Stock Markets vs Real Estate

Real Estate

  • Pros: When you invest in real estate you are putting your money into something that is tangible and that you can see. Yes, the prices are still determined by the state of the market, but a house is never going to be worth absolutely nothing, whereas a stock may well crash completely. Furthermore, a lot of new investors feel comfortable with real estate because they have some level of experience with it. Buying or selling a house can give you some idea of the processes required, plus there are plenty of resources available for people who are curious.
  • Cons: Unlike stocks, investing in real estate means that you are going to have to do a lot of work to maintain and repair your properties. This means you can’t ever just sit back and reap any rewards, as you must stay vigilant of issues with your properties at all times. Furthermore, if one of your properties is unoccupied, you are going to find that it will cost you money, rather than make money. This is the exact opposite of what you want to achieve, so you must always ensure you have a budget outlined.

Stocks

  • Pros: Stocks have proven to be the biggest wealth creating mechanism in the world, even if the market occasionally becomes volatile. This, coupled with the fact that it is much quicker to make stock transactions, means you can make a lot of money much more quickly if you invest well. Furthermore, buying high quality stock reaps rewards as your portfolio improves each time the stock does. This means you can make plenty of money by cashing out, or collect a healthy dividend based on your investment.
  • Cons: Psychological factors can play an enormous part in stock management, so you must be able to completely remove yourself from your emotions before investing. Just because you like a company, that doesn’t mean that your money should stay with them when it is clear that they are in a downward spiral. Furthermore, the volatility in the market not only allows for quick returns, but also offers the possibility of quick and catastrophic losses. While you won’t be putting in as much hands-on work, you will need to be aware of the state of the market at all times to make sure you don’t lose out.

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