Why You Should Try To Invest In Real Estate And Stocks?

Deciding whether to invest in stocks or real estate requires being honest about your risk tolerance and lifestyle preferences. Both investment strategies have their advantages and disadvantages, so it really comes down to your financial goals and budget.

Real Estate vs. Stocks

Investing in real estate means you acquire a physical piece of property. Regardless of the type of real estate investment you make, most investors make returns on monthly rental income and/or when they sell the property on account of it being an appreciating asset. On the other hand, when you buy shares of stock, you purchase a piece of a company. As the company’s value grows, your stock value also grows. 

Stocks

To buy stocks, you will have to go through a online discount broker, or an entity authorized to buy stocks. You can use a brokerage firm, individual broker, and even online platforms or robo-advisors to learn how to invest money in stocks.

Stock Investing Advantages

Stocks are liquid. With real estate, your money could be tied up for many years until you decide to sell. 

Proven track record of success. Despite the many stock market crashes, buying stocks, reinvesting the dividends and holding for long periods of time has proven to be the greatest wealth generator in history.

Earn dividends. Investing in high-yielding dividend stocks can generate significant passive income which you can then reinvest. 

Stock Investing Disadvantages

An emotional rollercoaster. Investing in the stock market requires a cool head and discipline. 

Short-term volatility. If you’re looking to make money fast, then stock price volatility could work for or against you. 

Capital gains taxes. You may have to pay capital gains taxes after you sell your stocks, and your dividends could also be taxed. 

Real Estate

There are numerous ways to invest in real estate, from long-term and short-term rental properties to fixer uppers and house hacking.

Real Estate Advantages

A hedge against market volatility. Owning property can serve as a hedge against stock market volatility and inflation, as home values and rent prices tend to appreciate with inflation.

Tax advantages. There are a plethora of tax advantages for homeowners and commercial real estate owners. 

Cash flow. Real estate investments can offer owners a reliable, passive monthly income through the form of rent payments. 

Real Estate Disadvantages

Real estate requires time and money. If you’ve invested in a rental property or fixer-upper, then expect to put a lot of time and money into the project. 

Your money is tied up. Investing in real estate is highly illiquid, meaning you will not be able to access your returns for quite some time. 

Tons of fees. There are many transaction costs involved with buying and selling property. 

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