has determined that an inflation rate around 2% is optimal for employment and price stability.

This level of inflation gives the FOMC scope to jump-start the economy during downturns by decreasing interest rates, which makes borrowing cheaper and helps boost consumption. Lower interest rates reduce costs for businesses and consumers to borrow money, stimulating the economy. Lower interest rates also mean individuals earn less on their savings, encouraging them to spend. But all this extra demand can push up inflation.

How Does Inflation Impact the Stock Market?

Some inflation can be a sign of a healthy, growing economy, but when inflation rises higher than expected or becomes unpredictable, it tends to hurt investors and businesses alike.

When inflation rises sharply, companies face higher costs for materials, labor and transportation. If they can’t raise prices to match those costs, their profit margins will shrink.

Inflation also tends to influence the Federal Reserve’s decisions. When prices rise too quickly, the Fed has been known to increase interest rates to preserve the economy. Higher rates make borrowing more expensive for businesses and consumers, which can slow growth.

However, not all industries react the same way. Energy, utilities and consumer staples, for instance, can often pass increased costs onto consumers to remain profitable. Meanwhile, growth stocks and tech companies may struggle.

What Investments Beat Inflation?

Even a moderate rate of inflation means that money held as cash or in low-APY bank accounts will lose purchasing power over time. You can beat inflation and boost your purchasing power by investing your money in certain assets.

To overcome inflation, “A good portfolio could include shorter-maturity bonds, a bit of TIPS, commodities and gold, and ideally a share of real assets that generate income, adjusting exposures as inflation expectations change, rather than thinking one static mix will work,” says Alex Tsepaev, chief strategy officer at B2Prime Group, a global financial services provider for professional and institutional clients.

Beat Inflation with Stocks

Investing in the stock market is one way to potentially beat inflation. While individual stock prices may fall and companies may go out of business, broader stock market indexes rise over the long run, beating inflation.

From 1937 to 2025, the S&P 500, which tracks the performance of 500 of the largest companies in the U.S., generated an average annual return of just over 12%, according to LSEG Datastream and Yardeni Research. This is a long-term average—in some years, the S&P 500 had lower or even negative returns.

Investing in individual stocks offers no guarantees, but a well-diversified investment in a broad market index fund can grow wealth over decades and beat inflation.

Beat Inflation with Bonds

Bonds on average offer lower returns than stocks, but they can also regularly beat inflation. Risk adverse investors or those approaching or in retirement may seek out the more consistent returns of investments in bonds and bond funds to beat inflation.

Treasury Inflation-Protected Security (TIPS)

Treasury Inflation-Protected Securities (TIPS) are a special class of U.S. Treasury bonds specifically designed to protect investors from inflation.

TIPS automatically adjust the value of your investment based on changes to CPI, meaning the value of your bond rises with inflation. TIPS pay interest over the five-, 10-, or 30-year life of the bond.

Can You Beat Inflation With Gold?

Many investors consider gold as the ultimate inflation hedge, although the debate over this proposition is far from settled.

The price of gold can fluctuate over time and is impacted by movements of global currencies. Monetary policy choices made by the Fed and other central banks, not to mention erratic supply and demand.

Investing in gold also comes with its own unique set of challenges. If you buy gold, you have to find a secure location or custodian to store it, which comes with costs of its own. If you sell gold after holding it for a year or more, it’s subject to higher long-term capital gains tax rates than stocks and bonds.

Oftentimes, thinking of retirement finances can be overwhelming because there is so much involved. Bright Wealth Management encourages people to have an integrated plan.

Whether you have a professional to help with your finances or not, having investments, taxes, estate planning and income strategies all under one umbrella helps mitigate risks and underlying fees.

Bright Wealth Management brings all those areas together, and they have a free service to get a second look at your finances and the trajectory toward your retirement.

“I would suggest just getting a second opinion, and you’re going to be armed with the knowledge and the wisdom, whether you want to move forward or not,” founder and president of Bright Wealth Management Matt Dages said. “You’re going to leave with a complimentary written financial plan, and you’re going to know exactly what you need to do to make that dream a reality.”

3 of Bright Wealth Management’s tips to optimize retirement savings

1. Tax and estate planning

The first part is having an estate plan. Some people don’t have one and don’t even know it.

Many factors, such as multiple residences, differing legal requirements and family dynamics can affect how assets are distributed. Knowing those answers will help minimize tax implications and legal challenges.

One of the most crucial aspects of tax planning is knowing the implications of withdrawing funds from tax-deferred accounts.

401(k)s and IRAs have required minimum distributions and other withdrawals that will push individuals into higher tax brackets if not followed correctly. Methods like Roth conversions and income timing can reduce individuals’ risk.

Another strategy to maintain control and reduce risk is preparing for higher tax rates. That way, you are proactively planning rather than being reactive when rates go above what’s expected and setting yourself up better long-term.

“Risk mitigation is the name of the game. We don’t want to wait until after a market crash to then lick our wounds,” Dages said. “We want to have a balanced, diversified portfolio, and we want to help people strategize, to say, ‘Hey, based on where you’re at in your life, your age and your timeline for retirement, or your overall goals in life and where you are looking to achieve, here’s how we can go after that.’”

That leads to the next tip.

2. Income planning

The key to income planning is having various streams of income so that essentials are covered despite how the stock market is performing.

“Many people, their income certainty is just social security. And the rest of it relies on market dependence, market success,” Dages said. “So what we want to do is we really want to know that your core expenses are covered without relying on the market. We want to give you that income certainty.”

Social security is a significant component of retirement planning, but having additional income sources, like pensions, annuities and other guaranteed income solutions, diversifies your portfolio so you don’t get tense every time the market fluctuates.

It creates balance, dependable income sources and creates confidence in your retirement.

Another important aspect is planning for a longer lifespan. This requires careful consideration of how income will be sustained over decades, and avoiding retiring during a market downturn.

If individuals separate their assets into different horizons and strategically manage withdrawals, the income will be protected and have stability over time.

3. Navigating hidden costs

One of the most substantial hidden or “stealth” costs for individuals is healthcare expenses. People often overestimate what is covered by Medicare, and those expenses that aren’t covered can add up quickly, depleting savings.

Family-related responsibilities are another major expense people don’t often account for, such as supporting adult children, contributing to grandchildren’s education or managing end-of-life costs.

These expenses can add up unexpectedly and fast, making it very important to build flexibility and contingency reserves.

While those expenses are more unexpected, inflation is easier to predict. But it still hits people as an underestimated challenge. Rising costs decrease purchasing power, and that can bring financial stress to individuals relying on pensions with fixed income.

One way to combat inflation is by utilizing growth-oriented investments and adjusting projections to account for it. This strategy can ensure long-term financial security despite economic changes.

Such factors also have an influence on the perception of one’s career, and often place medical or engineering professions at the top of a social hierarchy. People perceive different jobs as stable and respectable, irrespective of their own level of satisfaction or appropriateness, according to a report published by the Pew Research Center (2021). Such perceptions become even more evident when an individual is transitioning through a career change. Creative jobs or freelancing are normally considered unusual career paths and could be severely scrutinized. Individuals who work in non-traditional professions feel the need to justify their career choices, especially if they are from a culture that focuses on a strong connection between social status and profession, according to research published in Work, Employment and Society (2018). Responses like these are often implicit, but they have an effect on how individuals respond to questions regarding their profession.

Social validation can also have a major effect on career decisions. People can continue in careers based on external expectations even if they do not align with personal goals. There is a tension between autonomy and approval, where decisions must be made based on personal desire and external approval. Career decisions have multiple meanings, which include statements of ambition and identity within a cultural framework. It is this multiple meaning of career decisions that helps explain why they appear more complicated than they would be if based simply on economic or individual needs.

1. Doing it alone

Financial education is important, and a good financial adviser should be able to help you plan your finances.

“They will discuss your needs and goals and help you put together a financial plan. They can also recommend financial solutions to help you to achieve your goals. It is important to ask them about planning for life’s ‘what ifs’. Make sure you have short-term insurance to cover any accidents or mishaps with your car, home or valuables,” says Old Mutual’s Karabo Ramookho.

2. Not budgeting

Without a budget, you run the risk of overspending.

“Plan your finances and stick to that in order to avoid nasty surprises,” says analyst Wendy Makhado of Mazi Asset Management. Many banking apps have budgeting or money-tracking tools to help you rein in your spending.

“For example, there is 22seven,a free budgeting app by Old Mutual. This lets you see where your money is going, so you can cut waste, and put more money towards the things that really matter to you,” says Ramookho.

3. How to plan for a financial crisis not planning ahead

Good money management starts with a good plan.

“The pandemic has left many of us realising that we are ill-prepared financially. Make sure you plan and have a clear long-term vision,” says Old Mutual’s John Manyike.

Save for emergencies, build up a nest egg, and invest for your future.

4. Not addressing debt

If you already have debt and are struggling with payments, make sure you don’t ignore them.

“The biggest mistake you can make is to be in denial about your dire financial situation. Address the matter before it becomes a problem. If it is already a problem, don’t ignore it, hoping it will disappear – it won’t. Avoiding your creditor’s calls won’t help. If you get a letter of demand, do something about it immediately. But know your rights – the law says no debt collector is allowed to threaten, intimidate or use force against you (the debtor). If they do, you can report them. The National Credit Act protects your rights and all creditors have to adhere to it,” says Ramookho.

You can also negotiate with your creditors.

“Explain that you are unable to pay the account in full, but if they are willing and you are able to, you will pay a reduced amount. It is important that you don’t overcommit yourself with your repayment plan,” advises Ramookho.

5. Disinvestment or withdrawal of funds

Withdrawal of pension funds or disinvesting your money may seem a quick way to get cash, but it’s never a good idea, as it takes away money from your future.

“Don’t be tempted to disinvest because of panic. Markets are generally volatile during uncertain times, but will self-correct over time. And, if you happen to resign or are retrenched from your job during this time, avoid the temptation to cash out your retirement savings. Preserve it – don’t borrow from your future,” says Ramookho.

6. Not having another income

The certain way to make your money grow is to bring in more money. If you have a full-time job, aside hustle could be one way you could do it.

“Increasing income may not be as easy for many, but if there is a craft that you can do and it can generate income, have a go at it,” says Makhado.

Think about what you’re passionate about– it could be fashion or farming. Your passion project could bring you joy and supplement your income at the same time.

7. Not adjusting your expenses

The two most important things to do first, when looking to rebuild your finances, are to reduce expenditure and to increase the money coming in.

“Do this by cutting out non-essential spending such as eating out and money-based entertainment, re-negotiate your insurance, downgrade some of your higher expenses and, most importantly, pay your future self by investing for the long-term, and saving,” says Makhado.

I got my start with real estate investing in 2016 with the purchase of a run-down 1970s split level with four bedrooms. My W-2 income was less than $23,000 at the time. I lived with a rotating cast of three other short and long-term renters for years while slowly renovating it. Deals like that are much harder to find today, but that doesn’t mean you’re shut out of the market entirely if you’re in the same income bracket I was.

Here are five proven ways to invest in real estate, ranging from hands-off approaches that take minutes and minimal funds to set up, to more involved strategies that could become your full-time occupation.

1. Real Estate Investment Trusts (REITs)

What they are: REITs (Real Estate Investment Trusts) are companies that own, operate or finance income-producing real estate across various sectors like shopping malls, apartment buildings, offices, warehouses and hotels. They work similarly to mutual funds, allowing you to invest in real estate without actually buying or managing physical properties.

If you’re looking to invest in real estate immediately with limited funds at risk, REITs offer the most accessible entry point.

REITs are required by law to distribute at least 90% of their taxable income to shareholders as dividends, which typically makes them excellent income-generating investments. Many REITs pay higher dividend yields than what you’ll find with many stocks. Keep in mind that dividends from a REIT will be taxed at your income tax rate, not the lower capital gains tax rate you’d get with other investments, so you’ll need to prepare for a larger tax bill or hold them in a tax-advantaged account.

The beauty of REITs lies in their simplicity. You don’t have to worry about finding tenants, fixing toilets or dealing with property taxes as the REIT management team handles all those headaches. You just invest your money and collect dividends when they do well.

How to get started: You can buy shares of publicly traded REITs through any brokerage account, just like you would purchase stocks. If you’re new to investing or don’t have much capital, many investing apps like Robinhood, M1 Finance and Stash offer fractional shares of REIT ETFs (Exchange-Traded Funds), allowing you to start with as little as $5.

Expert tip: Consider diversifying across different types of REITs. Residential, commercial, healthcare and mortgage REITs each respond differently to economic changes, providing better portfolio protection. Since REITs pay through dividends, holding your REITs in a tax-advantaged account like a Roth IRA or Health Savings Account is a smart money move.

2. Crowdfunding Real Estate Platforms

What they are: Crowdfunding real estate platforms are online services that connect investors with real estate developers seeking funding for specific projects. Rather than investing in diversified portfolios of several properties like REITs, these platforms let you select individual properties or development projects to invest in.

For investors who want more control over their real estate investments without the hassle of direct property ownership, crowdfunding platforms offer an intriguing middle ground.

These platforms typically fund commercial or residential developments, apartment renovations or other real estate projects. The returns can potentially be higher than REITs, but so is the risk since you’re often investing in a single property rather than a diversified portfolio.

Consider that most crowdfunding investments lock up your money for several years. While some platforms offer early withdrawal options, they typically come with penalties or depend on another investor buying your shares.

How to get started: Popular platforms include Fundrise (which allows investments starting around $10) and CrowdStreet (which focuses on commercial real estate but typically requires larger minimum investments, often over $25,000). Be aware that some platforms only accept accredited investors—individuals with a net worth over $1 million (excluding primary residence) or annual income exceeding $200,000.

Expert tip: While crowdfunding is increasing in popularity, I don’t recommend it for beginners. The fees are substantially higher and less transparent, plus they aren’t diversified enough for people new to the industry. A REIT is a much better starting point until you better understand real estate investments.

3. Invest in Your Own Home

What is it: Perhaps the most common real estate investment most people make is purchasing a primary residence. By making mortgage payments, you gradually build equity in your home while potentially benefiting from property appreciation.

If you continue to slowly climb the property ladder during your working years and then downsize in retirement, you’re likely to benefit from a stable place to stay and a large check at the end of it.

However, the financial returns might be less impressive than you’d expect. Even with the wild market recently, home prices have only averaged a 4.29% increase in value annually since 1987, according to data from the Federal Reserve.

By comparison, REITs have historically delivered average annual returns around 11.28%, according to Nareit, while even a basic S&P 500 index fund has averaged roughly 10% returns long-term.

That doesn’t mean buying a home is a bad investment, it just means you should think of it as both a lifestyle choice and a financial one. Government programs for homebuyers, along with favorable mortgage terms, make homes much more accessible than other real estate investments.

You can even follow my playbook and rent rooms out while living in your home for extra cash flow for renovations, to build equity faster or to reduce your housing expenses.

How to get started: If you’re considering buying a home, first assess whether you plan to stay in one location for at least three to five years (to offset transaction costs). Research first-time homebuyer programs in your area, which might offer down payment assistance or reduced interest rates. Make sure your monthly mortgage payment is well within your budget, as you’ll be on the hook for maintenance as well as regularly increasing property taxes and insurance premiums.

Expert tip: Don’t rush to pay off a low-interest mortgage if you can earn higher returns by investing that extra money elsewhere. While a paid-off mortgage is an emotional win, it’s rarely the smartest money move. Let’s say you have room in your budget and can either pay off your 3% mortgage earlier or invest more in your 401(k) and you’re in a 30% total tax bracket. Paying off your mortgage saves you 3% in interest, but investing in your 401(k) will give you an immediate 30% tax savings, and grow at an average rate of roughly 10% a year if investing in something like an S&P 500 index fund.

4. Invest in Rental Properties

What is it: Purchasing residential or commercial property to rent out to tenants is perhaps the most traditional form of real estate investing. This approach can provide both ongoing income and potential appreciation.

Rental properties come in two main varieties:

• Long-term rentals: These properties are typically leased for at least a year, providing consistent monthly income (assuming reliable tenants). Options range from single-family homes to multi-unit properties.
• Short-term rentals: These cater to travelers and temporary residents through platforms like Airbnb and VRBO. While they typically generate higher nightly rates, they also require more active management and face more volatile seasonal and economic fluctuations.

The appeal of rental properties lies in their wealth-building potential. A well-chosen rental property can provide monthly cash flow while it potentially appreciates, and your tenants essentially help pay down your mortgage.

The downside? Becoming a landlord involves significant work. Finding tenants, handling maintenance, addressing emergencies and dealing with potential vacancies. Additionally, financing investment properties typically requires larger down payments and comes with higher interest rates than primary residences.

I’ve been a landlord for most of the last nine years, generally living with or near my tenants. The vast majority of my tenants have been fantastic people, but the few bad ones were so bad that I stopped renting out my house entirely. Carefully consider if you have the stomach to deal with a nightmare scenario before you start investing in rental properties.

How to get started: Research rental rates and property values in your target market. Many successful investors start with a small, manageable property like a duplex or condo. Consider “house hacking” by living in one unit of a multi-unit property while renting out the others, which can qualify you for better financing terms.

Expert tip: Factor in at least one to two months of vacancy per year when calculating potential returns, along with setting aside 1% to 2% of the property value annually for maintenance and repairs. Many new landlords underestimate these costs and overestimate their cash flow.

5. Flip Properties for Profit

What is it: Property flipping involves purchasing homes or buildings, renovating them and selling them at a higher price. This strategy can deliver significant returns but requires substantial knowledge, capital, risk tolerance and ability (if you DIY your renovations).

Despite what you might see on HGTV, flipping houses isn’t a guaranteed path to quick profits. It requires identifying undervalued properties, accurately estimating renovation costs, managing contractors (or doing the work yourself) and understanding local market trends.

The financial risks are considerable. Renovation costs frequently exceed initial estimates, permits can cause unexpected delays and market conditions might shift while your money is tied up in the project. Most flippers need to account for financing costs, realtor commissions, closing costs and capital gains taxes, all of which eat into profits.

For those with construction experience or strong contractor relationships, flipping can be highly profitable. The key is buying properties at a sufficient discount to cover all expenses while leaving room for profit.

How to get started: Before diving in, spend time learning your local market: attend open houses, track property values and build relationships with realtors specializing in distressed properties. Consider partnering with an experienced flipper on your first project to learn the ropes.

Expert tip: Use the 70% rule as a starting point: Never pay more than 70% of a property’s After Repair Value (ARV) minus renovation costs. For example, if a renovated home would sell for $300,000 and needs $50,000 in repairs, you shouldn’t pay more than $160,000 ($300,000 × 0.7 – $50,000).

Which Real Estate Investment Strategy Is Right for You?

The best approach depends on your financial goals, risk tolerance, available capital and desired level of involvement:

• For passive income with minimal effort: REITs or real estate crowdfunding
• For building equity while meeting a basic need: Your primary residence
• For ongoing income plus appreciation: Rental properties
• For active income requiring significant effort: Property flipping

Real estate investing can provide portfolio diversification, potential tax advantages and protection against inflation. But physical properties also come with illiquidity risks. You can’t sell a house as quickly as you can sell a stock.

For most investors, a balanced approach works best. Start with REITs to gain exposure to real estate while learning more about the market. As your knowledge and capital grow, you might consider adding a rental property or exploring more active strategies.

Whatever approach you choose, remember that real estate—like any investment—requires research, patience and a clear-eyed assessment of both potential returns and risks. Talk with a financial advisor about how real estate fits into your overall investment strategy before making any major decisions.

The path to real estate wealth is rarely a sprint; it’s a marathon. But for those willing to put in the effort and make informed choices, it remains one of the most reliable routes to long-term financial security.

The US Federal Reserve kept interest rates unchanged on Wednesday, holding its benchmark policy rate in the 3.50 to 3.75 per cent range as it grapples with renewed inflation pressures driven by surging oil prices and geopolitical tensions.

The move was widely expected, but discussions around the decision reflected growing concern inside the Fed that inflation risks may not be fading as quickly as hoped.

“Developments in West Asia are contributing to a high level of uncertainty about the economic outlook,” the Fed said in a statement, adding that inflation is “elevated” in part due to the surge in energy prices.

The Fed added that while the unemployment rate has changed little in recent months, job gains remain low.

Fed policymakers are increasingly focused on the impact of surging oil prices driven by the Iran war. The continued closure of the strategic Strait of Hormuz has pushed Brent crude back above 110 dollars per barrel, compared with around 70 dollars before the escalation in February.

This has complicated the Fed’s inflation outlook, which is already under pressure.

Inflation in the US remains about one percentage point above the Fed’s 2 per cent target. The central bank also expects upcoming inflation data to show further upward pressure, adding to the challenge of bringing price growth under control.

Against this backdrop, the US economy continues to show resilience.

Job growth has remained surprisingly firm, and unemployment has eased to around 4.3 per cent. That resilience reduces pressure on the Fed to cut rates in the near term.

However, economists say the combination of sticky inflation and strong employment is pushing the central bank toward a more cautious stance.

Markets are now pricing in a prolonged period of higher interest rates, with traders seeing little chance of cuts before mid-next year.

The decision also comes at a politically sensitive moment for the US central bank, with Jerome Powell nearing the end of his term as Fed chair on May 15.

Retirement planning is no walk in the park. It’s complicated. No surprise that many of us make mistakes that can turn retirement dreams into last-minute panic.

As retirement nears, there are tons of things to think about, like when to take Social Security, how much to take out of your 401(k), creating a spending plan you can stick to and investing your retirement savings. And like the butterfly effect, tiny decisions now can lead to huge, life-altering consequences down the road.

That’s why it’s crazy to go it alone.

A Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial adviser.

The value of working with a financial adviser varies by person, but according to an independent study, people who work with a financial adviser feel more at ease about their finances and could end up with about 15% more money to spend in retirement.

But who can you trust for guidance? In the past, you’d have to turn to a stranger and take your chances. But that was then.

These days there are no-cost online services, such as SmartAsset, that make discovering your ideal financial adviser a snap. You fill out a short questionnaire, then get matched with up to three local fiduciary financial advisers, each legally bound to work in your best interests. The process only takes a few minutes, and in many cases you can be connected instantly with an expert for a free retirement consultation.

Definitely something you should do, especially if your savings are $100,000 or more. Meanwhile, here are some of the biggest retirement mistakes — and how to avoid them.

1. Failing to plan is planning to fail

A happy retirement is one that’s stress-free. And how do you eliminate stress? Simple: by having a plan.

When you want to go somewhere you’ve never been, do you get in your car, drive around aimlessly and hope to eventually arrive? No. First, you decide where you want to go. Then you use a map to plot the shortest path to get there.

A financial plan is a map plotting the shortest path to reach your retirement goals. Deciding what you’re going to do, where you’re going to do it, how much it’s going to cost and where the money will come from: all parts of your plan. But what if your plans change as you approach retirement? That’s OK. It’s your plan; you’re welcome to change it.

Does making a plan sound complicated? It is. The investments you choose, income taxes, and your target retirement dates are just a few of the tons of variables you’ll have to consider. That’s why if there’s one time in your life you could use professional advice, this is it. Hiring an experienced, expert guide in the form of a qualified financial planner will keep you from getting lost and get you to your destination.

2. Putting off till tomorrow what you should have started yesterday

According to a recent survey by Bankrate.com, the biggest financial regret is not saving enough for retirement. And why don’t Americans save enough? Because they put it off, saying some variation of, “I’ll wait till I have more money”, or “I’ll start when I get closer to retirement.”

The thing is, the longer you wait, the harder it will be. In other words, starting small but sooner is better than starting large but later.

If you’re behind on retirement savings, a financial adviser may be able to help you catch up and figure out how much you’ll need to invest to meet your goals. In addition to investing for your future, a financial adviser can offer guidance on budgeting and paying off debt.

And while there’s obviously no guarantee, if an adviser can increase your returns, it could make a big difference. Consider this: if you save $500 a month for 40 years and earn an average annual return of 5%, you’ll end up with nearly $725,000. Double that return to 10%, and you’ll retire with almost $2.7 million. That’s a life-changing difference.

Again, there’s no guarantee a pro is going to do better than you could on your own. But the point is that, over time, tiny things can make a huge difference in your life.

3. Retiring too soon or not soon enough

If you are thinking about retiring soon, you may dream of quitting your job and traveling the world. However, before you call it quits, there are a number of reasons you may want to think things over. First, you may live longer than you expect, you may run into unforeseen health issues or face tough financial times that force you to cut back.

That’s not to say you shouldn’t retire early, but if that’s your plan, run various scenarios to make sure your savings are going to cover your expenses during retirement and offer a lifetime of income.

Same with not retiring soon enough. If you’re unsure your savings will be adequate, you’ll worry and as a result, perhaps work longer than you have to. You’re much better off knowing what you have and what you’ll need. Replace doubt with certainty and only work as long as you want to.

4. Hiring the wrong financial adviser

Whether it’s building wealth or securing a comfortable retirement, hiring a financial adviser is a major life decision. Unfortunately, not all are created equal. Hire the wrong adviser and you could end up worse off than when you started.

When it’s time to find someone to assist you, always meet with several planners. Talk to them, ask a similar list of questions and assess their qualifications and advice before making a decision. Ask how they get paid and how long they’ve been in the business. Take your time. And always deal with a fiduciary: a planner who’s legally bound to put your interests above their own.

These days, finding a financial adviser you know was well-vetted doesn’t have to be frustrating or difficult. Start your search with this free financial adviser matching tool, which matches you with up to three qualified financial advisers in under five minutes. Every adviser is vetted and is a fiduciary.

5. Taking too much risk, or not enough

Risk is a funny thing. Take too much and you can lose your savings. But take too little and you can lose purchasing power to inflation.

The money you retire with is money that can’t be replaced. That’s why we lean toward low-risk, low-return investments as we age. But as inflation erodes the value of money, that seemingly safe nest-egg drops in value in terms of what it can buy. Bottom line? Often, taking no risk presents risks of its own.

Investing, both before and after retirement, is about balance: harnessing investments designed to keep your income flowing, inflation hedged and risks manageable. Your strategy will require safe, guaranteed-income investments, as well as some exposure to stocks and other inflation-protection investments.

One piece of lasting wisdom from Buffett came during Berkshire Hathaway’s 2004 annual shareholders’ meeting, when a 14-year-old boy from California posed a question.

“What advice would you give a young person like me on how to be successful?” asked Justin Fong, a young shareholder at the time.

Buffett offered a simple, yet thought-provoking answer: “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours, and you’ll drift in that direction.”

This follows other common leadership advice: Surround yourself with people you admire. But Buffett took that advice one step further, saying young professionals should spend time with people who are “better” than them, although he didn’t expand on what exactly that meant.

Still, Buffett’s former business partner, the late Berkshire Hathaway vice chairman Charlie Munger, echoed the sentiment.

“If this gives you a little temporary unpopularity with your peer group, the hell with ’em,” Munger said.

Buffett said in his final shareholder letter this fall that he’d be “going quiet” after his retirement, but his endless career advice will continue to live on.

What other executives and researchers say about Buffett’s advice

Several other executives and successful businesspeople have given similar advice to younger generations: Spend time with people you wish to emulate.

Billionaire Virgin Atlantic cofounder Richard Branson wrote in a 2023 LinkedIn post that people should surround themselves with those who are “smarter than you.”

“Give them everything they need to grow, and your business will thrive,” he continued.

Apple cofounder Steve Jobs also gave similar advice in a 1992 lecture, saying it just makes plain sense to hire smart people.

“It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do,” he said.

Academic research also shows it can be beneficial for working professionals to surround themselves with high-achievers. A 2017 study from Northwestern University’s Kellogg School of Management found that sitting within 25 feet of a high-performer improved coworkers’ speed or quality by up to 15%, generating an estimated $1 million in annual profits per firm.

“The beautiful part of it is that when we put these people together, they’re not going to materially suffer on the area of strength,” said Dylan Minor, one of the researchers on the study and a former Kellogg faculty member. “They’re only going to improve on their area of weakness.”

Researchers surveyed more than 2,000 tech workers for the study, and call this phenomenon “positive spillover,” but warned it can work in the opposite way, too.

“Once a toxic person shows up next to you, your risk of becoming toxic yourself has gone up,” Minor warned. With toxic workers, “we see their imprint and negative effect across an entire floor.”

By cultivating the appropriate ability and financial discipline, one can be able to gain resiliency and be able to sail through turbulence with confidence.

The following are five practical solutions to upscaling yourself without compromising your financial performance.

1. Treat Learning as a Long-Term Investment

In a rapidly evolving professional landscape, upgrading your skills is essential to remain competitive. Pursuing certifications, short courses, or digital learning programs can help individuals expand their capabilities and unlock better career opportunities. Rather than viewing education as an expense, it should be considered a long-term investment that strengthens both professional growth and future earning potential.

2. Strengthen Your Understanding of Personal Finance

Professional success alone does not guarantee financial stability. Developing a clear understanding of personal finance such as managing expenses, building savings, investing wisely, and planning for retirement helps individuals make better financial choices. Strong financial awareness ensures that career progress translates into sustainable wealth and long-term financial wellbeing.

3. Make Career Planning and Career Goals meet

Upskilling cannot occur independently. The professional ambitions should be aligned with personal financial ambitions (home ownership, retirement planning or financing the education of their children). Career development and financial planning are two aspects that work hand in hand to ensure that people attain sustainable growth.

4. Develop Future-Ready Skills

Technology, data, and digital transformation are the future of work. There is a growing industry demand in such skills as digital literacy, analytical thinking, adaptability and problem-solving. The development of such competencies will assist professionals to be relevant and competitive in a changing job market.

5. Professional Financial Advice

With the increase in complexity of financial lives, professional advice from CERTIFIED FINANCIAL PLANNER® may be significant in aiding people to remain financially on track. Professional financial planners can offer comprehensive advice that incorporates saving, investment, risk management and long-term financial objectives.

Upskilling and financial planning are not in different directions and are complementary to one another, to a secure and full future. Through knowledge investment, acquisition of relevant skills and informed financial decisions, individuals can enhance their professional path and financial health.

In a world which is growing more dynamic, being able to develop professionally and remain financially stable will be one of the aspects that determine long-term success and stability.

Professional development and financial welfare are two inseparable issues in the modern rapidly evolving world. With emerging opportunities and the changing nature of industries, people should constantly advance their skills on the one hand, and at the same time, their financial choices should not compromise their life objectives. By cultivating the appropriate ability and financial discipline, one can be able to gain resiliency and be able to sail through turbulence with confidence.

1. Treat Learning as a Long-Term Investment

2. Strengthen Your Understanding of Personal Finance

3. Make Career Planning and Career Goals meet

4. Develop Future-Ready Skills

5. Professional Financial Advice