It’s no secret that the housing market has been particularly tricky lately. A convergence of factors, including soaring rates, high prices and lack of inventory, partly due to the “lock-in” effect — homeowners who would rather stay put due to the low mortgages they secured a few years ago — have made the situation difficult for both homeowners and buyers.
As of April 18, the 30-year fixed-rate mortgage surpassed 7% for the first time this year, jumping to 7.10% from 6.88% the previous week. To put this in perspective, the 30-year fixed-rate mortgage was at 5.11% on April 21, 2022, and at 2.97% on April 22, 2021, according to Freddie Mac data.
Against this backdrop, it might seem counterintuitive to sell a home in this market, yet some experts argue that even with the high-rate environment there are instances where it can make sense.
“Most folks sell their homes because of life circumstances, not due to the conditions in the housing market,” said Realtor.com executive news editor Clare Trapasso. “Some folks are expanding their families or moving for new jobs. Others are downsizing as grown children move out and they get older. Those things happen despite high mortgage interest rates.”
Also see signs it is time to sell your home.
The Market Is Not as Competitive
According to Trapasso, the housing market isn’t as competitive as it was at the height of the pandemic, when rates were at record lows. But it’s still competitive.
“There are more buyers than there are homes for sale, and that housing shortage gives sellers an advantage,” she said.
For instance, she noted that in many markets, move-in-ready homes in desirable areas that are priced right are still receiving multiple offers and some are selling for more than the asking price.
“It’s often the less desirable homes and fixer-uppers that aren’t selling as quickly,” she added.
It Can Make Sense If You Are Moving to a Cheaper Location
Many homeowners who have lived in their properties for a long time own their homes outright and these also may have increased greatly in value over that period, Trapasso said.
“So when they sell their homes, they’re looking at pocketing a steep profit,” she said. “And if they plan to buy new homes, they may not have to worry about getting a mortgage and those higher rates because they can use the cash from their sale to fund the next purchase.”
For example, she said, sellers in California may be able to sell their homes and then buy a cheaper home in Florida and, in turn, they can then put that extra cash they made on the sale of their properties into their nest eggs.
“Even sellers who can’t fund the whole purchase of their new home may be able to contribute a substantial down payment,” she said. “This lessens the size of their loan. And that might make their monthly payments more manageable.”
It Can Make Sense If You’re Downsizing
If you’re downsizing or moving, high rates matter less, offering opportunities amid a booming market, according to Jason Lee Villarreal of Martha Turner Sotheby’s International Realty.
“However, it’s crucial to consider the full cost-of-living adjustment,” he added.
Jason Sorens, senior economist at American Institute for Economic Research, echoed the sentiment, noting that even with the higher interest rate your new mortgage could be lower than it is now.
“Eventually you might be able to refinance the new loan at a lower rate,” he said.
You can pay cash or put a lot of money down on your new home.
“In those cases,” he said, “interest doesn’t matter much, so neither does the interest rate.”
If You Have a High-Interest Mortgage
If you purchased your home when interest rates were high and have a high-interest mortgage, selling your home during a time of high interest rates could allow you to pay off your mortgage and potentially save on interest payments, according to Michael Collins, CFA, founder and CEO of WinCap Financial.
“You could then downsize to a more affordable home or rent until interest rates decrease,” he added.
If You Have Paid Down a Large Portion of Your Mortgage
Homeowners who have significantly paid down their mortgages or witnessed their property values increase due to local market trends stand in a particularly advantageous position, some experts say.
“Choosing to sell during a high-interest period might unlock considerable financial gains,” said Matt Dunbar, SVP of the Southeast region at Churchill Mortgage.
In turn, this equity can serve as a substantial nest egg, whether it’s used to downsize to a more affordable living situation, relocate to a lower-cost area or diversify investments, he added.
“Particularly for those contemplating a lifestyle change or nearing retirement,” he said, “the timing could align well with broader financial strategies.”
Can Selling in a High-Interest-Rate Environment Be Detrimental?
As Dunbar noted, the decision to sell under these conditions is not without its challenges.
For one, the pool of potential buyers might shrink as some are deterred by the high borrowing costs, potentially leading to longer listing times or the need to adjust expectations regarding the sale price, he said.
“Moreover, if the intention is to purchase another property immediately, the same high interest rates will apply, possibly diluting the financial benefits of the sale.”
Selling your home in a high-interest-rate environment could be detrimental to finances if you’ve been in your home for only a few years and don’t have enough equity built up, Trapasso said.
“The same goes for someone who lives in a market where prices have come down,” she said. “You don’t want to sell a home if you owe more than your home is worth or if you’ll wind up having a loss when all of the fees and charges are tallied up, if you can help it.”
Ultimately, as Dunbar said, the decision to sell a house amid high interest rates requires a delicate balance between understanding market conditions, personal financial health and future objectives.
“It’s a calculated risk that, with careful planning and consideration, could lead to substantial rewards,” he said, “marking the beginning of a new chapter or the realization of long-held aspirations.”
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HGTV stars Jonathan and Drew Scott, also known as the Property Brothers, offered some advice recently on real estate investing in an era of high rates—especially what not to do.
During a wide-ranging CNBC interview on Wednesday, they sounded off on property flipping, high borrowing costs, the worst mistakes that aspiring investors make, the housing content on TikTok, and where the next big market will be.
Drew said he looks to invest over the long term and generally doesn’t flip rental properties. When structuring their own rental portfolio, there may only be one or two properties they flip for every 10 houses they add, he explained.
“Right now it doesn’t seem like a flipping market,” he said. “You just have to just adjust into what makes sense for the current market.”
Jonathan said that even though rates are high, investors should judge each property on its own merits. In fact, he and his brother just bought a 20-unit apartment building because the specifics of the deal worked out, he said.
Their focus on rentals comes as high home prices and mortgage rates have kept many Americans away from ownership. The cost of owning a home is officially the highest on record, Redfin said recently.
When asked about all the real estate advice that appears on social media apps like TikTok, Jonathan didn’t hold back: “99% of all the get-rich-quick people that you see online are full ‘beeeep.’ If everybody could do this, everybody would do this.”
Drew pointed out that their forthcoming series on HGTV, “Backed by the Bros,” is meant to help clear up confusion among new real estate investors or those who have flipped a few properties and are not yet seasoned investors.
“They get in over their heads because they’ve been watching those TikTok videos,” he cautioned. “They’re seeing this content that’s telling them, ‘You can do this.’ And then they spend in the worst way. They’re not organized.”
Indeed, not being organized is one of the biggest mistakes new real estate investors make, Jonathan said, noting that they often try to be their own general contractor and run their own projects.
But they don’t realize that when a subcontractor doesn’t show up, it can have a snowball effect that ripples through every other part of a project, he added. And the longer a rental property is sitting vacant, “the faster you’re going to dig yourself into a hole you can’t get out of.”
Another huge mistake investors make is blindly following their buddy’s advice, Drew said: “Don’t listen to random idiots that you know that has no idea about real estate or what he’s talking about. It’s usually the loudest voice in your group that’s who you listen to, and then you make big mistakes.”
The Property Brothers also offered their prediction for the next hot housing market.
“I’ll be totally honest, I think Detroit is amazing,” Jonathan said.
The Motor City was one of the hardest-hit markets during the last housing crash as the Great Financial Crisis and recession forced auto giants General Motors and Chrysler to seek government bailouts.
But as the post-pandemic housing boom has sent prices soaring in places like Florida, Midwestern cities have become more attractive. And in November, Detroit topped Miami for the first time in annual home-price gains.
Meanwhile, the Biden administration has offered the auto sector billions of dollars to encourage them to develop electric vehicles, though consumers have recently shifted away from EVs in favor of hybrids.
“When you look within a city, there’s usually a certain area of a city that’s really starting to redevelop and there’s so much potential and eventually a lot of money gets invested. And that area becomes a very valuable part of the city,” Jonathan told CNBC. “Detroit is like that on a national level. There’s so much money pouring in, so much redevelopment happening. I bet you in 20 years, it’s going to be one of the most technically advanced cities.”
Florida has long been known as a popular retirement destination, offering warm weather, beautiful beaches and relatively affordable housing. Home prices have risen substantially in recent years, especially in popular coastal cities like Miami, when compared to the national average.
As of January 2024, the median home value across the United States is $342,685, according to Zillow. In comparison, popular Florida metro areas command substantially higher valuations. Miami has the highest median home value at $554,261. Tampa follows at $373,235, still 10% pricier than the typical U.S. home, and Orlando comes in just behind Tampa with a median of $377,792.
But there are still pockets across the state where real estate remains relatively cheap. For homebuyers looking for deals, the cities listed here offer an opportunity to buy into the Florida lifestyle at a fraction of the cost.
Fort Myers
Located along Florida’s southwest Gulf Coast, Fort Myers is known as the “City of Palms” because of its lush tropical landscape. Fort Myers offers an affordable coastal lifestyle close to beaches like Sanibel and Captiva Islands. The median home list price currently sits around $366,600, reflecting its popularity.
“In 2022, Fort Myers was the sixth-fastest growing city in the country,” said Laura Adams, senior analyst at Aceable. “It’s another Southwest coastal city that offers affordable housing, proximity to beaches, and various recreations, making it a top choice for both families and retirees.”
Retirees flock to Fort Myers for the warm weather. Families are also drawn by affordable homes, good schools and access to the coast. For both demographics, Fort Myers provides an appealing mix of housing value, employment and lifestyle along Florida’s Gulf Coast.
Ocala
Moving south, Ocala offers even more relative affordability within commuting distance of Orlando and the I-75 corridor. Known as the “Horse Capital of the World,” Ocala is surrounded by hundreds of thoroughbred horse farms and rolling green pastures. Situated near the Ocala National Forest, it provides easy access to nature and recreation. Homebuyers can choose from reasonably priced single-family homes as well as 55+ active adult communities.
“The Villages is a sprawling retirement community near Ocala that continues to attract retirees who want to enjoy its amenities, active lifestyle, and wide range of housing options,” Adams said. “It has a combination of seasonal and full-time residents. “
As of January 2024, the median home value in Ocala is $267,427, significantly below the state and national median prices. With its natural beauty and slower pace of life, Ocala gives buyers a small-town feel just an hour’s drive from Orlando.
Winter Haven
Winter Haven provides affordable homes amid glistening lakes and natural beauty. It boasts over 100 lakes ideal for boating, fishing and watersports. Active 55+ communities draw retirees looking for an outdoor lifestyle.
“Situated near Lakeland, Winter Haven attracts nature lovers with its lakes and parks, and affordable homes with a median price of around $280,000,” said Colin Hannan, principal at Proven Partners.
The economy includes tourism, healthcare, retail and distribution. Homebuyers can find reasonably priced single-family homes near the lakes to fit a range of budgets.
Bartow
Moving inland to Polk County, Bartow provides reasonably priced homes near the I-4 corridor between Tampa and Orlando. Known as the “City of Oaks and Azaleas,” historic downtown Bartow features Victorian homes and blooming flowers.
“This Polk County city boasts a median home price under $260,000, offering access to Tampa and Orlando while remaining budget-friendly,” Hannan said.
The economy includes healthcare, education, government and manufacturing. Homebuyers can opt for affordable houses in the city or larger properties in outlying areas.
Homosassa Springs
Homosassa Springs provides a serene environment and attractive home prices. Located on the Gulf Coast north of Tampa, it is known for its freshwater springs, wildlife, boating, fishing and golf.
“Nestled along the Nature Coast, Homosassa Springs offers a peaceful environment and lower prices, with a median around $220,000,” Hannan said.
Retirees are drawn to the relaxed pace of life, natural beauty and affordable homes. The economy relies on tourism, retirement living and fishing. Homebuyers can choose from houses near the water as well as condos and townhomes.
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What are capital gains?
You have a capital gain when you sell an asset or investment for more than it cost you to acquire it. If you purchased $100 worth of stock and then sold those shares for $150 two years later, for example, you would have a capital gain of $50. On the other hand, when you sell an asset for less than its original purchase price, that’s called a capital loss.
Capital gains and losses can occur with many types of investments and property, including stocks, bonds, shares in mutual funds and exchange-traded funds (ETFs), rental properties, cottages and business assets. Capital gains generally do not apply to some types of personal-use property, such as cars and boats, whose value tends to decrease over time. They also don’t apply to the property you live in—your principal residence.
Capital gains are taxable in Canada. The value of a capital gain is treated as income earned during the tax year in which it was realized. There are, however, important exceptions to these rules, which we’ll run through below.
Watch: Capital gains tax, explained
What is the capital gains tax rate in Canada?
Many Canadians mistakenly believe that the entire capital gain is taxed at a rate of 50%. In fact, only 50% of a capital gain is taxable, and the rate depends on where you fall within the federal and provincial income tax brackets in the year you report the gain. The gain is added to your taxable income. There’s no single “capital gains tax rate” in Canada, because the rate depends on how much you earn. The higher your total income (including employment) is for the year, the more tax you can expect to owe on a capital gain.
Also important to know: A capital gain is taxed only once it is “realized,” meaning the asset has been sold. As long as the gain is “unrealized,” meaning the asset’s value has increased on paper but the asset remains in your possession, you do not have to pay taxes on it.
Let’s say you realize a capital gain of $50,000 this year. Half of that amount ($25,000) must be reported as income on your tax return when you file next year. If you fall in a 33% marginal tax bracket—the highest federal tax rate in 2023—the additional $25,000 in income results in $8,250 in taxes owing. The remaining $41,750 is yours to keep. And if you fall within a 26% marginal tax bracket, the same capital gain results in $6,500 in taxes owing—meaning you keep $43,500.
With the tax rates we currently have in Canada, and the fact that only half of a capital gain must be reported as income, no one is paying more than 27% in capital gains tax. Most people pay much less.
How to calculate capital gains and losses
You can calculate whether you have a capital gain or loss by subtracting the asset’s net cost of acquisition from the net proceeds of its sale.
As simple as that may sound, there’s a bit more to it. To ensure you follow capital gains tax rules as set out by the Canada Revenue Agency (CRA), you’ll need to know the adjusted cost base (ACB), outlays and expenses, and proceeds of disposition.
When someone decides to buy a million-dollar home with a suitcase full of cash, it’s not just a scene from a movie. It’s happening in real estate today, especially in the high-end market, and it’s shaking up things more than you might think. This shift toward cash purchases is not just a fad; it’s a trend that’s making the luxury housing market much more interesting.
See Also: 6 Genius Things All Wealthy People Do With Their Money
Cash Buys Speed Up the Homebuying Process
Imagine you’re selling a million-dollar house. Two offers come in: one is a person ready to pay cash, and the other needs a loan from the bank. It’s easy to see why a seller might prefer the cash buyer. There’s no waiting around for bank approvals, no risk of financing falling through–just a straightforward deal that can close fast. This simplicity and speed are why more luxury homes are being bought with cash. It cuts through the red tape and gets to the point, making life easier for everyone.
According to Redfin’s chief economist, Daryl Fairweather, cash buyers wield a “superpower” in the current market by sidestepping the high mortgage rates that deter many potential buyers. This advantage is clear in the numbers: while the overall housing market faces challenges, the luxury segment is thriving. Luxury home prices have surged by 9% year-over-year to $1.1 million–a growth rate nearly triple that of non-luxury homes. This resilience in the face of economic pressures showcases the powerful role cash transactions are playing.
Sellers Love Cash Offers
In luxury home real estate, the deals are big and stakes are high. Sellers have a soft spot for cash offers. They’re cleaner, with less fuss and fewer hoops to jump through.
Redfin reported a little more than 46% of luxury homes that were purchased in 2023 were paid in cash, which nearly 40% more than the year prior. This highlights how much a cash deal can mean a faster sale and less worry about the buyer’s financing backing out at the last minute. Plus, when buyers come with cash, they might even snag a better deal since sellers are often willing to lower the price for the certainty and convenience cash brings to the table.
Why the Cash Trend?
So, what’s behind this cash buying spree? Several reasons. For starters, the luxury housing market is global. Buyers come from all over with different financial setups, and cash becomes the universal language everyone understands. Then there’s the idea of investment. In uncertain times, pouring cash into real estate, a tangible asset, can seem much safer than other options. And don’t forget about the sheer satisfaction of owning your dream home outright, no strings attached. That peace of mind is priceless for many.
The Bigger Picture
This cash trend isn’t just a blip on the radar for luxury homes–it could signal a shift in how real estate, in general, is bought and sold. It might make people rethink how necessary a mortgage might be and financing in general, at least for some purchases. Real estate agents, brokers and even lenders might have to adjust their strategies to fit a market where cash is becoming more common, especially at the high end.
But it’s not all rosy. As much as cash deals can energize the luxury market, they also highlight the gap between those who can afford to buy in this market and those who can’t.
It’s a reminder of the growing divide in housing affordability and accessibility. Despite these broader economic downturns, luxury real estate remains robust, with cash deals maintaining high sales prices and volumes. This resilience could shape future market trends, and keep the luxury sector’s status as a safe haven for high-net-worth individuals and investors alike.
Final Take
Cash deals are making waves in the luxury housing market, changing how homes are bought and sold. This move towards cash offers simplicity and speed when it comes to buying and selling real estate. For sellers, it means a smoother path to closing. For buyers, it’s a chance to stand out and sometimes even get a better deal.
As this trend continues, it could reshape not just the luxury market but the whole landscape of buying homes. It’s an exciting time in real estate, with cash transactions leading the charge in the luxury sector.
Editor’s note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates’ editorial team.
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When selling your home, you can choose to work with a real estate agent or sell it yourself. For sale by owner, or FSBO, isn’t very common, but it can save you money on the listing agent commission and it gives you complete control over the selling process.
According to the National Association of Realtors (NAR), FSBOs accounted for only 7% of home sales in 2023. Sellers who choose this route mainly do so to save on the listing agent’s commission. For real estate agents, commissions are typically between 5% and 6% of the sale price, although this could change depending on a recent NAR settlement which may see commissions drop, Yahoo Finance reported. On a $500,000 home, the agent commissions could cost $25,000 to $30,000. This money is typically taken from the proceeds of the sale.
Interested in selling your home without a real estate agent? Follow these steps and (hopefully) save money in the process.
Set the Listing Price
One of the most difficult tasks for FSBO sellers is getting the price right. The NAR’s 2023 Profile of Home Buyers and Sellers found that 15% of FSBOs have trouble setting the listing price.
Normally, a real estate agent will conduct a comparative market analysis (CMA) to price your home. A CMA estimates a home’s price based on similar, recently sold properties in the same area. Real estate agents put this information together in a CMA report to help sellers set competitive listing prices.
Sellers can perform a CMA themselves or hire a professional real estate appraiser to provide an objective and unbiased estimate of the property’s value.
Prepare the Home for Sale
Once you set the listing price, you will need to start preparing the home for listing and showings. This can include making necessary repairs, cosmetic updates, a fresh coat of paint, landscaping and other small improvements to boost your home’s curb appeal and make it more appealing to buyers.
You will also need to take pictures to help your home stand out in online listings. You can either take the photos yourself or hire a professional photographer.
List and Market Your Home
Homeowners will need to create a listing and market their home to attract prospective buyers. According to NAR data, the most common FSBO methods used to market a home are through friends, relatives or neighbors, yard signs and through a third-party aggregator. However, you’ll get more visibility by listing your property on the multiple listing service (MLS).
According to U.S. News & World Report, you can typically list your home on the MLS for a $200 to $500 flat fee, but you’ll likely need to pay a 2% to 3% commission to the buyer’s agent.
Respond to Buyers
Buyers or their real estate agents will start calling or emailing you directly about the property. You’ll need to be responsive and set up showings around your schedules. If you wait too long to respond, they may move on to the next property.
Negotiate
FSBO sellers should be prepared to negotiate the price with buyers. When an offer is made, you’ll typically have two to three days to respond. Keep in mind that the highest offer isn’t always the best. The offer may come with contingencies, which could impact the sale of the property. Contingencies are clauses that buyers include when making an offer. They allow them to back out of the sale if the clauses aren’t met.
Hire a Real Estate Attorney
Federal and state law require sellers to meet certain legal requirements when selling property. Some states, including New York and Georgia, even require the sale to be overseen by a real estate attorney, according to U.S. News & World Report. If your state doesn’t require it, a real estate attorney can ensure you’re following the correct procedures and offer guidance.
Attorney fees vary, but many charge a flat fee or on an hourly basis.
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It’s no secret that the road to homeownership has been very difficult lately. A conflation of factors, including soaring mortgage rates, high prices and lack of inventory, has left many would-be buyers on the sidelines. Yet, according to financial guru and host Dave Ramsey, even though house prices are at an all-time-high, you should still consider buying.
“Median house prices are at an all-time high in history right now. I’m not predicting it to go nuts again, but don’t sit around waiting on the market to ‘correct.’ Prices are going to go up. Rates are going to go up and down — and you can refinance,” Ramsey posted on March 21 on X (formerly Twitter).
Indeed, the median national home price is $412,095, up 6.4% in the past year, according to Redfin. In comparison, in April 2020, the median national price stood at $304,179.
Ramsey has reiterated his stance for months, including in December 2023 on his namesake show, where he spoke with a caller who asked whether he should hold off on buying a home until the rates come down. Ramsey responded by telling the caller to “marry the house, date the rate” — in other words, buy now and refinance later.
“You’re not married to the mortgage, you’re married to the house,” Ramsey said, noting that if the caller keeps on waiting for prices to drop, he might wait too long.
Regarding the mortgage, Ramsey said, “It’s not a permanent decision. No one says you have to keep a mortgage.”
“It’s a really weird time to buy, but there’s nothing wrong with buying right now,” Ramsey noted. “If you wait two years, prices are going to be more. And if you buy now at a higher rate and the rates come down, just refinance.”
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David Swensen, a profoundly influential American investor, wielded significant influence in moulding the investment strategies of institutional funds. Having served as the Chief Investment Officer of the Yale University Endowment for close to four decades, David Swensen authored notable works such as “Pioneering Portfolio Management” (2000) and “Unconventional Success” (2005).
Revered beyond the university for his groundbreaking contributions to investment management and mentorship of future leaders in the field, Swensen was equally esteemed within Yale for his dedication as an educator, astute advisor, and spirited member of the university community.
David has bestowed upon the financial world a multitude of investment principles, a selection of which are outlined below.
Focus on asset allocation
Asset allocation represents a nuanced strategy that extends beyond mere diversification. Below is a breakdown of its fundamental components.
Rebalancing: Rebalancing necessitates periodically readjusting the proportions of various asset classes within your portfolio to uphold your desired allocation. Market valuations fluctuate. Rebalancing enables you to seize opportunities by acquiring undervalued assets while averting excessive exposure to overvalued ones.
Risk management: Although diversification plays a significant role in risk mitigation, it’s not the sole factor to consider. An integral aspect of asset allocation entails evaluating the inherent risks associated with each asset class alongside your overall risk tolerance. This could entail implementing measures such as mitigating exposure to high-risk assets amid market volatility, employing hedging techniques to safeguard against particular risks, and choosing investments that match your risk tolerance.
Returns matter
David aimed to highlight asset classes likely to yield higher long-term returns, albeit at the expense of sacrificing a significant level of short- and intermediate-term liquidity. This clarifies why Swensen didn’t limit his investments to conventional stocks and bonds. He sought asset classes offering the prospect of superior long-term returns, even if they lacked liquidity (meaning they couldn’t be readily bought or sold). This readiness to trade off liquidity for potentially greater returns is a fundamental element of the investor’s Yale Model.Also Read: 10 investing principles of Kirk Kerkorian that elevated him to the status of a billionaire
A measured approach towards diversification
David Swensen’s approach to asset allocation was not characterized by a rigid, one-size-fits-all strategy. The Yale Model is recognized for its diversification across multiple asset classes, and one approach he endorsed is a straightforward, equal-weight allocation. Here’s a breakdown of this method:
Various asset classes: The portfolio is segmented into approximately five or six discernible asset categories, such as domestic equities, international equities, real estate, and fixed income.
Equal allocation: Each asset class is allocated a similar proportion of the overall portfolio investment. This streamlines portfolio management and guarantees extensive diversification.
Active management helps
Swensen’s conviction in the value of active management forms the foundation of the model. It emphasizes the utilization of proficient investment managers who strategically select assets to surpass market performance, thereby providing a means to bolster portfolio returns. This differs from individual investors attempting to identify the “hot” stocks independently.
The Yale Model emphasizes investing in asset classes where active management stands a greater chance of success. These often include less efficient markets such as private equity or venture capital, where information may be less readily accessible. Conversely, Swensen acknowledged the challenge of consistently outperforming the market in highly efficient markets like large-cap US equities.
Don’t try to time the market
Swensen recognized the perils associated with market timing and its potential to undermine the success of the Yale Model. Forecasting short-term market fluctuations is notoriously challenging. Swensen likely understood that even the most sophisticated analyses couldn’t ensure success in timing the market. The investor emphasized a long-term investment horizon. Making frequent adjustments based on short-term trends could disrupt the overarching strategy and potentially result in prematurely selling profitable investments or purchasing overvalued assets.
Market timing decisions are frequently guided by emotions such as fear or greed. Swensen probably grasped the significance of disciplined, rational investing founded on thorough research and long-term objectives.
Research well before investing
David Swensen’s focus on extensive research was a cornerstone of the Yale Model and a significant factor in its achievements. Below is an analysis of why meticulous research held such significance for him:
Understanding investment dynamics: By conducting deep research, Swensen aimed to gain a comprehensive understanding of the forces driving an investment’s performance. This included factors like market trends, industry competition, and the company’s business model.
Assessing uncertainty: Investments inherently entail a degree of uncertainty. Swensen utilized research to quantify this uncertainty through the analysis of historical data, simulation exercises, and the evaluation of potential risks.
Assessing competitive edge: A robust competitive position is pivotal for ensuring long-term investment success. Swensen’s research likely centred on identifying companies possessing enduring advantages over their competitors.
Alignment of time horizons: Various asset classes possess differing investment horizons. Swensen utilized research to ensure that investments aligned with the endowment’s long-term objectives and liquidity requirements.
Exploring upside potential and exit strategy: Research contributed to pinpointing the prospective upside of investment and devising a well-defined exit strategy to capitalize on those gains when appropriate.
Contingency planning for worst-case scenarios: Astute investors don’t solely concentrate on favourable outcomes. Swensen’s research probably involved stress-testing potential investments to comprehend their performance under adverse economic conditions.
David Swensen’s enduring legacy persists long after his passing. His insight into the complexities and opportunities confronting investors in their pursuit of successful investment strategies has empowered and informed investors to devise novel approaches to capitalizing on market opportunities and generating returns.
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In this article, we will take a look at 13 Countries with the Best Citizenship by Investment Program in the World. You can skip our detailed analysis and go directly to the 5 Countries with the Best Citizenship by Investment Program in the World.
The growing trend of increased international mobility has fueled the desire to expand not only one’s cultural experiences but also financial ones. With the evolving dynamics of dual citizenship, the appeal for acquiring a second citizenship has intensified, prompting individuals to explore viable options. This is particularly true for investors and high-net-worth individuals. Citizenship-by-investment programs offer one such method, creating a win-win situation for all parties involved. By investing in the host country’s economy, investors can secure a second citizenship and passport, while the host country benefits from the influx of foreign direct investment, thereby strengthening its economy.
Citizenship By Investment Programs: Host Country Advantages
Citizenship-through-investment programs have experienced increasing popularity over time. According to the Investment Migration Council, approximately 5,000 individuals are granted citizenship through investment, annually. It is estimated that citizenship and residence by investment programs contribute between 2% and 30% to the GDP of the host country. The European Parliament Research Service reported earnings of 9.2 billion euros from 2008 to 2018 through investment programs. Similarly, other regions have also reported impressive revenue generation. For instance, Vanuatu earned $40.5 million from citizenship-by-investment programs from January 2022 to June 2022.
In 2022, approximately 1,375 applications were submitted for citizenship through investment programs in the three most sought-after Caribbean Islands—Antigua & Barbuda, Saint Lucia, and Grenada. While the 2019 pandemic initially dampened the upward trend, its reversal led to a subsequent revival. However, even in the face of the pandemic, revenues from the investment programs in 2019 exceeded those of 2018 for most countries. Notably, Turkey’s citizenship-by-investment program generated US $1,343 million in 2019, compared to $106 million in 2018, and the country issued the highest number of passports in citizenship-by-investment programs—9,962. Similarly, revenues for other countries, such as Vanuatu ($105 million), Antigua and Barbuda ($99 million), and Grenada ($61 million), also surpassed their 2018 figures in 2019.
Citizenship By Investment Programs: Financial Allure for Investors
In contemporary times, acquiring second citizenship offers numerous benefits. One key advantage is the enhanced sense of security that comes with being a national of two or more states. Additionally, the concept of visa-free global mobility has taken on new significance, proving to be particularly advantageous for investors. Beyond that, individuals can enjoy various tax benefits and increased opportunities for business advancement, as well as personal development through an improved quality of life, encompassing education and healthcare.
It is, therefore, unsurprising that a growing number of millionaires are seizing this opportunity. According to Henley & Partner, the number of millionaires relocating to another country reached 128,000 by 2024, a substantial increase from 51,000 in 2013. Notably, 6,705 Americans renounced their citizenship in 2020 to move to other countries, with tax avoidance emerging as a primary motivation for some of these millionaires.
Given this need for better finances, it is not surprising that companies like Intuit Inc. (NASDAQ:INTU) and Broadridge Financial Solutions, Inc. (NYSE:BR) have gained significance for entrepreneurs. Intuit Inc. (NASDAQ:INTU) is a multinational business software company that provides top-notch financial software services. Here’s what Baron Fintech Fund had to say about Intuit Inc. (NASDAQ:INTU) in their fourth quarter 2023 investor letter:
“Intuit Inc. (NASDAQ:INTU) is the leading provider of accounting software for small businesses and tax preparation software for individuals and tax professionals. Shares increased after the company reported quarterly financial results that exceeded Street expectations, with 15% revenue growth and 49% EPS growth. Intuit is benefiting from the sale of higher-value services and is well positioned to capitalize on increasing adoption of artificial intelligence (AI) given its vast data sets. The company recently launched Intuit Assist, a generative AI-powered digital assistant that improves productivity and unlocks valuable insights for customers. We continue to own the stock due to Intuit’s strong competitive position and numerous growth opportunities.”
Broadridge Financial Solutions, Inc. (NYSE:BR) is a leading provider of investor communication and helps financial services firms by providing technology-driven solutions, including tax reporting services. Continuously upgrading their solutions, Broadridge Financial Solutions, Inc. (NYSE:BR) has recently introduced NYFIX Fill Matching platform, aimed at helping high asset managers with high volumes.
Methodology
In order to compile our list for 13 Countries with the Best Citizenship by Investment Program in the World, we start off by scouring through various sources to extract citizenship by investment programs being offered around the world. We then used our article 10 Cheapest Residency or Citizenship by Investment Programs in Europe, as well as other sources, to find and rank these countries according to the minimum required investment and the time to citizenship. We then further check their political stability and absence of violence/terrorism percentile rank from The World Bank databank, 2022 and rank our selected countries according to those scores. We also use Human Development Index Ranking, 2022. To present a consolidated final ranking, we average the ranks for the four metrics on the weighted-average concept, with cost awarded the highest rank (0.5), followed by time (0.3) and then equal values for the other two metrics (0.1 each). We also talk about The Henley Citizenship Program Index, 2024 scores and rankings for these countries.
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Now that we have made a thorough analysis, we present to you 13 Countries with the Best Citizenship by Investment Program in the World.
13. Austria
Minimum Investment Rank: 13
Time to Citizenship Rank: 6
Political Stability Rank: 6
Human Development Index Rank: 2
Insider Monkey Weighted-Average Ranking: 9.4
Austria’s citizenship-by-investment program stands out as one of the initiatives requiring a significant investment in either joint ventures or direct business investments, with the goal of creating jobs and fostering new export sales. The selected businesses are expected to possess an international reputation and demonstrate growth potential. Under this citizenship program, the minimum required investment is €2 million, with the possibility to invest up to €10 million. The application process typically takes 24 to 36 months.
While the investment required is indeed substantial, the benefits of obtaining Austrian citizenship are manifold. Austria, being a politically stable, safe, and developed nation, offers a high quality of life to its citizens. Austrian passport holders enjoy the privilege of visa-free travel to approximately 190 countries and the freedom to reside anywhere within the European Union and Switzerland. Notably, Austria holds the 2nd position on the Henley and Partner Citizenship Program Index for 2024, achieving top scores in attributes such as quality of life, visa-free travel, residence requirements, and relocation flexibility. It’s essential to note, however, that except for certain specific cases, acquiring Austrian citizenship entails renouncing one’s previous nationality.
12. Jordan
Minimum Investment Rank: 12
Time to Citizenship Rank: 4
Political Stability Rank: 3
Human Development Index Rank: 9
Insider Monkey Weighted-Average Ranking: 8.4
As a Middle-Eastern nation offering citizenship through investment, Jordan presents a unique opportunity for investors seeking to establish strong ties with the country and capitalize on lucrative economic prospects. Geographically situated between Asia, Africa, and Europe, Jordan provides a secure, politically stable, and business-friendly environment for potential investors. The minimum investment required is US $750,000, directed towards a productive economic sector project located outside of Amman, which should generate at least 10 jobs for Jordanians. Citizenship is typically granted within a span of 3 to 6 months, with a higher likelihood of approval within the shorter timeframe. The program extends to the individual investor and their immediate family members, encompassing children under 18, widowed or divorced daughters, as well as parents.
The citizenship of this Middle-Eastern country opens doors to numerous opportunities, particularly as it grants citizenship in a region known for its stability and safety, coupled with visa-free travel to 50 destinations. According to the Henley and Partner’s Citizenship Program Index for 2024, the country is ranked 6th overall. The program received a higher score for processing time, residence requirements, and physical visit requirements. In summary, Jordan emerges as one of the countries offering one of the best citizenship programs in the world.
11. Malta
Minimum Investment Rank: 11
Time to Citizenship Rank: 7
Political Stability Rank: 8
Human Development Index Rank: 1
Insider Monkey Weighted-Average Ranking: 8.2
Citizenship through investment in Europe has become increasingly common in contemporary times. While the aforementioned Austrian citizenship is also European, the high associated costs can sometimes be beyond the reach of certain individuals. Malta, however, offers an alternative with a slightly more accessible investment requirement. The process involves a minimum donation of €600,000 to the National Development and Social Fund, securing a minimum residence of 36 months through the Malta Citizenship for Exceptional Services by Direct Investment program. Additionally, applicants have the flexibility to include family members, extending eligibility to include grandparents.
Ranked among the top 25 countries on the Human Development Index and recognized for its political stability, Malta offers a high quality of life for its residents. With the privilege of visa-free travel to over 180 destinations, Malta stands at the pinnacle of Henley & Partner’s Citizenship Index, boasting the highest scores in various aspects, including visa-free travel, compliance, and relocation flexibility.
10. Cambodia
Minimum Investment Rank: 9
Time to Citizenship Rank: 3
Political Stability Rank: 9
Human Development Index Rank: 5
Insider Monkey Weighted-Average Ranking: 7.1
As one of the rapid citizenship programs, Cambodia offers investors the opportunity to acquire citizenship by making a minimum donation of approximately US $320,000, including fees, to the Royal Government. The country boasts beautiful scenery, rich heritage, and friendly people. Citizenship can be obtained in a relatively short period, typically within 3-4 months. While passport holders from Cambodia enjoy visa-free travel to 53 countries, the nation maintains a politically stable environment. Notably, Cambodia secures the 9th position in the Henley & Partner Citizenship Index, earning high scores for residence and physical visit requirements. It also makes to the 10th position in our list of countries with the best citizenship by investment program in the world.
9. Turkey
Minimum Investment Rank: 10
Time to Citizenship Rank: 4
Political Stability Rank: 1
Human Development Index Rank: 3
Insider Monkey Weighted-Average Ranking: 6.6
Turkey’s citizenship-by-investment program stands as one of the most renowned programs globally. Since the reduction of their minimum investment requirements in 2018, over 13,000 investors and their families have seized this opportunity. The program offers a diverse range of options, with the minimum required investment set at $400,000 in real estate. This investment must be maintained for a minimum of three years after obtaining citizenship. The citizenship application process typically takes 3-6 months and extends to family members, including children below 18 years or children of any age with disabilities.
This citizenship offers numerous benefits, including visa-free travel to over 110 countries and access to a financially sound, stable, and safe country with a high quality of life. The investors can also become eligible for E-2 Investor Visa for the US after being domiciled in Turkey for three years. Turkey holds the 5th position on the Henley & Partner Citizenship Index, boasting high scores in physical visit and residence requirement rules.
8. Saint Kitts and Nevis
Minimum Investment Rank: 7
Time to Citizenship Rank: 4
Political Stability Rank: 9
Human Development Index Rank: 6
Insider Monkey Weighted-Average Ranking: 6.2
As the world’s first formal citizenship-through-investment program, Saint Kitts and Nevis has welcomed numerous investors since its establishment in 1984, offering them the opportunity to become residents of one of the most beautiful Caribbean Islands. The program remains a top choice for many investors, naturalizing over 1,000 investors and their families annually. Among its two investment options, the minimum-cost route involves a US $250,000 investment in a Sustainable Island State Contribution. Citizenship can be attained in approximately 3-6 months.
Citizenship in Saint Kitts and Nevis offers a multitude of benefits, including visa-free travel to approximately 157 destinations, the inclusion of family members such as parents and dependents, and the option of citizenship by descent for future generations. The country holds the 4th position in the Henley & Partner Index, earning high scores in the physical visit and residence requirement categories.
7. Egypt
Minimum Investment Rank: 7
Time to Citizenship Rank: 5
Political Stability Rank: 1
Human Development Index Rank: 8
Insider Monkey Weighted-Average Ranking: 5.9
Considered one of the world’s newest citizenship-through-investment programs, Egypt offers investors five different options. The option with the minimum investment involves making a non-refundable contribution to the CIU account in the central bank of the country, totaling US $250,000. The process for obtaining citizenship typically takes 6-9 months.
Ranking high on the political stability index, Egypt offers a rich cultural experience within the Middle East. Residents can enjoy visa-free travel to 51 destinations. The country secures the 6th place in the Henley & Partner Index, scoring notably high on various attributes, including travel destinations, compliance, process time, and physical visit, as well as residence requirements. It is thus, no surprise that Egypt is one of the countries with the best citizenship by investment program in the world.
6. Grenada
Minimum Investment Rank: 5
Time to Citizenship Rank: 4
Political Stability Rank: 12
Human Development Index Rank: 4
Insider Monkey Weighted-Average Ranking: 5.3
Grenada has emerged as a popular choice among investors seeking citizenship through investment programs. With a stable economy and political environment, the country offers lucrative options for investors. The minimum investment entails a donation of US $150,000 to the National Transformation Fund for a single applicant, with citizenship available in 3-6 months.
This investment option in Grenada comes with various benefits. Investors have the opportunity for an E2 visa for the US, thanks to the country being a signatory to the United States E2 Treaty. Grenadian citizens can also enjoy visa-free travel to over 140 countries, transfer their citizenship to future generations, and include family members such as parents and grandparents. The program’s appeal is reflected in Grenada’s 3rd position on the Henley & Partner Index, where it scored high on various attributes.
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Disclosure: None. 13 Countries with the Best Citizenship by Investment Program in the World is originally published on Insider Monkey.