Last Updated on October 7, 2020
While not everyone is in a position to consider growing their assets, it’s always worth considering in advance. Once you have some disposable income, you’ll at least then know what to do with it. So you might be wondering, real estate or stocks, which will make you richer? Well read on for more information.
Investing in the Property Market
When you buy a house you get somewhere to live at a lower price than if you were renting. Sure, you have to have a deposit of at least 10%, but it’s arguably one of the best investments you can make. For starters, you can fix it up as you wish. And when you leave or sell, the increased value from your improvements goes to you, not to a landlord.
If you’re smart with your purchase and buy a house under market price as a distress sale you have an immediate profit built in. Commonly known as a “fixer upper” (Learn more about it from my bestseller “Think Like a Tycoon – Profit From Selling Distressed Properties”), they offer amazing ways to see return on your investment. What’s more, flipping a house you bought for $20,000 at auction for at least ten times the price is clearly an amazing way to make money.
If you place a 20% deposit and your property goes up in value by 20%, you have made 100% on your investment. If the real estate market drops, it doesn’t matter, you still can live in the place with the overhead being what you expected. Eventually you will make money.
ProTip – Whatever you decide to invest in, whether it’s the stock market, real estate, or as a business partner, know what you’re investing in, and don’t risk more than you can afford to lose.
Investing in the Stock Market
So when it comes to real estate vs stocks returns, your main deciding factor should be risk. Realistically, you shouldn’t bother with stocks unless you have at least $10,000 to invest, although slightly under will be acceptable.
For a more detailed guide on how much money you need based on various stock trading scenarios like “day trading”, check out Ragingbull’s post.
Penny stocks, which are minor investments, are not only quite risky, but they don’t see particularly high returns. That’s why working with bigger amounts of money is usually the better option. But “better” is a very loaded term in stock investment.
If you buy a diversified portfolio of stocks and bonds from a mutual fund or hedge fund, you could, and probably would, lose anywhere from 50% to 100% of your investment.
People who work in stock deal with other people’s money; this is the point. However, if you’re a day player working with your own money, the level of risk is much higher. While an investor might stand to lose their annual bonus by making a bad play, you could stand to lose your entire savings.
Real Estate vs Stock Returns
Nothing is without risk. The main problem with property is not the risk, but rather looking after it and repairing things. Property ownership can be stressful, but it also adds a level of security.
However, if you’re deciding between investing in real estate vs stocks, then your better option is real estate. If you’ve got some DIY knowledge and some spare cash, you can make some real money flipping properties and selling them, or renting them out. Investing in stocks, on the other hand, has a higher level of risk and a lower chance of return.