The subprime mortgage crisis triggered a severe economic recession in 2008, but billionaire hedge fund manager John Paulson made billions in this period. His bet against the U.S. housing market made him $20 billion richer.
Paulson has since been biding his time and waiting for the next collapse to bet on. He has his sights set on the cryptocurrency market, but its sheer volatility has kept Paulson at bay, he revealed during an interview with Bloomberg in 2021.
Bitcoin is a no-go for Paulson | Image generated using Dall-E
So, with cryptocurrency out of the fray, what would Paulson do if you had $100,000 to bet on? The billionaire investor has a rather simple answer: buy a home.
The Best Investment For An Average Individual
Although Paulson made billions by betting against the housing market, he continues to believe buying a home remains the best investment for an average individual.
Paulson still prefers housing | Image generated using Dall-E
"I always say the best investment for an average individual is to buy their own home."
Paulson recommends that if you have $100,000, you could put it down towards a $1 million home. Capital appreciation should help you increase the value of your $100,000 investment while you service the $900,000 loan.
"The longer you wait, the more the house is going to appreciate and the greater return you'll have on your equity investment."
What About Gold?
Gold is another one of Paulson’s favorites | Image generated using Dall-E
Paulson also believes gold is another good avenue for investment. "There's a very limited amount of investable gold. It's on the order of several trillion dollars, while the total amount of financial assets is closer to $200 trillion."
He says gold is the "logical place" to go to when inflation is on the rise. According to the Bureau of Labor Statistics, U.S. consumer price index (CPI) inflation came in at 3.4% for April, higher than the long-term average of 3.28%.
Beyond housing and gold, Paulson's advice for investors is to invest in areas "that you know well" and that luck is not a long-term strategy.
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