Throughout most of human history, our ancestors were nomadic, and moved from place to place leaving few signs of their existence. This tumultuous way of life eventually gave way to an agriculture-based society, and ultimately to the globalized world we see today. Without these advances we would not have had the dawn of the very first type of investment – home ownership and real estate.
The Birth of Private Ownership
In ancient times, land was staked out and claimed by whoever managed to arrive in an area first, and those with the most physical or military power defended it. Eventually, a system of powerful landowners developed, and tribal leaders (or Kings and Queens) would disperse the lands and take payment from their citizens. This structure would of course in time fall victim to the rise of nations governed by the people, and title lands
were broken into much smaller pieces and sold off to rich merchants, and the wealthiest of the population.
Enter the industrial revolution, which will go down in history as the great equalizer, and perhaps the primary catalyst for the emergence of the modern middle class. Ambitious peasants could now jump classes and gain great material wealth in just one lifetime. This meant owning the property that they lived on, and if they so chose, selling it to another person for an agreed upon sum. Sometimes the purchaser would be wealthy enough to own more than one property, and would allow other people to live in it in exchange for financial compensation. Just like that, real estate investment was born.
Mortgages were the next development in the chain of events, and no specific culture can be solely credited with their arrival, as the whole of human society contributed to the inception of the idea. After the industrial revolution, the world became rich enough that banks could lend money to normal people in exchange for interest on the amount that they owed. This enabled individuals to be the owners of their property, and to become landlords themselves, if they so chose.
Ownership of land and homes has provided the base for all of the investment that we see today. It has long been established as one of the most secure forms of wealth, and this is as true today as it has ever been. No investment portfolio is truly free of market risk without the diversification that property investment can offer. It is important to recognize that although the modern condition has altered the way that we view investment, the principles have remained the same throughout the passage of time, and to this day it remains a practical and savvy way to increase and secure ones wealth. (Investopedia.com) @Investopedia on Twitter
Read more in our series:
Do you have questions? Feel free to contact us