Investment in stocks versus real estate: what's a better investment?

 

The capitalist world is dominated by stocks and shares and ups and downs of the market are a part of our everyday lives. Just like millions of stories in the morning or whole fortunes wiped out overnight. However, stocks are not exclusive to investment portfolios – real estate is also the backbone of most. Many people, of course, have at least one property, their own home. But what makes the investment better? To decide, we have to look at the advantages and disadvantages of real estate investment versus stock purchases. Properties for sale in Doha

The advantages of property investment

Property investment advantages

In addition to providing a roof over your head, immobilial investment has the following advantages:

Property prices continue to rise – they are steadily increasing if you look at the historic trends in house prices. The trend is always up despite the cycles with their bubbles and crashes. However, to take advantage of this, investment in property is best seen as medium- to long-term. As Warren Buffett, one of the best investors ever in the world, says, "our preferred holding period is forever."

The purchase of property is unemotional – it doesn't involve strong emotions if you don't purchase your home. However, stocks and shares often involve a casting of enthusiasm and desperation, as illustrated by frenzied buying and selling scenes in bonds. And often this panic is contagious. In real estate markets, you rarely see this.

Property investment is easy – you don't have to be a finance expert to buy a property. On the other hand, if you buy stocks, you need more than basic notions about how shares work.

Immobilien is tangible

Real estate is tangible – it's real as the name says. You can see it, touch it and use it. On the other hand, stocks appear rather ephemeral, usually digital and therefore not at all tangible. You will receive a paper certificate at most. Compare this with the strength of bricks and morter.

Property is long-lasting – without a natural disaster, property is the test of time, and it is unusual that property is wiped out overnight as is possible with inventories.

Immobilien is your domain - you control and decide what to do with the property. Stocks tend to be in the hands of others, often managers or shareholders' boards. In the end? You have transferred interest to the property (your investment), because nobody cares more about it than you.

Property leverages – successful real-estate investment often involves hypothecary finance. This makes it possible for investors to leverage their purchases and increase profits. Few investors are borrowing to purchase shares.

Property has various income streams – in different ways, you can make money from the property. The most obvious appreciation of capital is, however, a property can also generate passive income, for example through the rental of purchase income. You can also buy and develop a plot of land, extend a small property or upgrade an old property to add value.

Immobilien is stable – real estate markets are increasing and declining, but never in the same way as stocks and shares. Even the slightest political event can send shockwaves. They are forced into free fall by major economic crises or geopolitical disputes.

The advantages of stock investment

stock advantages

No comparison of the two investment vehicles would be fair if the benefits of purchasing stocks and shares were not examined. User-friendly apps such as eToro have brought the stock world closer to mass investment. It was never easier to start purchasing publicly traded company stocks. The advantages include:

Stocks give you immediate liquidity – you can sell stocks quickly and easily if you need cash. However, property can take a while to sell particularly in slow markets.

Stocks are cheaper – stocks start at only a few Euros, while you have to buy a property at least a few thousand.

Stocks come with zero maintenance – no stock maintenance involves any damage due to adverse weather conditions or careless tenants.

More Returns

Stocks offer high returns – if you know how to play the market, stocks and stocks can really get rich fast. Profit gains from property are generally slower.

The downside of investment in real estate and how to compensate for it

Benefits of property investment

The list of benefits for the property is significantly longer than that for stocks and shares. But that's not to say that investment in property has zero disadvantages.

Even the old saying, "it's as safe as halls" isn't always true – in the last economic crisis, many homeowners lost considerable money. However the number of shareholders who saw millions wipe their portfolios since the pandemic began in March this year is diminishing.

False location – probably the greatest risk when investing in property purchases in the wrong place. The three most important things to consider are not for nothing: location, location and location.

Offset by – careful and rigorous market research helps to avoid this error. Select an agent specializing in the area and take advice about the best locations.

Poor liquidity – property can be a challenge to sell rapidly, so that liquid assets can not easily be converted to cash.

Offset by – property earns money as monthly income on a regular basis. Buy-to-let investment is one of the best examples of liquidity gain from an investment in real estate.

Benefit: maintenance

Costly maintenance – all houses need maintenance, which can be particularly expensive for large-cost items like roof repairs or broken pipes.

Offset by – taking as many tax allowances as possible into account. There is, unfortunately, no maintenance avoidance, but you can compensate for your tax bill in most countries.

Overall, the benefits of investment in real estate far outweigh the disadvantages. And all the disadvantages can also be easily avoided or mitigated.

The downside of investment in stocks and how they can be compensated

FTSE 100

The same cannot be said for stocks unanimously. You can research stock market trends and corporate performance for weeks, but the volatility of the market can obsolete all your facts and figures. After all, between March and July this year, no investor in airline shares could have imagined a nearly vacant sky that would lead to collapsing airline share values. Or the domino effect on other stocks – for example, aircraft engine manufacturers such as Rolls Royce.

And while it is true that most countries levy lower income tax rates on share dividends, there's no guarantee that you get a profit. Since the start of the pandemic the FTSE 100 has lost 23.5%, leaving many shareholders with losses instead of dividends.

In the end? Compensation of the inconvenience of investment in stocks can be a challenge and often out of your hands.

What's better for property or stocks?

What's better: inventory or property?

As we have seen, in terms of benefits, real estate investment clearly has a significant edge over stocks. The best-success portfolios always contain real estate and many millionaires are founded on property.

And then, of course, real estate beats stocks in one area and that's the value of a home. We all discovered in these strange times that our home is a true refuge. Somewhere to take shelter and feel safe from the external pandemic. What stocks are you going to describe as a haven?