Month: February 2021

With life expectancies rising and a pandemic that changed the healthcare landscape, healthcare providers, medical insurance companies, employers and individuals are scrambling to meet a new world order. But that doesn’t mean you should overlook the healthcare industry as an investment. In fact, now may be a better time than ever to consider this sector.

The case for healthcare as an investment stems from the aging of the population. According to the latest census figures (from 2010), there were more people aged 65 and older in 2010 than in any previous sampling. In fact, between 2000 and 2010, the population aged 65 years and older increased at a significantly faster rate (15.1%) than the general U.S population (9.7%). According to the latest figures, the 40 million Americans over the age of 65 comprise around 13% of the U.S. population.

And the Administration on Aging projects that this group will more than double in the next 36 years, reaching 88 million by 2050. That means that we can expect consistent demand for healthcare products and services. Indeed, according to the Centers for Medicare & Medicaid Services, healthcare spending is projected to grow at an average rate of 5.5% per year from 2018 to 2027 and should reach nearly $6.0 trillion by 2027.

The aging of the population and its need for healthcare has fueled growth among healthcare companies, which include medical device manufactures, pharmaceutical producers and home healthcare services, to name just a few. As a result, now might be a good time to look into adding healthcare-related stocks to your portfolio.

Before jumping in, however, you should understand the risks and rewards of investing in this sector, especially at this tumultuous time in the sector’s history.

We can help you determine if healthcare investments are right for you based on your individual financial circumstances and goals. Please reach out to us today.

Most investors understand the importance of diversification, which is investing in a variety of asset classes to help ensure that when one is performing poorly, another is performing well. And one way to diversify is to add real estate to your portfolio. But doing so isn’t easy.

That is why some investors interested in real estate choose real estate investment trusts (REITs), which are securities that (a) invest in income-producing real estate or (b) make loans to businesses in the real estate industry. Investors in REITs earn income derived from rent; they can also participate in the profits from the sale of properties in the REIT portfolio. REITs often trade on major stock exchanges, so they are liquid.

In terms of diversification, many investors consider REITs for their historically low correlation with other asset classes. That is, they tend to perform differently from other investments, including equities, fixed income and cash. For example, in calendar year 2019, the MSCI U.S. REIT Index returned 25.84%. By comparison, the S&P 500 Index returned 30.43%, and the Bloomberg Barclays U.S. Aggregate Bond Index returned 8.72%.

Of course, REITs are not without risks and can be volatile. In the last calendar year (2020), for example, the MSCI U.S. REIT Index was down almost 20% (as of September 30, 2020) due to challenges presented by COVID-19.

If you are considering investing in REITs, then please reach out to us so you can get the best information that will help you determine if they make sense for your portfolio.