Investment trends are changing. The US is now experiencing some of the biggest shifts in capital flows in the nation’s history. That’s likely to continue through the year ahead.
Where is the money flowing, why, and how can investors benefit from it?
Between the end of traditional on-site employment and frothiness in plan investments many retirement account owners are making sizable shifts. This is being further triggered by newly proposed rules aimed at capping the size of IRA plans and a Department of Labor plan to divert funds into more cause based and politically motivated investments, despite higher fees.
Investors can still leverage all of the tax advantages of these plans by rolling over to self-directed versions of 401ks and IRAs. As well as diversifying their holdings in IRAs through accounts for their spouses and children in addition to their own.
This control allows investors to pick their own higher returning and more stable assets, and to diversify into things like real estate.
It has been a volatile few years on all fronts. Cryptocurrencies and the public stock market are prime examples of this. Investors who want to avoid losses, future proof their portfolios and generate passive income are also looking to alternative asset classes like real estate and private lending to avoid getting caught.
Who Controls The Wealth
Largely thanks to the rebound in real estate, Generation X has seen its wealth bounce back well over the past decade.
In fact, Gen X has seen its wealth grow around 50% during COVID restrictions, and now controls around 30% of the nation’s wealth.
That’s far more than any other group. Making it among the most influential as to where money is flowing, and which investments will perform best ahead.
Where People Are Moving & Vacationing
We are in the midst of what is probably the second greatest migration in the history of America. Consider as much as 40% of the population of Manhattan has fled. The same is also likely true of some other old metros.
New data from Mayflower and Airbnb shows a huge appetite for moving to and vacationing in secondary cities, and mid-sized cities. It is these destinations which are likely to see the most growth over the next couple of years.
Evictions & Rapidly Rising Rents
While no great eviction tsunami seems to have happened, evictions are flowing again. Whether it is vacating units of non-performing tenants, or the termination of old leases, landlords are finding market rents have often risen by 20% to 70%. That makes rentals far more valuable and profitable than they were just a year ago. A trend not likely to change given all of the moving that is happening out there