Although both stocks and real estate are investment options, it is not out of place to assume that we have more people investing in the stock market than in real estate.
The dream of every investor is to generate as much profit as possible with minimal costs and risks.
Now, where would you rather put your money – real estate or stocks?
Before we dive into comparisons, it is important to note that investing in real estate or stocks is a personal choice that depends on your financial situation, risk tolerance and goals.
Nonetheless, the goal is to identify that which has the highest potentials of returns with risks as minimal as possible. Right?
Let’s begin with this eye-opening statement by Grant Cardone:
“Did you know that banks will offer you loans to invest in real estate, but not in their own stocks?”
Interesting. Isn’t it?
Apparently, the banks seem to know something that the rest of us are yet to figure out just yet.
Let us look at some key reasons why real estate is a better investment option over stock.
1. Forced Appreciation:
Being able to control your investment as well as your earnings is a feature that is almost only available to real estate investors. Real estate investors have the ability to force appreciation and increase revenue.
Unlike the stock market where revenue is dependent on the company’s performance, bearing in mind that investors have little to no influence on the company’s performance.
Also see: Forced Appreciation and how to leverage it
2. Minimal Risks
Every investment option carries some level of risk. However, a bad investment in real estate could simply mean that the investor has to wait for a longer period of time to recover his capital investment.
Unfortunately, this is not the same for stocks. A bad investment in the stock market could result in an investor losing a significant part of invested funds, if not all of it.
Asides the fact that investment in real estate is an investment in tangible assets, it is also a safe investment option.
Owning some real estate in your investment portfolio provides you access to credit. This leverage could be used to fund subsequent investments and grow wealth.
This is not the same for stocks. Although investment in stocks is highly liquid, stock portfolios cannot be used to access credit.
The stock market is very volatile. Consequently, investors may panic-sell or invest at the wrong time. In fact, volatility accounts for more than half of the losses in the stock market.
Volatility in real estate may refer to uncertain economic conditions that result in inflation.
Interestingly, inflation is a favorable condition for real estate investors. Real estate investment is a great way to hedge against inflation. This is because rental income increases with inflation.
Also, the capital value of properties appreciates when there is inflation.
Indeed, real estate offers numerous benefits in ways that stocks do not. In fact, it is one of the safest and most guaranteed kinds of investments on earth.
Whether you are seeking to generate cash flow, or you simply want to hold assets that appreciate with time, real estate offers all of these possibilities.
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