Real Estate Vs Stocks: Which Is The Better Investment For You?

If you are considering investing your money, it can be difficult to know where to begin. There are lots of different investment routes out there, and not all of them will be suitable for everyone. So where do you begin? Well that is a very good question! 

There are a lot of people who will recommend that you choose a traditional investment route, such as the stock market. But an increasing number of people are now choosing alternative investments, such as real estate, to put their money into. But how do you know which option is better for you? 

In this guide, we’ll be comparing real estate and stocks as investment opportunities to help you determine which is the best investment for you. So if you find yourself debating between the two, you’re in the right place. 

Keep on reading to find out whether real estate or stocks is the better investment for you! 

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What is Real Estate Investment?

First things first, what is real estate investment? Well as the name suggests, real estate investment is any investment opportunity that requires you to invest your money in real estate and property. There are lots of different styles of real estate investment, but in some shape or form, they all tie back to property. 

Most of the time real estate investment will involve the act of purchasing property with the intent of making profit from it. A lot of people will generate a rental portfolio which allows them to purchase houses and then rent them out for profit.

Other people will purchase run-down properties with the intention of doing renovations and then flipping them. While some people will take a more detached approach and join a real estate investing group that allows them to invest in property without getting their hands dirty.

Real estate investment is often viewed as a “safe” investment route because people will always need houses, and the value of property tends to be fairly stable. While it is considered an alternative investment, it is actually a pretty popular investment vehicle. So, let’s take a look at some of the pros and cons. 

Pros

• Buy Below Market Value - Real estate investment is one of the investments that allow you to purchase below market value, this can really maximize your profits and allow you to get a great deal on your purchase. 

• Steady Cash Flow - If you choose to go down the rental route, then you can generate a steady flow of income through real estate investment. 

• Property is Usually On the Up - The majority of the time, the real estate market is appreciating in value, and as a result it is a very stable investment opportunity. Most of the time, you will make profit through real estate and unless the market crashes, you will almost certainly break even.

Cons

• Hard Work - A lot of real estate investment opportunities require you to put in a lot of time, effort and money. If you do a lot of the work yourself, you can make a lot of money on your properties while keeping the costs down. 

• Constant - If you choose to go down the rental route, you will be responsible for the maintenance of the properties you own, and this can be tedious and costly. 

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What is Stocks Investment?

Now that we have taken a look at real estate investment, let’s take a look at stocks. The stock market is one of the most traditional investments in the world, and it is one that many people aim to invest in. Yet I do not fully understand.

Investing in the stock market essentially requires you to purchase shares of a company through the stock market. Once you have purchased those shares, you become an investor in that company, so as the company value fluctuates on the stock market, so will the money that you have invested in that company. 

So, if the company is doing well, it is possible for your profits to rise significantly. But by the same degree, it is also possible that your shares could drop in value significantly. This is why the stock market is often viewed as a risky investment. To make money in the stock market, you will often need to be invested in it for the long haul, and that is why it isn’t a viable investment for everyone. 

Pros 

• You Can Start Small - With stocks investment, you don’t need to have a lot of money to invest, you can start small and build your way up. 

• Easy Access to Money - Liquidating your stocks is a lot easier than liquidating money that is tied up in property or other fixed assets. 

• Lots of Options - There are tons of different types of stocks available to choose from, so investing in stocks can be tailored to suit most people's needs.

Cons

• Volatile - The stock market is an incredibly volatile investment route and this can make it rather risky. 

• You Will Always Lose Money - There will always be a small amount of money lost in the stock market at least, due to the fluctuation of the market value. 

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Which is the Better Investment For You?

So now that we have taken a look at both of these investment routes, you might be wondering how to decide which is the best option for you. 

The best way to do this is to take a look at the pros and cons of the two investment options. They are both very different from one another, with real estate investment typically being very hands-on, and stocks allowing you to take more of a hands-off approach. So, ask yourself if you want to get stuck in, or are you happier sitting behind a screen and trading stocks. Only then will you be able to decide which investment is best for you. 

Also read: The 8 Amazing Passive Income Ideas With Little Money

Summary

In short, if you are considering investing then it is likely that you may be attempting to either invest in stocks or real estate. In this guide, we’ve compared the two to help you decide which is the better investment for you. 

Your pay stubs will be a great resource to find out figures needed to calculate net income etc.

Thanks for reading!

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