Like many decisions, investing in real estate or stocks depends on what you are willing to spend, what you are willing to risk and what your investment style is.
Most people usually invest in stocks over real estate because it’s fast and usually does not require as much money. Others prefer real estate because it is a tangible asset that can be controlled. So what are the other factors that you should consider?
Investing in stocks
When you invest in stocks, you buy a small portion of a company. As the value of the company increases, the value of your investment increases. Depending on the company, you may also receive regular dividends.
Stocks are liquid, which means they are generally easily bought and sold and reliable for emergencies. With many options out there to choose from, you can create a well-diversified portfolio.
However, being so volatile, stocks can be a riskier choice. Selling your stocks may result in capital tax gains, increasing your tax burden and unless you have a lot of money in the market, the growth of your holdings may not be as high as you would want.
Investing in real estate
When you buy real estate, you own property or land. Usually, investors earn money by collecting rent and when the value of the real estate appreciates.
Compared to stocks, real estate investors have the ability to gain leverage on their capital and have better tax benefits. While it might be a longer and slower commitment, the long-term cash flow provides passive income and the promise of appreciation.
With it’s higher entry-level, you will need to consider a larger investment right off the bat to secure a down payment and any financing and since real estate is not liquid, you will not be able to sell your property immediately in a state of emergency.
Both real estate and stocks offer their own opportunities and pose their own risks. To reduce risk, study each option closely and do your own research to find out what works for you. You may like to invest in both.
On May 19th (Tuesday) 2020, at 8:30 PM, property guru and seasoned stock trader, Dr Victor Gan and David Lau will be joining Property Hunter to discuss this very topic - Property or Shares? Tune into Property Hunter Facebook page and click “going” to join the conversation here.