Chances
are, your family home represents the lion's share of your investment portfolio.
If so, your wealth will be significantly altered by changes in local real estate
prices. It could well be to your advantage to hedge against the loss you would
incur if the local real estate market went down.
On
the other hand, you may want to increase your investment in real estate ... but
the high cost of property, or the time and effort involved in acquiring and
managing it, may be more than you are willing to take on. You'd like a simpler
way to add more real estate to you portfolio.
Where
in the financial world can you go to meet these investment goals?
HedgeStreet
is a new online market where you, as an individual trader, can hedge or
speculate on the economic factors most relevant to your everyday life.
HedgeStreet's unique financial instruments, called Hedgelets, combine low
per-instrument prices (under $10), simple yes/no outcomes, and clearly defined
potential gains and losses appropriate for the common investor. Hedgelets
greatly expand the investment options and strategies available to you.
HedgeStreet's real estate Hedgelets let you take
positions on whether a regional index of housing prices will rise or fall in a
quarter. You can use real estate Hedgelets to:
- Hedge against loss of value in
your home or other real estate
- Speculate in major real estate
markets across the U.S.
- Invest in real estate without
buying property
Hedging Your Current Real Estate Holdings
Hedging
is a risk-management strategy that lessens the impact of market volatility on
your future gains or losses. If real estate dominates your investment
portfolio, you can hedge your risk (i.e., lower the amount you could
potentially lose) by purchasing Hedgelets that pay out if the value of your
real estate falls. Your exposure to real estate price changes is lessened
because:
- If real estate prices go down,
profits from your real estate Hedgelets compensate for the loss of value
in your real estate.
- If real estate prices go up,
gains in the value of your real estate compensate for losses on your real
estate Hedgelets.
You
can tailor your positions in real estate Hedgelets to minimize volatility to a
level you're comfortable with.
Speculating on the Real Estate Market You Know
Before
HedgeStreet, the only way most investors could speculate on real estate was by
purchasing and selling properties. Clearly, that investment option has some
serious limitations.
- What if you believe housing
prices in your area will rise, and would like to invest a few thousand
dollars in local real estate?
- What if you believe local
housing prices will fall, and would like to invest based on that belief?
The
conventional real estate market does not support small investments or
shorting. But Hedgelets let you invest whatever amount you choose on either a
rise or a fall in housing prices.
Explore Your Real Estate Investment Opportunities on
HedgeStreet
Find
out how you can make real estate a more dynamic and flexible part of your
investment portfolio by visiting HedgeStreet at www.hedgestreet.com/realestate.
The first article in the series is here.
The second article in the series is here.
The third article in the series is here.
