Investing in Real Estate Vs the Stock Market
When it comes to long term financial plans, investments play an integral role. Besides all the other areas of expenditure, investing in a prospective field is a great way of increasing the financial resources. Real estate and the stock market are among the most commonly targeted areas in terms of investing. Potential investors often wonder whether they should invest in stock market or real estate; this article reveals the facts related to both the options, so you can decide the best matching option for your financial situation. Under general circumstances, investing in real estate is considered to be the best option by many investors; however, it may depend on the facts like personal interest and preference too.
Real Estate Investing
One of the most obvious benefits of investing in real estate is that it is that it is a physical property. Since it is a tangible asset, the owner can inhabit, renovate, and sell whenever it is necessary. Also, owning a home is an important aspect for a person’s life; after all, it is a tangible metric that is associated with a measure of success.
Apart from that, there are some other benefits associated with real estate investment:
- The chances for defrauding in this sort of an investment are fairly low. In fact, since it is a tangible asset, you can evaluate the value thoroughly. You can see and assess the condition of the property and current value easily.
- Leveraging the real estate investment will be a relatively safer risk compared to the stock market investments.
- In the event of inflation, real estate investment will provide protection. As a matter of fact, inflation maximizes the value of the property parallel to the cost of living and the power of purchasing of the respective currency. As inflation occurs, generally home prices follow suit.
- Even after the initial investment through your hard money loan, you can develop the land and increase the return on the investment. This is exactly what happens during the fix and flip business.
- If necessary, you can immediately convert your investment into a revenue generator through leasing or rental agreements.
Stock Market Investments
When it comes to stocks, investing in them is a riskier compared to real estate. Things can become worse upon inflation, in direct opposition to a real estate investment. Nevertheless, mentioned below are some of the notable benefits of stock market investments.
- Investing in stock market is relatively effortless, especially if you pay a financial advisor to manage your portfolio.
- If you can end up with high-quality stocks, you can expect a good annual income.
- You have the opportunity to reinvest the dividends.
Despite the mentioned benefits, stocks are associated with several drawbacks. These drawbacks have made stock market investing a less attractive means of investing compared to the real estate market. The tumultuousness of the stock market during the complex economic situation will cause significant losses for the investor, losses which may or may not be gained back during upswings. And, while it can be easy and low-maintenance, those who have more success with the stock market often pour hours of effort into managing their investments. Unpredictability and the necessity for sound knowledge in investing are other significant drawbacks pertaining to stock market investing.
If you are ready to learn more about real estate investing, take your questions to those with experience. At TABS, LLC. we offer a range of hard money loans, and are familiar with the different ways it is possible to invest in real estate. Give us a call to learn more and see how we can help you get started!