There are endless amounts of quotes that talk about how smart people buy land and property. Everyone knows that rich people always are buying and selling Real estate. The only thing is that the other thing that everyone knows is that rich people also buy and sell stocks all the time too. So the question is simple if you need to make a choice between the two, what should a person choose.
As simple of a question as it is, sadly it is not nearly as easy to answer. When weighing out these two core investment strategies we really need to look at the upsides and downsides to each to get a full picture of what works and why to make sure that at the end of the day you start with the best investment option for you.
Pros of Stocks
If we start with stocks the pros are easy to see, the biggest advantage is that they are easy. All you have to do is pick a company or fund and buy it and sit back and watch it grow (hopefully). This is one of the core reasons why people love stock investing so much, is that you invest in major companies success while not doing anything more than just buying some of their shares. Another major advantage is the ability to purchase large or small amounts allowing you to diversify into many different projects/companies at the same time.
Cons of Stocks
The biggest issue with stocks is value fluctuation. When you are winning in the stock market it feels like you are stealing money, the only issue with that is that when you are losing in the stock market it tends to feel like someone is stealing money from you ( not the best feeling). If you don’t have the required discipline and just are bad at keeping diversified you can easily lose most or even all of the money you invest without an issue in the blink of an eye.
Pros of Real estate
Consistency is the name of the game when it comes to Real estate. Property value over time has consistently risen and appreciates as time moves on so you can largely count on solid returns as long as you have a long enough time to wait out the gains. Another core advantage is that it is tangible and easy to understand and for many people that makes them feel a bit better investing in it. Property can also be leased and or rented out while you wait for it to appreciate, which can create passive income while you sit on your investment long term.
Cons of Real estate
Outside of the obvious issues of picking a bad neighborhood to invest in and the value over time tanking, the biggest secondary issue is problems selling and the fact that it requires a larger sum of money to get started investing.
The winner is Stocks due to the fact that diversification is a major advantage to Stocks compared to Real estate because you simply can’t beat the ability to split up the same amount of money into hundreds of investments instead of risking it all on one property that may or may not successfully appreciate.