WEIGHING THE PROS AND CONS
by Contributor
(Jun. 23, 2019) — As global economic uncertainty rises, more and more people are becoming cautious with their investments. Several factors, such as trade wars, political uncertainty, and slowing economic growth in key markets across the globe may affect their decisions. Nevertheless, despite the nervousness surrounding the global economic outlook, there are still positive signs for certain investments, such as real estate or the stock market, to achieve a certain degree of financial security.
Stock market trading and the real estate industry are two popular forms of investments that anyone could try in this day and age. And you probably think that you would want to invest, but it seems complicated due to the factors mentioned above.
This article will compare these two prevalent types of investments so you can determine what the best option is.
Stock Market Investing
Pros
- Big Profit
The biggest win in stock market investment is that it has the potential to earn you a significant amount of money at a very limited period of time. Whether you’re a seasoned investor or just starting to get interested in stock investments, once you get the hang of it and play your cards right, you can definitely create a fortune for yourself. However, you must keep in mind that the possibility of a great reward comes significant risks.
- Unparalleled liquidity
Perhaps the primary value of stock investing is liquidity. Compared to other investments, such as real estate, you have easy access to money in the stock market. That general thrill of being able to move in on a stock when it looks promising, watch it explode, and then sell it off as quickly as possible has attracted investors for several decades.
- Flexibility For Your Portfolio
Stocks are flexible investment instruments. This means that investing in stocks can make a whole lot of difference in your financial portfolio. You can allocate your funds to your retirement, for example. The best thing is that these funds remain tax-free until you use them.
Cons
- Market Volatility
Price swings are very common in the stock market. This yields both positive and negative effects. You may win or lose in this game of investment; winners earn much money, and losers will surely see their investments fall apart. If you want to invest in the stock market, you should not be risk averse, and you should be in a stable enough financial position to withstand swings.
- Stock Market Crashes
What you have to bear in mind is that daily volatility can happen and can be expected. Massive failures in the system are less common. However, when they do happen, it can take years to recover. The market will eventually recover, but it may take time for investors to rebuild their portfolio.
Real Estate Investing
Pros
- Income Stability
Real estate property always has value and should appreciate in time; therefore, you may sell it at a higher price. This long term revenue generating capability is what attracts investors who are looking for a stable source of income. These days, there are several ways to sell your property online. You can check through a directory site and learn more about other properties as well.
- Long Term Value
Real estate investments can be a profitable long term investment, which can help add to your retirement fund. Another example is that you may receive tax incentives for owning the property, such as depreciation value if your property value falls and rises over time.
Cons
- Time Consuming
If you plan to rent or sell, the time it would take for you to sell the property you’ve built varies. Plus, the fact that you have to deal with rental tenants, maintenance issues, and take on a mortgage to purchase a property can be very time-consuming.
- Cash Isn’t Readily Available
Since real estate isn’t a liquid asset, you’ll not be able to turn into your property into cash quickly in case of emergencies. There’s also an immense amount of risk and extra costs associated with buying properties that may need repairs or improvements.
Conclusion
Now that you have been presented with the pros and cons of real estate and stock market investing, it’s time to make that vital decision of which is a better investment.
Do take into consideration how much work you’re willing to put into despite the hurdles that may come your way. At the end of the day, it all boils down to which can bring you more profit and success.