Real estate has long been used as an alternative investment, to give investors a non-correlated asset that can give a portfolio increased diversification.

In the last 15 years or so, with the prevalence and popularity of REITs and real estate industry funds, real estate investments are considered by some to be a core holding instead of an alternative investment. Real Estate investments are so accessible now that they should be considered an indispensable part of any portfolio.

There are many types of real estate and many types of funds and stocks that you can use to gain exposure to the real estate market. Conventional wisdom is that real estate investments are a good hedge against inflation, and they often have potential tax advantages.

As an asset class, real estate tends to be less correlated to the rest of a portfolio than a basket of stocks or mutual funds. There are such things as real estate bubbles, of course, and we all saw how badly things went in 2008, largely thanks to mortgage backed securities, so one has to be very careful with this type of investment.

Before buying into real estate investments, it is best to consult a professional.