Both, Real Estate and Stock Market offer very lucrative investment opportunities and both have their pros and cons. To make maximum money out of your investment, it is very important to gain knowledge of both the fields. In this article a comparison between real estate investment and stock market investment is done to help you make an informed decision.
Stocks Market Investment
The average rate of return on stock market investments from 1978 to 2006 was recorded 13.4%. Although, the stock market industry is more unpredictable than the real estate industry but the rate of profit is always more.
Real Estate Investment
The average rate of return on Real Estate Investments from 1978 to 2006 was recorded 8.6%. The profit rate in real estate industry is consistent due to the appreciation of the property value.
Working of Stocks Market
Investing in stock market allow you to get ownership in a company. The profit you earn in this type of investment is directly proportional to the financial position of the company you investing in. If the company does well you can earn huge profits but in case it doesn’t your funds may diminish.
Stocks Market Investment can provide you with a much greater profit rate if the economic condition is stable.
Working of Real Estate Industry
Real estate industry is categorized under two heads: commercial and residential. You can buy property at lower rates and sell in when the market value increases. If you wish to earn a consistent income from your investment then you can rent out the property purchased.
There is always more consistency in the profit margins of a real estate investment as the property rates generally appreciate.
Advantages of Stocks Market Investment
Stocks Market Investments hold a higher liquidity value and are therefore easier to sell in comparison to the real estate investments. They are also more flexible and can be transferred to a retirement account.
The second big advantage of Stocks Market Investments is that rate of turnover they can generate in a year is much higher if the financial position of the company is stable. Some of the stocks also bring in huge profit as some companies have an average growth rate of 20% or even 50%.
Advantages of Real Estate Investment
Real Estate Investment also has great benefits, such as tax deductions, selling the property under 1031 exchange, and continuous appreciation rates of properties.
Land is one tangible asset the value of which continuous to appreciate with time. Therefore, Real Estate Investment usually generate consistent turnover every year. Sometimes due to regional growth the property rates are doubled within years and fetch the investor’s huge profits.
To conclude stock market investments usually are more advantageous than real estate investments in certain categories. Although, real estate offer greater stability and tax relief but stock market investments can generate huge profits in lesser time and offer greater flexibility in terms of liquidity. It is advisable to make your decision keeping in consideration your financial position.
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