Real Estate Vs Stock Market
There are ways to capitalize on investing your hard-earned money and turning a major profit, the popular ones are real estate and the stock market. The question is which investment avenue is more reliable?
A Tangible Investment
Unlike stocks, investing in real estate is investing in something tangible: a house, an apartment complex, land, property, etc.. You own something that exists in the physical world and is not an abstract concept on paper only. For many people, that is psychologically more reassuring.
Depending on the real estate deal you got, certain types of real estate deal will cost you money monthly to maintain, other deal can be a cash-generating machine (passive income). You can refer to these articles here and here about creating a passive income as a landlord.
When you buy shares of stock, you are buying a piece of a company. Whether that company makes a food product, manufacturers automobiles or any high tech products, owning shares of this company entitles you to a cut of any profit this company generates. The more shares you hold, the more you profit if the company is on an upturn. The stockholders’ elected Board of Directors decides internally how much of the profit each year gets reinvested into the company’s expansion and how much of this profit gets paid out to shareholders as cash dividends. But at the end of the day, you own a piece of paper.
Calculated Risk
Compared to the world of stocks, it is way more difficult to be defrauded in the real estate market if you do your research because you can physically inspect your property, see that the place exists, run background checks on the tenants and the real estate agents you are dealing with, and back everything up in contracts. With the right nurturing and care taking of your properties, your real estate investments—in the right markets—can also yield tremendous results: a formidable upswing on what you originally paid for them in just a few short years if you are eyeing an eventual resale.
With stocks, you have to trust the management and the auditors and if something goes south based on their bad financial advice, there is not much legal recourse for you to recapture any lost moneys.
Price Fluctuations
We all know there are ups and downs in any investment market. If you look at or heard news the history of Nasdaq or Dow Jones that can go up and down drastically in one day and it’s really unpredictable for most people, it’s not the case in real estate. Think about it, how long does it take for a property to go up 40% in value? A few years. How long does it take to go down 40% in value? A few years. It’s slower and more predictable. This is one of the reasons why real estate is more preferred than stocks.
No matter what investment type you choose, there is always risk involved. How big is the risk and how you think you can handle it, it’s your choice.