Real assets like real estate, precious metals and commodities can boost returns and offer diversification.
When you consider your investments, you may zero in on your stock and bond portfolio, while also including any cryptocurrency holdings.
But there are other ways to invest, using what’s called real assets. According to a 2021 white paper from asset management firm Invesco, real assets include:
“Institutions often use real assets to buffer their portfolios against the effects of inflation, currency movements and other macroeconomic factors,” according to John Corcoran, a senior client portfolio manager at Invesco.
He adds that institutions have been increasing their allocations over the last two decades, in part because real assets can deliver a higher yield than traditional equities, “combined with more consistent cash flows, positive sensitivity to inflation and superior risk-adjusted returns.”
Here are some reasons that real assets may be a good addition to your portfolio, along with some real asset investing ideas to consider incorporating into your long-term strategy:
Real Assets Offer Portfolio Diversification
Real assets can provide a hedge against stock market volatility. The value of real assets is often more stable than stocks and bonds, and generally appreciates over time. This can offer protection and smooth returns during an economic downturn.
However, as investors saw in the 2008 financial crisis, real estate and the stock market declined simultaneously, so investing in real assets also has its risks.
“Investing in real assets means putting your money into things you can actually touch,” says Eric Croak, a certified financial planner and president of Croak Capital in Toledo, Ohio.
“Real assets aren’t just useful; they can also make you money. It’s a good way to spread your wealth into something tangible. And if you can enjoy these real assets while they grow in value, that’s even better,” Croak says.
In addition to the real assets Invesco named, Croak points out items such as valuables and collectibles. “Things like classic cars, coins and stamps have done better than the MSCI World Index in the last 10 years,” he says.
He notes that prices for works by artists such as Vincent Van Gogh, Andy Warhol and Johannes Vermeer have increased because the supply is scarce and there’s increasing demand from wealthy buyers.
“As countries like China, India and other rising powers grow, more and more wealth will be put into precious metals and valuable items,” Croak says.
Should You Invest in Real Assets or Equities?
If you want to invest in gold, you can buy the physical metal, stocks of gold mining companies or shares in an exchange-traded fund, or ETF, such as SPDR Gold Shares (ticker: GLD).
Similarly, if you want to invest in commercial real estate, you could buy an office complex, if you have the means. Or you could buy shares of a real estate investment trust, or REIT. A publicly traded, liquid REIT invests in commercial real estate properties. They are required by law to pass at least 90% of their taxable income to shareholders in the form of dividends.
On the other hand, direct investment in a real asset – whether that’s precious metals, real estate, commodities or some other category – offers tangible ownership. That provides more control over how you can manage the specific asset, and how much of its appreciation you participate in.
Still, investors should use caution if they want to invest directly, says Avis Berg, chief investment officer at Berg Capital in Houston, Texas.
“Direct investment in real properties can provide greater control and perhaps higher returns, but it also necessitates more experience and carries its own set of hazards,” Berg cautions.
“Investing in stocks issued by publicly traded companies can provide exposure to real assets while maintaining liquidity, provide expert management and (require) less active participation,” he says, adding that in this case, ownership is passive rather than active.
4 Real Asset Investing Ideas for 2025
As with stock investing, there are plenty of ways to invest in real assets. Popular investments include:
Brick-and-Mortar Real Estate
Investing in physical properties, such as residential or commercial buildings, provides investors with tangible assets that have the potential for rental income and appreciation.
“Real estate is like the Swiss Army knife of real asset investing. You can earn money from rent while also banking on the property’s value going up over time,” says Cliff Ambrose, founder and wealth manager at Apex Wealth in Danvers, Massachusetts.
Raw Land
Holding undeveloped land offers investors a blank canvas for potential development or resale. These investments have long-term appreciation potential and serve to diversify a portfolio.
“Raw land might seem like just a patch of dirt, but with the right vision and patience, it can turn into a goldmine,” says Ambrose.
Precious Metals
Investing in gold, silver or other precious metals offers a hedge against inflation and economic uncertainty, with the potential for capital appreciation over time. Precious metals are generally considered a safe haven during bouts of stock market volatility.
“I have had multiple clients share a similar version of the same story with me. They look at gold and silver as real money and a currency nest egg,” says Jonathan Rose, CEO of Genesis Gold Group, a precious metals firm in Beverly Hills, California.
Over time, Rose, adds, gold has appreciated in value while the dollar has lost purchasing power. “You don’t wait to buy gold; you buy gold and wait,” he says. “You can’t time the flood, but you plan and ensure your security.”
Commodities
Investing in tangible goods like oil, natural gas or agricultural products provides portfolio diversification and a hedge against inflation. Investors should be aware that commodity prices are frequently influenced by global supply and demand dynamics, as well as geopolitical events.
Directly buying commodities involves storage costs, regulatory complexities and market volatility. Commodities also lack income generation and may require specialized knowledge for successful investment.
For investors who want the exposure without the hassles of directly owning commodities, there are plenty of ETFs that offer access to all the various commodity categories.
Pros and Cons of Investing in Real Assets
Investing in real assets can enhance returns and diversify portfolios, but be sure you understand what you’re getting into.
If you’re investing in real assets, consider the risks, especially when it comes to areas where you don’t have much familiarity. That could easily apply to buying any real asset, which requires more in-depth knowledge than buying a stock.
“Incorporating real assets into a portfolio can diversify investments and potentially reduce risk. However, a lack of understanding about what you’re buying can increase risk,” says Jeff Rose, a certified financial planner and founder of Good Financial Cents.
Real assets, including land, commodities and precious metals, require specific knowledge to evaluate their value and the market factors affecting their prices, Rose adds.
“Without this expertise, investors may face challenges such as paying too much for an asset or underestimating its ongoing costs, which can negatively impact the investment’s return.”
