Investing in The S&P 500 Compared to Self Storage REITS

What is a more Stable Investment, Self Storage or the S&P 500?

Self Storage has steadily become a safe haven for investors looking to deploy capital. While the S&P 500 has held the same place for over 30 years we thought a comparison of these sectors would be interesting. The only way we could  give a perfectly precise comparison would be with access to real-time, constantly updating financial data. While we won't attempt to do that, this article can provide a general overview and some key factors to consider when comparing S&P 500 investing to the Self-Storage sector over the past 5 years .

S&P 500:

• • The S&P 500, representing the broader stock market, has experienced a generally upward trend over the past 5 years, although with significant volatility. Factors influencing this include economic growth, corporate earnings, interest rate fluctuations, and geopolitical events.  

  • There have been periods of substantial growth, as well as notable downturns, particularly during the COVID-19 pandemic in 2020 and periods of rising interest rates.

Self-Storage Sector:

• • Self-storage REITs have demonstrated dependable stability and consistent growth over the past 5 years.

Factors contributing to their strong performance include:

• • • Increased mobility and lifestyle changes (downsizing, temporary housing).

    • Strong demand from businesses and individuals for storage space.

    • Extremely stable occupancy rates.

    • The ability to raise rental rates.

The Self Storage sector is often considered recession resistant because it holds up really well during economic downturns.

Key Comparison Points:

Volatility:

• • The S&P 500 exhibits higher volatility than the self-storage REIT sector. The broad market is influenced by a wider range of factors, leading to greater price fluctuations.

  • Self-storage REITs, with their stable demand and consistent cash flow,  experience much lower volatility.  

ROI:

• • The S&P 500 has the potential for higher overall returns during periods of strong economic growth. However, it also carries a greater risk of losses during downturns.

  • Self-storage REITs offer a much more balanced return profile, with a combination of steady dividend income and moderate capital appreciation.  

Income vs. Growth:

• • Self-storage REITs are known for their consistent dividend payouts, making them attractive to income-oriented investors.

  • The S&P 500 offers a mix of growth and income, depending on the specific companies within the index.

Economic Sensitivity:

• • The S&P 500 is highly sensitive to overall economic conditions.

  • The self-storage sector is extremely resilient to economic downturns, as demand for storage space continues to increase, particularly in States with strong population growth  such as Texas, Florida and North Carolina to name a few.

The  overall consensus from experienced investors is that it's easier to generate quick, accelerating profit in the S&P 500 and the Self Storage Sector, while slower to see gains, will not put you at risk of losing money for any period of time.

The motto in Self Storage Investments is No Trash- No Tenants- No Toilets which makes this sector very attractive for conservative investors looking to protect their capital from upheaval.
  

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