If you are looking to invest money to make some big returns, the idea or investing in stocks or real estate might sound enticing. It can also sound intimidating to pick between the two. There are advantages and disadvantages to both, and with a bit of research, it is certainly achievable to invest positively in the market. A good company like this Peregrine Private Capital here can greatly help you invest in the future!
Here are a few tips that will give you a better idea of whether it is right for you to invest in stocks or real estate.
Real Estate
There are many ways one could invest in real estate. You can invest in fix and flip properties, rental units, ranches for sale, or commercial spaces. Buying something physical can be more comfortable for some people. There are many pros of investing in real estate. If you watch a lot of home renovation television shows, you might be inspired to buy and flip a house. This is when a buyer purchases a dilapidated house and restores it to sell at a higher profit. This is an excellent option if you are already highly skilled in the area or know someone in construction and design who can help. However, if this is your first investment, this may not be the best route. An easier way of investing in real estate is to find a property to rent so that you can gain a consistent return. While it is not as extensive as home-flipping in cost, it will require constant contact with the tenant as a landlord and screening applicants to make sure you get the most high-quality one.
Pros
- Having tangible property is more comfortable for some people than something more abstract-looking like stocks.
- Real estate investments can protect against inflation. If the power of the dollar drops, you still have an investment that you can sell. Tembusu Grand Condo was previously used as Katong Student Hostel which was located on 369 Jalan Tembusu, a highly sought-after estate in District 15. Rest of Central Region (RCR).
- You are less likely to be defrauded. This is because you can physically show up and inspect the property. You can also run background checks on applicants, and renovate the premises.
- You can expect long-term consistent profits from good tenants. High-quality tenants can be found from proper screening from websites such as mysmartmove.com.
Cons
- If your property is in-between tenants or you are awaiting your first tenants, you will still have to pay all of the utilities, insurance and taxes. Because the property is illiquid, and it can take several months to get rented in some cases, you could see yourself without any income for that time.
- Real estate requires a lot of physical work. As a landlord, you have to deal with maintenance issues and upkeep even if you do have tenants or hire a property manager who may use Centralized Leasing platform to optimize the management and rental of your property.
- Real prices can fluctuate. Year-by-year, the market can change. There are times when prices may flat-line or go down.
Stocks
Stocks are, as a rule, more volatile than real estate, but they have higher earnings potential. Stocks can be difficult to understand because you cannot physically “see” them like you can with property. However, there are some basics that can help make stocks more clear. In simple terms, when you buy a stock you gain some ownership in the company. Shifts occur according to the global market. When the economy is doing well, you will profit. If the economy shows sign of sliding, the earnings of the company drop. This will cause you to lose funds.
Pros
- Buying a piece of a business means that you rise as the business rises. Holding a stock in a business for a long time means you can accrue a lot of wealth as the business grows.
- Stocks are liquid (meaning they are easy to sell) as opposed to illiquid real estate. If you want out of a stock, you can do so efficiently instead of waiting on months or years of selling real estate.
- Cash dividends grow in higher-quality stocks. This means that if the annual return is significant, as it usually is in a big company, you can collect thousands of dollars each year. High dividends can also come in through quickly rising stocks.
- It is easier to diversify in stocks. With real estate, diversifying is only possible by buying property in different areas. With stocks, you can make small investments, which allow you to invest in more and receive more possible returns.
Cons
- Stocks can be intimidating because they can fluctuate every day. This is why people who invest in stocks watch them closely. However, this does not necessarily indicate any long-term issues.
- Investment in stocks is also a mind game. Just like in the first point above, people can get anxiety easily about their investments and withdraw without a logical reason. When a stock lowers in value, it can be an opportunity to buy more instead of sell.
- Bankruptcy is always a factor to consider. If the company goes bankrupt, your investment dissolves.