Your long-term financial plan should include investments. Investments can be a great way of increasing your financial resources, whether you’re saving for retirement or preparing your children for college. So, there is a common question about investing and the advantages of stocks versus real estate. Although real estate is considered the best investment option, you will have to consider your personal preferences and expectations when deciding whether or not to invest in a real estate company or stocks.
Investment in properties was historically considered to be the safer option. Investment professionals will tell you that real estate is the safest option. However, this investment is not always the most lucrative. There are potential huge returns depending on what type of investment you make. You could have made a great investment if you had bought a beachfront house in Vancouver’s Kistilano neighborhood in the 1970s. It may have been difficult to find comparable real estate investments if you had bought Apple or Microsoft stocks before these companies went public. How do you pick the best investment? Let’s look at the advantages of each type.
Benefits
Because you have a property that you can live in, renovate and sell, many of us feel more comfortable investing in properties. We are also more likely to recognize the importance of owning homes. This type of investment can be both tangible and associated with success.
Other benefits of investing in real estate include:
- This type of investment is less likely to defraud you because you have the ability to evaluate your investment more thoroughly. This allows you to assess the property’s condition and determine its potential and current value.
- Real estate investments can be leveraged against debt better than stock market investments. Even if your property or home’s value declines, you still have that property.
- As property values rise along with living costs and the purchasing power your native currency, real estate investments can be a great hedge against inflation.
- To increase your return on investments, land investments can be made.
- Through rental or leasing agreements, investments in property can have a direct impact on your cash flow.
Stock Benefits
Stocks are definitely the most risky of all the investment options. However, there are still many benefits that make stocks attractive as a financial option.
- Stocks can be an easy way to invest.
- Profits increase year after year with high quality stocks
- Dividends can also be reinvested into your stock portfolio.
Stocks have a few drawbacks, which make them less attractive to conservative investors. Stock market volatility is high, especially given current economic conditions. Losses can be substantial. Stock prices can be difficult to predict so it can be challenging to know when stocks should be bought or sold. Stocks are best for experienced investors with a good knowledge of the stock exchange. However, real estate is a better choice for long-term stability and a low risk investment.
