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Long-Term Investments | How to Invest to Reduce Volatility and Protect Your Wealth

29. February, 2024
Investimenti immobiliari a lungo termine

How to protect your wealth from volatility and ensure its appreciation in 5/10 years

One of the most important aspects for those seeking long-term investments is the delicate balance between the characteristics of the investment itself:

  • volatility
  • riskiness
  • return

While in a short-term perspective some volatility and some degree of risk, are necessary and accepted by most investors with an eye to a possible return on investment, almost no one wants to spend 5/10 years on the roller coaster of the Ulcer Index or, even worse, risk having their assets devalued.

This excludes for long-term investment perspective, unless you want to check them frequently:

  • stocks, equity ETFs, equity funds, or mixed funds
  • bonds, bond ETFs, bond funds, or mixed funds
  • Bitcoin and cryptocurrencies
  • commodities

Each of these investments carries a volatility, a risk of drawdown, and a probability of crisis that are too high for an investor seeking long-term investments that do not require constant monitoring. Those considering a 5-year horizon must consider at least one financial crisis or bear market, while those considering a 10-year horizon must take into account at least one crisis and probably two, not to mention bear markets.

At the same time, in a long-term perspective, the worst investment compared to those just mentioned turns out to be cash. In this case, the loss of value, possible in the other cases due to inflation over 5/10 years, is almost a certainty. This is in addition to the foregone earnings.

Safe-Haven Assets as Long-Term Investments

In this perspective, so-called safe-haven assets come to the aid of the investor, which, thanks to their countercyclical dynamics, are able to survive financial crises and appreciate. For example:

  • gold, platinum, silver
  • strong currencies
  • fine art, luxury watches, fine wines

Excluding the latter because of the need to be true “connoisseurs” with the risk of discovering that you are not at your own expense, and because of the difficulty of preserving these treasures, the weakness of the former two is that they are too defensive and cannot guarantee the investor a return.

Income Real Estate as a Long-Term Investment

The long-term strengths of the asset classes seen so far meet and combine in this investment with very special characteristics:

  • reduced volatility
  • return on investment consisting of an immediate component (from rents and guaranteed) and a long-term component (from revaluation, not guaranteed but highly likely in the 5/10-year view)
  • limited risk because the risk of depreciation over 5/10 years is mitigated by the sum of the immediate rents received

Looking specifically at the U.S. income real estate market, consider that the profitability of most of the properties on this site ranges from 6% to 10%. So, for example, over 10 years each of these properties is able to provide a “profitability cushionof 60% to 100% of its value, which protects against the possibility of unlikely depreciation.

The Best Real Estate Markets for Long-Term Investments

Let’s briefly review the best US real estate markets for long-term investments.

Long-Term Investments in Florida

The real estate market in Florida (not just in Miami) has experienced a true explosion following the pandemic. Growth has been fueled by foreign investors – many from Central and South America – as well as by US citizens who choose to relocate to the Sunshine State for retirement or remote work opportunities every year. This has initiated a robust phase of property value growth in Miami, Orlando, New Port Richey, Port Charlotte, Tampa, Mount Dora, and other locations.

In particular, Orlando‘s traditionally tourism- and entertainment-driven real estate market has seen growth in the influx of visitors and workers in areas such as theme parks, golf, shopping, and conventions. New Port Richey in Pasco County has grown and continues to grow due to its ability to offer an affordable option for those wishing to live near the coast. Port Charlotte, located on the southwest coast of Florida, is another area that has experienced significant growth, fueled by retirees and those seeking a leisure-oriented beach lifestyle. Tampa is experiencing steady expansion in the real estate market in downtown areas and along the coast. Mount Dora, just a 45-minute drive from Orlando and overlooking Lake Dora, is a charming town rich in history, attracting more people due to its mild climate, strategic location, and high quality of life it can offer. These locations, given the high liquidity of properties, are very attractive for medium-term investment perspectives.

Long-Term Investments in Philadelphia

Following the recession of 2008, the real estate market in Philadelphia, Pennsylvania – like many others across the United States – took some time to recover. However, starting in the early 2010s, the city began to show signs of recovery with growing interest in urban properties. In the subsequent years, Philadelphia has witnessed a significant phase of growth and development, still ongoing today. This growth is evident both in its central neighborhoods and in some peripheral areas, partly due to the city’s universities attracting an increasing number of international students, many of whom decide to stay after completing their studies.

The redevelopment of neighborhoods has attracted new residents – students, young professionals, and families – leading to an increase in demand for housing, resulting in both property values and the rental market growing, thus generating income for property owners. Philadelphia is, therefore, highly attractive as a long-term investment and also for those seeking immediate rental income.

Long-Term Investments in Detroit

The real estate market in Detroit, the largest city in Michigan, has undergone a remarkable transformation over the last ten years, transitioning from a period of severe recession – due to the automotive crisis affecting companies like General Motors and Chrysler, and their entire supply chain – to a phase of revitalization and growth. After the housing crisis of 2010, marked by foreclosures and a collapse in property values, joint efforts from local government and private investors have taken shape through demolitions and renovations of abandoned homes. This development has intersected with the broader economic recovery of the Detroit Area, stemming this time from a variety of sectors: the resurgence of the automotive industry thanks to electric vehicles, as well as numerous technology startups that have attracted over 300,000 STEM (science, technology, engineering, and mathematics) workers.

The affordability of this city has led many families to purchase their first homes – stabilizing the market – and has attracted businesses and startups that have initiated the revitalization of entire neighborhoods and created job opportunities. Today, Detroit is highly attractive for those looking to make long-term investments with relatively modest amounts.

Long-Term Investments in Baltimore

The real estate market in Baltimore, a major Maryland city, has gone through significant transformations over the past decade, demonstrating remarkable resilience and adaptability in the face of local and global economic challenges. The city’s renaissance began around the mid-2010s, with the real estate market gaining momentum through efforts to revitalize downtown and the waterfront, attracting new businesses and residents.

The city’s strengthening economy year after year has propelled the real estate market with new construction projects and the renovation of historic neighborhoods, in addition to the gentrification of suburban areas. The rental market has responded accordingly, ensuring significant returns for property owners. Thus, Baltimore is recommended both for long-term investment perspectives and in terms of immediate profitability.

Conclusion: Why Invest in Long-Term Income Real Estate

Income properties in the U.S., as we have seen, can be an excellent long-term investment for several reasons:

  • the immediate yield (shown on the Opisas website for each available property) is only one component of the overall gain offered
  • by reselling the property after 5/10 years, the capital gain often offers a gain comparable to the immediate yield multiplied by the years of ownership
  • the value of real estate has little volatility and the long-term trend upward
  • the trends of rental income are also upward (in fact, rents are one of the components of inflation itself)
  • the risk of loss in the medium to long term is very remote and is mitigated by the sum of the rental incomes
  • the US real estate market is highly liquid, and available properties are quickly sold

Make Your Long-Term Investments with Opisas

For more information on long-term investments you can make in the US real estate market, please contact to schedule an appointment with a consultant who speaks your language.



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