Which is a better investment - the real estate market or stocks?
There are pros and cons to each choice, but key research beforehand will help you figure out what works best for you. It is very easy to get confused when all you are looking at is numbers.
Investing In Real Estate
- Can generate regular cash flow
- Can reduce taxes
- Provides a home for people
- Helps the local economy
- Offers more flexibility if it becomes full-time job
- Have to find financing
- Could have to deal with bad tenants
- May have to find (and pay for) a management team
- A lot of maintenance may be required
- May be cash flow issues when there are vacancies
Investing In The Stock Market
- Very easy to sell (and can also sell online)
- Receive dividends depending on the company
- Diversify your equity investments
- Could lose entire investment
- Can be an emotional rollercoaster as prices flucuate
- Requires a lot of on-going research into the companies
- Large crashes are not as common, but when they happen it can take years to recover
A dividend is a sum of money paid to shareholders by the company.
Diversify equity investments means buying the stocks of different companies at different times in hopes that if one stock drops, the other will offset the loss.
Stock Market Beginners
Getting into the stock market can be intimidating for beginners, but even people who have been doing it for years are still learning. It is something that is always changing. Learning how to handle those changes and potential risks is the first step.
Start small when investing in the stock market, just as you would investing in real estate. You can easily start with $500 and start making your way up.
The next step would be to understand how to read stock charts.
Real Estate Investing Beginners
Investing in real estate can be expensive at first, but in the long run it will pay off. Making sure you buy an investment property is the first step to ensuring your cashflow will be steady. If the area has a high turn-over rate, do not take any chances. Vacancies may cause a lot of trouble if you are not prepared for them.
Becoming a landlord comes with a lot of responsibilities that may or may not be for you. You may love dealing with people and being a handyman, but if not, you will have to build a team of trusted professionals or hire a property management team.
Whether you decide investing in real estate or investing in the stock market is for you, there are different perks to each decision. It all depends on your lifestyle, how much you have to invest in the first place, and ultimately, what will benefit you in the end.