Coronavirus Fears Cause $3.4 Trillion Stock Market Loss

In March of 2020, COVID-19 hit the United States. The American economy began shutting down and the resulting panic caused the stock market to plummet.

When severe stock market dips like this occur, many Americans lose significant value in their retirement plans.

Throughout its history, the stock market has always recovered after major crashes, but the timing and duration of recovery is never predictable. Meanwhile, many people planning to retire soon are forced to work extra years to retire with sufficient assets.

This is why diversification is important. It's a fundamental financial principle that experts consistently emphasize. When there's a loss in one part of your portfolio and a gain in another, the overall impact is moderated.

Investing in rental property offers a measure of stability because "people will always need housing, even during recessions." In fact, rents often remain resilient during recessions because people lose jobs, lose homes, or downsize—increasing demand for rental units.

Recessions can create more demand for rental property. When demand for rentals increases and supply stays fixed, market rents tend to rise.

And then there are the tax benefits that accompany real estate ownership—depreciation, mortgage interest deductions, and 1031 exchange deferral among them.

The downside is that investing in real estate is not as straightforward as buying stocks online. It's a business. It takes knowledge, careful analysis, and operational skill—which is why many investors choose to participate passively through syndications.