Luxury real estate

In 2022 and 2023, the Federal Reserve raised interest rates repeatedly to combat soaring inflation. (4) As a result, a lot of people put home buying plans on hold, and many real estate projects were paused due to a combination of supply chain backlogs and high borrowing costs.

At the same time, the pandemic caused a shift in many consumers’ behavior, driving people to focus more on experiences than physical purchases. And with interest rates coming down, it sets the stage for more luxury real estate development, particularly within the hospitality space.

High-end hotels and resorts can deliver reliable income — and they often increase in value over time. If you’re not invested in real estate yet, this could be a smart area to explore.

One option to look at is hospitality REITs or real estate investment trusts. One big perk of REITs is that they have to pay out at least 90% of their taxable income to shareholders in the form of dividends.That steady income could help offset other losses in your portfolio that might ensue if the broad stock market declines.

Another option is to invest in individual hospitality stocks. Once again, before choosing shares of individual companies, you’ll want to pay attention to factors like debt, earnings and income-generating strategies.

Of course, luxury real estate isn’t without its risks. If the economy slips into a long recession, vacations are usually the first thing people cut. And another pandemic could hit the hospitality industry hard, just like in 2020. Even so, if you’re thinking long term, adding a little hospitality exposure could be a smart way to diversify.

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Healthcare

As Bloomberg reports, the top two companies in the S&P 500 – Nvidia and Microsoft – comprise 15% of the index. Healthcare stocks only make up 9%. So branching out into healthcare could give your portfolio better diversification if you’re invested in S&P 500 ETFs or index funds.

The tech sector is prone to volatility, given how quickly technology can change. Healthcare, on the other hand, is something there will always be demand for, making it a more potentially stable sector to invest in today.

Healthcare stocks run the gamut from pharmaceutical companies to biotech firms to makers of medical equipment and supplies. You can buy shares of individual stocks, invest in healthcare ETFs or put money into healthcare REITs, which are companies whose portfolios center on hospitals and other medical facilities.

Of course, even a sector as steady as healthcare isn’t completely risk-free. Drug companies can be especially unpredictable — a treatment can be delayed or fail to get FDA approval altogether. But if you take the time to research your choices, healthcare stocks can help balance out the more volatile parts of your portfolio.

Home repair

Mortgage rates have fallen recently, and they could continue to drop as the Fed moves forward with more expected interest rate cuts. Lower rates could spur an uptick in mortgage applications and home purchases, particularly among new buyers, leading to an increase in home repairs.

That’s why now may be a good time to invest in home repair and improvement stocks – think established businesses such as Home Depot and Lowe’s. Although Bloomberg warns that home repair stocks may not necessarily take off in the next six months or so, a lot of money could flow into this sector in the coming years. If you invest now, you may see the value of your shares increase as demand rises.

Keep in mind that if the economy cools or slips into a recession, home improvement stocks may dip because people put projects on hold. But in the long run, this sector can still add solid stability to your portfolio.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

U.S. Bureau of Labor Statistics (1, 2); Bloomberg (3); Forbes (4)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.