Real Estate or Stock, which one is better? Choosing between real estate and the stock market has always been a tough choice to make. Many factors help you decide which one to pick, and these include; your financial situation, risk tolerance, goals, and investment style. Since everyone has a different approach towards previously mentioned terms it might be difficult to answer this question abruptly. However, there is always a better side to go with and for that real estate is the preferred one.
If you are given an opportunity which one would you invest in? Before jumping towards a conclusion, let’s decide after analyzing both sides of the book. However, first, we need to know what these daily routine terms mean.
What exactly is real estate?
A real estate is a form of property related to a piece of land and all the monetary attachments related to it. For example, a piece of land in a colony, a house in a street, a shop in a mall, or a salon in a town are all examples of real estate. The concept of residence and commercial area are both converged into a single term when it comes to real estate. Hence, concluding, this is a broader term to deal with. There comes a lot of ownership and user rights when it comes to real estate. These terms include paperwork, real estate agent, market, regulation, development, etc.
What is a stock market and how does it work?
Stocks are sold online and they are exchanged online based on their monetary value. This live trading refers to the collection of exchanges and other venues where the buying, selling, and issuance of shares of publicly held companies take place. If you are a beginner, you should research well about a company whose stocks you are interested to buy and do stock market analysis. After you are done researching, depending upon your pocket’s capacity pick the number of shares you can afford. Later, choose your stock order type and then optimize your portfolio.
A stock market is a place where companies sell their stocks online and buyers and sellers can negotiate on their prices. Companies share their stock on market via a process called initial public offering (IPO). People who tend to invest in stocks, buy their stocks here moreover, the company raises its money in this way.
There are four types of stocks:
- Preferred stock
- Common stock
- Growth stock
- Yield stock (Dividend)
Why is real estate better than stocks?
Real estate investment includes spending on properties that incorporates land, houses, etc. On the other hand, the stock market investment involves investing in stocks be it of any company. To differentiate between the two, you can say that real estate investments are tangible and stock market investments are non-tangible.
There are several reasons why real estate investment is better than stock market investment. Investing in real estate generates steady income, for example, renting a house, would help you generate a constant revenue per month. Moreover, increments are a bonus. Another key factor leading towards this choice is that it is tangible and helps you generate ownership of your asset.
How does commercial real estate differ from residential real estate?
There are two types of real estate investments; commercial and residential. Commercial investments come with big fortunes however, residential is no less. Commercial investments might be more expensive but the revenue that you receive at the end is enormous depending upon the location and type of commercial use of the plot. For example, renting land to a bus terminal is a better option than letting the land stay unfertile. Moreover, if you buy a commercial building and rent it out to a school, you get huge profits without any pain of constant investment.
In addition to it, if we talk about residential investment then what is better than sitting at your home and enjoying your leisure time, however, earning at the same time? If you invest in the residence you earn for a long time and for a consecutive time slot.
Is real estate wholesaling a good way to make money?
There is a proper real estate market in which you are dealt with by real estate agents that help you know the regulation and development of real estate and facilitate you to invest in a proper place.
Real estate wholesaling is a process when a person who wants to sell his property, contacts a contractor who later sells it for him to the end-user. In this process, the contractor makes money by charging a specific amount above the actual price of the property to make a profit for himself. Several allegations come with it for example making money on someone else’s property but the counter-question comes regarding the struggles that the contractor has to bear for selling the property. Disregarding the previous question, it is a good way of earning money.
Does real estate beat the stock market?
Moving forward another major advantage is that of tax deduction. To elaborate this point further, here is an example. If you sell a property and spend the amount to buy another property, of a similar type then you will not have to pay capital gains taxes. In today’s world of increasing taxes, it is a big plus point and a wise way to invest.
Another benefit is that real estate gives you constant wealth and long-term appreciation. For example, if you invest in a property today and it is worth 1 million Rs, due to inflation in the coming time the same property would cost more than 10 million Rs (depending upon location and time), hence leaving you with a surplus. Instead, if you had kept the money to yourself at the beginning (1 million Rs), then you would have been left empty-handed because it is human nature that you spend.
Coming towards stocks; stocks are a volatile source of investment. Moreover, since our country’s economic situation is uncertain, you are never sure about your investments. Furthermore, if the stock market crashes then your investment dissolves. In addition to it, it is usually said that investment in the stock market is emotional rather than rational, hence due to irrational decisions it is pretty likely that you are left with bankruptcy.
In a conclusion, real estate investment is a hedge against inflation and a reliable source of passive income. However, stocks are unreliable and leave you in doubt and sometimes empty-handed. Real estate might sound like a dead investment but always gives you a surplus to enjoy.
Which makes more money stocks or real estate
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