Investing In Real Estate Vs. Stocks-Which Should You Choose
Over the years people have argued about which is the better investment option between real estate and stocks. Answering this question in a definite manner is difficult since it all comes down to one’s preferences, style and personality. You need to take into account individual investment particulars if you are to give a defined answer.
The concept of real investment involves dealing in physical land or property. As long as you are holding onto some real estate, it will cost you financially every month. In other cases, you can invest in real estate that will generate cash for you.
You will be owning a part of a trading company when you buy stocks. You benefit from if a company makes profits in the course of trading as you get a portion of it. How much profit will be ploughed back to the business to finance expansion and the part to be paid as cash dividends, is for the Board of Directors to decide.
The tendency of people in the lower and middle classes to lean towards real estate investment is higher. The reason for this is because as they grew up, they were exposed to it. As well they heard their parents outline the importance of directing your investments in real estate.
A lot of people opt for real estate investments as they can see the tangible thing where their money is. The psychological effect that this has on a good number of investors is essential. Since they can look and feel their investments makes them more comfortable.
The likelihood of being swindled in a real estate deal are lower. You can physically show up at an investment in order to inspect it. This is unlike in stocks where you have to trust the management and auditors.
Unlike stocks you need to engage in a lot of hands-on job when you are investing in real estate. Though you may have a property manager, you will be required to have oversight and go to meetings.
Investing in stocks gives you the opportunity to benefit from a great wealth creator. Since you are purchasing a part of a business in stocks investing, this is considered as higher level of asset ownership.
The process of diversifying in stocks is easier and less expensive. This is unlike in real estate where you will need more money.
The tendency to lose money for stocks investors is high since they are often emotional, undisciplined and fickle in their dealings. Most losses in the stock market can be attributed to psychological reasons.
The value of stocks tends to undergo extreme fluctuations. The level of volatility is elevated in the stock market as opposed to real estate.