Investing in your financial future is a long-term process that requires plenty of planning, a cool head, and decisive action. If you’re debating between investing in property or stocks, here are 5 reasons why real estate is better than the stock market.
Less Risk, More Predictability
The first big thing to remember about investing in real estate is that the market is quite stable and the costs are predominantly up-front.
Once you put a down payment on your chosen property, you have the most immediate roadblock to owning that property out of the way and you’re ready to put your plan into action. Maybe you’re looking for a faster return on investment and want to flip the house, or maybe you feel it’s best to rent the property and create a passive source of income.
In the world of stock trading, you likely will be investing your capital in smaller transactions that yield smaller returns in the short term and are subject to lots of market forces and fluctuations that are out of your control.
Investing with Debt Is Doable
Even if you’re currently dealing with debts, investing in real estate is still something that can be done in a safe manner.
If you find yourself in this situation, it’s important to find the right mortgage lender that understands your circumstances and is willing to work with you to make this venture a success.
On the other hand, investing in stocks with debts can be very risky and make your situation much worse. Trading stocks while in debt also requires you to receive some kind of financing, and making stock trades with borrowed money is called margin trading. Because you are making these stock trades temporarily with someone else’s money, you will be held liable for any losses. Losing someone else’s money through margin trading may make your debt problem worse.
Ease of Use
Doing your market research and pricing a rental property, or flipped home, appropriately is much easier than researching companies in which to invest.
Once you feel you’re ready to get your real estate investment rolling, you can then focus on making that property the best it can be.
When it comes to investing in stocks, you’re taking a gamble on a company you may have researched thoroughly, but still don’t know everything about. By investing in a specific company, you’re choosing to trust the individuals in charge to do what’s best in order for you to yield a profit.
Immediate Market Gains
Two ways real estate is better than the stock market are that properties often provide tax breaks and also act to protect your investment from inflation.
Most homeowners will claim a tax deduction for mortgage interest paid in a fiscal year up to $1 million. This means you can receive more in your annual tax refund. Second, inflation applies to the value of any property you own. So, when the value of the dollar increases the prices of everything else, your property value increases in proportion as well.
Stocks Bring Stress and Emotions
The final thing to take into account when determining if real estate is better than the stock market is that the stock market goes up and down constantly.
With these nonstop ups and downs comes an emotional roller coaster that can be difficult to cope with. If you’re the type of person to fret over details, you may find yourself being pulled in by a feeling of need to perpetually monitor your stock investments. You won’t have this issue with real estate as you dictate the emotional and time investment in the property in order to meet your individualized goal.