Is it better to invest in Real Estate or Stocks?
Investing can be complicated between real estate vs. stocks investment. Especially when you don’t know what to invest in or how to invest in it. We automatically think we need to buy stocks when we want to invest, but that’s not true at all. There are plenty of options to consider when you want to initiate investing.
In this article, I am going to compare two prevalent types of real estate vs. stocks investment, so you can determine which, if either, the best option for you is.
Investing in Stocks
Investing in stocks is the most common way for people to start investing. It’s quick and convenient, and the learning curve is relatively small.
You should start investing in individual stocks once you have a firm understanding of the markets and how stocks work. You significantly reduce your diversification and increase your risk by investing in just a handful of individual stocks. Following are the options available to invest in stocks:
· You can invest in Exchange Traded Funds, which are a basket of stocks that act as a single stock. You can purchase ETFs like you would an individual stock, but it’s a fund that encompasses multiple other stocks.
· Mutual funds are often managed by a person or group of people. These fund managers make the decisions about what stocks the fund holds and how much of each they want to invest in.
One of the most significant benefits of investing in stocks is how easy they are to buy and sell. Just sign up for a brokerage account, deposit money, and you can purchase shares immediately. The same goes for selling. If you decide you want to unload some stocks from your portfolio, just place an order to do it.
Investing in Real Estate
For a lot of investors, putting their money into real estate feels a lot better. With stocks, you can’t see or feel them. You just look at the charts. But with real estate, you can physically walk into a property that you’ve purchased and seen what your money has bought you (sometimes that’s good, sometimes it’s bad!).
If we compare real estate vs. stock market investment, people associated with real estate investment earn large returns on investment. That’s not always the case anymore, and much of it depends on your geographic market. It also depends on how well you know that market.
When investing in real estate, there are two primary options you can take:
· Investing in residential properties is exactly what it sounds like. You buy a house as an investment, usually to rent out and capitalize on the rental income. Investing in residential properties has been the most common path for a long time—primarily because investors are drawn to the (almost) guaranteed monthly income it produces. It’s also easier to manage a home than a commercial building.
· Investing in commercial real estate can come in a variety of flavors. You can buy an office building, an apartment building, or even a commercial storefront that houses a variety of retail shops. Commercial real estate investing is complex, requires a lot of up-front capital, and you’ll need to have a reliable system in place to be able to manage it all (maintenance workers, accounting, property managers, etc.).
It is only you, who can determine which method is best for you. From these methods, you know what it takes to get into each of these investment types. Both of these options come with risks and rewards, and both are suitable for most people.