“Should I invest in real estate or stocks?” has been an ongoing argument. You might have always asked yourself where you should invest your money and which investment is better. You might have also asked yourself: “What are benefits of investing in real estate versus investing in stocks?”
Of course, such questions have no absolute answer as many factors play a role in this answer. Especially, there s tons of information on the internet that could be misleading. Moreover, some might say that stocks generate more money over the years than real estate. Yet, they do not take into consideration real estate and many other aspects. For many investors, real estate is a more valid choice, and Americans generally prefer real estate over stocks, as recent surveys show that 27% of Americans prefer to invest in real estate, while only 17% chose stocks. But before we rush into any conclusions, let us first look at what each of these types of investments is like.
What are real estate investing and stock investing?
Real estate: Investing in real estate means buying a land or a property. You purchase a tangible asset, a physical property. There are different forms of this investment. For example, you can buy an investment property and hold it over the years as its appreciation rises before you sell it when the time is right. Another form of investment is the one that generates money each month by owning an apartment or a commercial building, rental houses, or even a mall, and you let in tenants who are going to pay you for renting these spaces from you.
Stocks: Buying a stock or a share in a company is basically owning a part of the company, no matter what this company is specialized in. It could be selling or providing a certain service, you get a cut of the profits and sometimes a loss for every share you own. So, if a company has a total of 1,000 shares and you bought 10 shares, you own 1% of that company.
So, now the question is: What are the benefits of investing in real estate versus investing in stocks?
The pros of investing in real estate and the cons of investing in stocks
It sounds like a good deal and so appealing to just put all your savings in stocks as you do not get to do any actual effort. You just buy shares and lay back. For many other reasons though, investing in real estate seems like a more proper choice, especially for the middle and upper classes. So, here are some reasons why you should take a second thought when investing in stocks and maybe consider investing in real estate instead:
Benefits of investing in real estate over stocks: Market stability
The stock market has extreme ups and downs. The 50$ share you invested in could go to $10 or to a $100 just like that. This may cause you to lose all your savings if the company in which you invested your money does badly. Many agree that the stock market is not predictable at all. Even huge international companies you have bit on might crash down overnight. However, here are where the benefits of investing in real estate appear. The real estate market is more predictable than the stock market. Moreover, it is hard for your real estate business to crash down so easily. You can still sell your property in case of any issues.
Benefits of investing in real estate over stocks: Asset management
It’s called real estate for a reason: It is real! You can physically check your investment property and decide whether you want it or not upon purchasing it, or whether it suits you or not. This makes it harder to be defrauded. On the other hand, investing in stocks might be riskier. After all, you are purchasing non-physical assets. This makes it harder for you, and you even face fewer options. When you choose a company to invest your money in, you give in for whatever they have for you. You do not get to choose the stocks you want, simply because they are all the same.
Furthermore, another one of the benefits of investing in real estate is that you are the owner and the CEO of your investment property, while in stocks you lay back and depend on other people’s choices of management.
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Benefits of investing in real estate over stocks: Cash flow
The rental real estate cash flow will keep on coming as a monthly income for you to live on. You can even retire if you want to! Meanwhile, the stock shares can make good returns, but it is all on paper. You will not see any real money until you sell your shares. This is one of the biggest benefits of investing in real estate versus investing in stocks. Real estate is the safest option for you to invest in. It is going to boost your income in the safest and most lucrative way there is.
Besides all that, managing your finances with stocks might be hard. There isn’t a stable income in stocks, while in real estate investing you have a monthly income which makes it easier for you to operate your finances and plan ahead of time. This is simply because you know what you are getting and when.
Benefits of investing in real estate over stocks: Choices
The real estate market is super diverse. You get to do your research and find out the many different types of investments there are. If you are a beginner, you can find all the information you need to start off with. You also get to choose based on your financial state. If you do not have much capital, you can go with wholesaling houses. You can even work as a real estate agent if you do not want to invest your money in an actual rental property. You can start with a huge capital, or you can even start with little or no money at all. However, in the stock market, the only choice you get to make is the company you want to invest your money in. You have to do a thorough research on each company you have on your list, and still, have a chance of losing your money. Remember, the stock market is never stable. Even the biggest companies in the world are subject to a crash down overnight.
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After reviewing the benefits of investing in real estate versus investing in stocks, it is clear to see why real estate is the better choice. From regular rental income to market appreciation, your investment in real estate is more secure and rewarding than investing in the stock market.