Should you invest in real estate or stocks – or both?
Many investors turn to stock market as the place to put their money. Though stocks are a well-known investment option, not everyone knows that buying real estate is also an investment. With the right circumstances, real estate can be alternative to stocks, offering lower risks, better returns, and greater diversification.
Stocks or real estate investing is a personal choice that depends on your risk tolerance, financial situation, goals, and investment style. When you invest in stocks, you are buying a tiny piece of that company. You can make money two ways with stocks: value appreciation as the company’s stock increases and dividends.
When you invest in real estate, you acquire physical land or property. Most real estate investors make money by collecting rents, which provides a steady income stream, and through appreciation, as the property’s value goes up. Since real estate can be leveraged, it’s possible to expand your holdings even if you can’t afford to pay cash outright. For many investors, real estate is appealing with its tangible asset that can be controlled with the added benefit of diversification. They own something concrete for which they can be accountable.
There are a number of considerations for investors when choosing between investing in stocks or buying real estate as an investment.