Real Estate Vs Stocks - Which is a better investment?

There’s always a long standing debate among investors on whether property makes a better investment proposition to shares. There’s no denying that the stock market historically outperforms other types of investments. And if you have to choose between investing in real estate and stocks, it might seem like a no brainer.

Some people think the stock market is the better alternative because the real estate market is unstable at its best. There’s no guarantee that property values will appreciate from year to year and when home price gains slow or decline, investors take a serious hit. The stock market isn’t much better, it’s known for its volatility and there are unpredictable ups and downs.

Without doubt, stock market investing offers an unparalleled ease. You can invest in stocks with as less as Rs 500. It can be done in the comfort of your home. The case with real estate is different. You have to go and survey the property, inquire about the locality and go through a lengthy process, including government regulations, to invest in it.

Each investment options provide a range of benefits. Real estate and equities, both are a great source of investment and help build wealth in the long term. Success in investing in these assets depends on the knowledge of the asset, inclination and attitude of individual investors and understanding the key drivers of prices of these assets. Regardless of your asset class, returns are determined by different factors that generate different benefits. It’s important that you investigate and consider investing in both real estate and the stock market for different reasons.

Let’s look at these benefits in more detail and what to consider before you invest:

REAL ESTATE

• A real estate is a tangible asset. It can be a land or a property that you can see, feel and utilize. It can provide a better quality of life. Moreover, before your purchase, you can inspect the property if it is in good condition to make sure that what you are getting is worth your hard-earned money.

• Complete control over your investment in real estate is possible. The decision to rent it out to generate passive income, to make repairs or improvements and to sell it in the future are in your hands.

• The value of real estate properties appreciates over time. It is one of the rare assets that rise with inflation. Even during tough times, it is less volatile. When the economy is down, you can still relax in your home.

• A property is a source of satisfaction. You can take pride in its ownership. Since it is tangible, you have a constant reminder that years of hard work definitely pay off.

STOCK MARKET

• Stocks are low maintenance. Investment in it can be left alone after the initial purchase and it will still pay out dividends. Because it requires less work, you can focus your attention elsewhere with confidence that your investment is still moving.

• Investing in stocks is doable even for young investors. It is even preferable to start young to maximize its potential growth. Shares can be inexpensive and you can determine its volume.

• When you buy shares of stock, you buy a piece of a company. The returns you earn is invested in prominent and are persistently successful, companies can certainly be of considerably high value. And historically, stocks have a high rate of return.

• With stocks, you can invest not only in your own country but even in different countries and in various sectors.

Why Real Estate is still the best investment class?

When one wishes to invest his or her money in a place wherein a long-term viability and return on assets are at a higher rate, real estate investing is the best choice for you. Real estate investing provides for a more controllable amount of risks that other financial assets cannot match. It's tangible nature also gives the investor a more peace of mind as real estate pricing seem to be more constant as compared to stock market investments.

However, there are also risks involved in this type of market. These risks could be more tricky to analyze in relation to the constant move of the market, it can be easily affected by the performance of a particular neighbourhood that could endanger your credits where the property is situated, the need for a larger capital to actually invest in the real estate industry, the nature of the property which is less liquid than other financial assets and lastly, the taxes that come along with it. Stocks and real estate are both smart investments, but the right one for you will depend on your own personal preferences. If you’re looking for quick high returns, stocks may be the better option for you.

The biggest advantage investing in Real Estate gives you is you can buy below market, add value and rent for positive cash flow. If you buy properties right you can make more than your initial investment back before you even rent the home.Your cash flow can provide you lifetime income with no retirement calculators and you have control over your investment to increase its value.

Regardless of which one you choose, it’s crucial to ensure that you research the investment opportunity carefully. Real estate can offer great returns, but you need to choose the right property. The wrong property can lead you owing more than the property is actually worth. The same can be said for stocks. Invest in the wrong company, and you may see your investment go down the drain.

This guest post has been written by Gunjan Johar, Real Estate Blogger.